This article is written by M.S.Sri Sai Kamalini, a fourth-year student currently pursuing B.A.LLB (Hons) in School of law, SASTRA. This is an exhaustive article which deals with the various provisions related to functionaries under the Code of Criminal Procedure, 1973.

Introduction

There are various functionaries under the Code of Criminal Procedure,1973 who help to regulate the various provisions of the code. The functionaries are essential for the proper functioning of the code. The various functionaries mentioned under the code are the Police, Public Prosecutors, Assistant Public Prosecutors, Additional Prosecutors, Prison authorities and the Defence counsel. The powers and functions of the functionaries are clearly mentioned in the code.

The Police

The Police Officer is an important authority who is the backbone of criminal law in India. They are responsible for maintaining the law and order of the country. They are also responsible for the enforcement of various laws and orders. The police officers have various powers and functions that help to prevent various crimes happening in our country. There is no definition of the term “Police” in the Code of Criminal Procedure but the term is defined in the Police Act of 1861. According to the Police Act, 1861 all the persons who are enrolled under the Act are known as the Police. 

The Police Act, 1861

The Police Act, 1861 is a comprehensive code that deals with the appointment, dismissal, and functions of the police officers. The main aim of the Police Act is to reorganize the police forces whenever necessary and to make the police forces more effective. The Police Act contains 47 sections which deal with the various aspects of the police force. The Police Act of 1861 is a legislation that was brought by the British officers after the First war of independence. There are various states like Kerala, Maharashtra, Gujarat, and Delhi that have formulated a separate Police Act for their states but they are very similar to the Police Act, 1861. 

Organisation of the police

Section 2 of the Police Act, 1861 deals with the constitution of the Police force. The State Government is responsible for establishing a Police force in that State. According to this Section, the entire Police establishment under the State Government is deemed to be a single Police force. The State Government can decide the number of officers to be appointed and it varies from time to time. Section 3 provides that the superintendence of the Police and that has to be exercised by the State Government. The Inspector-General of Police is responsible for the administration of the Police department. The hierarchy to be followed while exercising power is Deputy Inspectors-General, Assistant Inspectors- General, Superintendents, etc. According to Section 5, the State Government may impose any restrictions on the powers of the Inspector-General of the Police.

Section 7 of the Police Act deals with the appointment and dismissal of the inferior officers. This Section provides powers to the Inspector-General, Deputy Inspectors-General, Assistant Inspector-General and District Superintendents of Police to dismiss, suspend or reduce any police officer of the subordinate ranks. This action is taken when the officers are negligent in discharging their duties. There is a certificate provided to the Police Officers after their appointment according to Section 8 which allows him to exercise powers provided by the Act. Section 17 of the Act deals with the appointment of Special police officers. Special Police Officers are appointed in a situation when there is a riot or disturbance of peace in any form and the Police Officer normally appointed cannot handle the situation. The Special Police Officers are appointed by the Inspector General in charge after providing a proper application to the Magistrate. The powers of Special Police Officers are the same as the normal Police Officers. According to Section 20, the Police Officers can exercise only the authority provided in the Act and cannot exercise any other power exceeding this Act.

Functions of the police

Section 23 of the Police Act, 1861 deals with the functions of the Police Officer. According to this Section, it is the duty of every Police Officer,

1. To collect and communicate intelligence.
2. To prevent the commission of offences and public nuisance.
3. To figure out and bring offenders.
4. To promptly obey and execute all orders executed to him by any competent authority.
5. To arrest all persons if any crime is committed and whom he is legally authorized to arrest.
6. To enter and inspect any drinking or gambling house or other places without a warrant to solve loose or disorderly characters.

Section 25 provides that it is the duty of every Police Officer to take charge of unclaimed property. The Police Officer has to pay a penalty for neglecting his duty. The Magistrate might even punish Police Officers with imprisonment if it is necessary.

Other Police Acts

The Police Act is the main legislation which regulates the Police forces in India. The various provisions in Indian Penal Code, 1860 and the Criminal Procedure Code are also responsible for regulating various functions of the Police. There are also certain provision like Section 26 and Section 27 in the Indian Evidence Act, 1872 which provides power to the Police to record confessional statements. There are also different regulations and manuals, for example, the manuals in Tamil Nadu which regulates the various functions and duties of Police. 

Importance of Police under the Code

The Police are provided with lots of duties and powers under the Code of Criminal Procedure, 1973. Section 151 of the Code provides power to arrest a person without any warrant and orders from Magistrate to prevent the commission of any cognizable offences. The person arrested cannot be detained in custody for a period not exceeding more than 24 hours from his arrest. This period can also be extended if it is required by the various provisions of this Act or other laws in force. According to Section 154, the Police Officers have the power to record every information provided orally if it relates to the commission of a cognizable offence. This Section also says that certain complaints can be recorded only by the women Police Officers if a complaint is given under the various provisions of the Indian Penal Code which relates to the offences against women, Section 156 of the Code provides power to the Magistrate to investigate any cognizable offence within their jurisdiction without the order of any Magistrate.

Public Prosecutors

Section 24 of the Code of Criminal Procedure deals with the Public Prosecutor. The main function of the office of Public Prosecutor is to administer justice and to secure the public purpose entrusted with him. The Public Prosecutor is an important officer of the State Government and is appointed according to the provisions of this code. The Public Prosecutor is an independent statutory authority and is not a part of any investigating agency. 

It is mandatory to appoint a Public Prosecutor in all the cases when the prosecution is against the State. The Court cannot provide any reasons like shortage of funds to appoint a Public Prosecutor. The Advocate-General cannot become a Public Prosecutor unless he is appointed under Section 24. The relationship between the Public Prosecutor and the Government is that of a counsel and a client. The Public Prosecutor shall never be partial to either the accused or prosecution.

There are various classes of Public Prosecutor like,

1. Public Prosecutors appointed by the State Government and the Central Government;
2. Additional Public Prosecutors appointed by the State Government;
3. Special Public Prosecutors appointed by the Central Government;
4. Special Public Prosecutors appointed by the State Government.

Public Prosecutors and additional public prosecutors for High Court

Section 24(1) of the Code of Criminal Procedure provides powers to the Central Government or State Government to appoint a Public Prosecutor for every High Court. They can also appoint one or more Additional Public Prosecutors. The appropriate Government can appoint the Public Prosecutors after consultation with the High Court. The eligibility of the person to be appointed as a Public Prosecutor is that he should be practising as an Advocate for not less than seven years.

Public Prosecutors and Additional Public Prosecutors for districts

Section 24 provides various rules regarding the appointment of Public Prosecutors and Additional Public Prosecutors for districts. The Central Government can appoint one or more Public Prosecutors for conducting cases in any district or local area. The State Government can also appoint one or more Additional Public Prosecutors for the district. The Public Prosecutor or Additional Public Prosecutor appointed for a district can also be appointed for another district in certain cases. The District Magistrate will prepare a panel of names of persons who are eligible to be appointed as a Public Prosecutor or Additional Public Prosecutor. This list is prepared after consulting the Sessions Judge. The State Government cannot appoint any other person as the Public Prosecutor or Additional Public Prosecutor other than the persons provided in the panel of names.

Assistant public prosecutors

Section 25 of the Code of Criminal Procedure deals with the appointment of Assistant Public Prosecutors. The State Government has to appoint one or more Assistant Public Prosecutors for conducting prosecutions in different districts. The Assistant Public Prosecutors have no right to practise as advocates or defend the accused in criminal cases. Their only work is to conduct prosecutions on behalf of the State. A police officer who is not below the rank of Inspector and who has not taken part in the investigation of offence can also be appointed as Assistant Public Prosecutor when there is no availability. The Assistant Public Prosecutors are full-time Government servants.

In the case of Kannappan v. Abbas, the Madras High Court held that the permission granted by a Magistrate permitting the accused to appear for the accused was without jurisdiction. The Public Prosecutor is not competent to act as a defence counsel even in a private criminal complaint against police officers.

Role of the Prosecutors

The Public Prosecutors are appointed to conduct any prosecution, appeal or any other proceedings on behalf of the Central Government or State Government. The Public Prosecutor is bound to satisfy himself that there is a justification to seek an order of remand to judicial custody and to assist the Court, for example in a case, the Assistant Public Prosecutor conducted a case under the Prevention of Food Adulteration Act, the trial was impaired as the Assistant Public Prosecutor has no authority to conduct those cases.

Court

The Courts are another important functionary under the Code of Criminal Procedure. There are various classes of Criminal Court like,

• Courts of Session;
• Judicial Magistrates of the first class and, in any metropolitan area, Metropolitan Magistrates;
• Judicial Magistrates of the second class; and
• Executive Magistrates.

The Code of Criminal Procedure has clearly differentiated the various functions of the court and has dedicated various powers to various classes of Courts in Chapter three of the Code of Criminal Procedure. Section 26 of this code mentions that the High Court, the Court of Session or any other Court as specified in the First Schedule of the Code of Criminal Procedure is eligible to try offences provided under the Indian Penal Code. Section 28, Section 29 and Section 30 deals with the various kinds of sentences that can be passed by different Courts which helps the procedure of trial and also the powers between the Courts get distributed properly. The Courts govern the entire process of trial and acts as a regulating authority.

The Defence Counsel

Every person arrested by the police has a right to defend himself with the help of a counsel. In the case of State of Madhya Pradesh v.Shobharam, it was provided that any law that takes away the right to defend is against the rights guaranteed in the constitution. This provision should be construed in relation to Article 22 of the Constitution which provides the right to free legal aid to the accused. The arrest leads to restriction of personal liberty and thus the right to defend himself by the counsel of his choice is a compulsory right. Section 303 of the Criminal Procedure Code provides this right to appoint a defence counsel of their choice. This provision must be construed liberally in favour of the accused along with the other provisions and orders issued by the High Courts. A defence counsel should be provided to the accused even in cases of committing capital offences where they have no right to defend themselves. The right guaranteed under this Section is indispensable as it guarantees a fair trial. When the accused is not represented by counsel, it is the duty of the court to put appropriate questions to the witnesses in cross-examinations in order to find out the truth. The court also has the duty to examine the evidence.

Prison authorities and correctional services personnel

The Prison authorities are not directly governed by the Code of Criminal Procedure even though they are involved in the various stages of the proceedings. The Prisoners Act, 1900 is an important act which governs the various duties of prison authorities. According to Section 3 of the Prisoners Act, the officer in charge has the duty to detain persons who are convicted until the person is removed in due course of law. Section 4 of the Prisoners Act gives the officers to return the order, writ or warrant to the court after the discharge of persons who committed the crime. The State Government has powers to appoint prison authorities. The prison personnel are appointed for the management of correctional services like providing recreational services and securing the safety of inmates.

Conclusion

The functionaries under the Code of Criminal Procedure are very essential for the enforcement of various provisions of this Code. Each functionary has a different duty which together regulates various provisions of this code. The public should be aware of the various functions performed by these functionaries in order to approach them when there is an issue. The Public should support these functionaries in every way possible to help them perform their duties. Thus these authorities form an important part of the criminal proceedings.

References

• https://blog.ipleaders.in/the-indian-police-act-and-police-reform-in-india/.
• https://blog.ipleaders.in/meaning-roles-functions-public-prosecutor/.

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 skill.

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This Article is written by Shruti Singh, 2nd year Law intern from Hidayatullah National Law University, Raipur pursuing B.A.LLB(Hons.) Course. This article explains the provisions and procedures which deals with attachment of property under the Code of Civil Procedure.

Introduction

A civil suit is instituted against an individual who causes some kind of harm or wrongful act to the plaintiff. Usually, in a civil suit compensation is awarded to the complainant, the person who suffered harm because of the action of the defendant. Hence, a civil lawsuit can be brought over a residential eviction after a broken lease, a contract dispute, injuries caused due to car accidents, or countless other harms or disputes. The main objective of instituting a civil suit is to compensate for the harm caused to the aggrieved, unlike the criminal suit which emphasizes punishment for the wrongdoer.

There are three stages of every civil suit. It starts with the institution of a suit, adjudication of a suit and finally the implementation of a suit. The implementation of the suit is a step in which the results of the adjudication are put into action, hence this stage is known as execution. In this process, the order or judgement passed by the court is enforced or given effect. It is the enforcement of the decree and gives the benefit to the decree-holder in whose favour the decree has been passed. Section 38 of CPC states as to who can execute the decree. A decree may be executed either by the court which passed it, or by the Court to which it is sent for execution. Section 37 gives further explanation of certain expressions. In a proceeding for the arrest of Judgment Debtor, if the Decree Holder satisfies the Court that the Judgment Debtor has sufficient means to satisfy the decree, the Court cannot refuse to order arrest, on the ground that there is an alternative remedy of attachment available to the Decree Holder for realization of the decretal amount.

The Code of Civil Procedure, 1908 provides various modes of execution of a decree subject to some conditions and limitations. 

Section 51 of CPC provides the following modes of execution of decrees subject to such conditions and limitations as may be prescribed.

(a) By delivery of any property specifically decreed;

(b) By attachment and sale or by the sale without attachment of any property;

(c) By arrest and detention in prison for such period not exceeding the period;

(d) In such other manner as the nature of the relief granted may require.

Attachment of property is one of the modes of execution applied by the court of justice. An executing court is competent to attach the property if it is situated within the jurisdiction of the court. The place where a judgement debtor carries out his business is not relevant.

Nature, Scope and Objective

Attachment of property is one of the modes of execution of a decree in a civil suit. In a decree, the court may require a person(defendant) to pay an amount to the decree-holder. In cases where the defendant fails to pay the required sum, the court can, in the execution of its decree, attach the movable and immovable property of the defendant and recover the amount which is due by the disposal of these assets. However, there are some assets which cannot be attached to recover the due amount.

This article goes through various modes adopted by courts in executing a decree in a suit with special emphasis on “Attachment of property”. It also examines the various provisions relating to attachment in the Code.

Property which can be attached

Attachment is a legal term which refers to the action of seizing property in anticipation of a favourable ruling for a plaintiff who claims to owed money by the defendant. Decree Holder is Dominus litis(person to whom the suit belongs) and he h.as the right to choose the mode of execution from those available to him. Neither the Court nor the Judgement debtor can force or persuade him to choose a particular mode of execution. This can be referred from the case V. Dharmavenamma v. C. Subrahmanyam Mandadi.

In the process of attachment, the court at the request of the decree-holder designates specific property owned by the debtor to be transferred to the creditor or sold for the benefit of the creditor. Sections 60 to Section 64 and Rules 41-57 of Order 21 of CPC 1908, deals with the matter of attachment of property.

Section 60 CPC,1908 describes the property which can and cannot be attached while execution. Several types of property are liable for attachment and sale in execution of a decree like lands, houses or other buildings, goods, money, banknotes, checks, bills of exchange, hundis, government securities, bonds or other securities etc., and things on which he has a disposing power. There is express mention of particulars which shall not be liable for attachment or sale. The decree as mentioned in this section is only a money decree and it does not include a mortgage decree. Therefore, it is important that the property not only belongs to the judgement-debtor but also he has disposing power on it.

In M. Balarajan vs. M. Narasamma, it was held that the said house of the JUdgement-debtor was liable to be sold for execution of the decree as his contention of agricultural produce was declined. 

Section 61 grants partial exemption to agricultural produce- The state Government may by general or special order published in the Official Gazette declare any piece of agricultural land for the purpose until next harvest season for the due cultivation of land and support of the Judgement-debtor and his family, exempt that property from being attached or sold in execution of the decree.

Section 62 talks about seizure of property in case of dwelling house. No person executing under the code will enter the premises of a dwelling house after sunset and before sunrise. No door of such dwelling house can be broken without the knowledge of the Judgement-debtor. Where a woman resides in such house and she is not allowed to appear in public. The person executing has to give her a notice to be at liberty to withdraw and also reasonable time to do the same. Once she withdraws he has the power to enter the premises.

Section 63 says that where the property attached in execution of decree is going on in several courts then the final decision of the court of higher grade prevails and where the court are at same grades then the court where the case of attachment came first will hold a higher value.

Property which cannot be attached

Some kind of property which cannot be attached and sold in execution of a decree is expressly mentioned in Section 60 of the Code of Civil Procedure. Particulars like wearing apparel, cooking vessels, beds, tools of artisans, books of accounts, any right of personal service, wife and children, stipends and gratuities allowed to pensioners of the Government etc. and many more.

Modes of attachment

Rule 43 to Rule 54 of Order 21 lays down a proper procedure for attachment for movable and immovable property.

Order XXI Rule 54- The modes of procedure for attachment of immovable property initiates or starts with issuing a prohibitory order to the debtor and the public generally, this order will prevent the judgment-debtor from transferring the property to himself or anyone else or charging it. The judgment debtor shall attend the court on the date decided for deciding the terms of the proclamation of sale. Normally for immovable property, two copies of prohibitory orders are sufficient. But where the land is such that the revenue accrued from it is paid to the government, three copies of prohibitory order is prepared. In order to make the attachment lawful, the particulars given in the schedule attached with the order should be matched to be exactly the same with the details given in the schedules of the property given in warrant.

Furthermore, the warrant and the prohibitory orders along with the copies shall be submitted to the Nazir. The Nazir will then endorse the warrant and return it within a defined time before the Court. Where any person delegated by the Nazir completes the above-mentioned work of attachment of property, a separate document stating how the day and hour at which he did such an act has to be properly attached.

Warrant of Attachment of Land.Drum Beating charges- Any customary or usual practice will be carried out for proclamation of the order, and the copy of it will be affixed on a conspicuous part of the property as well as on the court. After this, the reader has to record a note stating the fact that all the required formalities dictated by law to be followed have been complied with. The presiding officer will then take charge of ensuring its truthfulness. The court also has the obligation to make sure that all the requirements or formalities for a legal attachment have complied with in order to prevent any sort of material irregularity as it might cause serious trouble and loss to the parties. The civil courts should also apply proper caution and care in the process of service of warrants of attachment before they take any action concerning the property.

When the property is movable property, which is not agricultural produce, then the attaching officer can seize the property and keep it in his custody. But on the other hand if the property seized is of a perishable nature or the cost of keeping it is likely to exceed its value the attaching officer can sell it immediately. If the attachment officer fails to sell such property by applying every means, he can at the instance of judgment-debtor or decree-holder or anyone having an interest in such property leave it in the custody of a respectable person in the village or place where it has been attached. The custodian will later be can be made liable for the inability to produce such property before the court, or for any loss or damage caused to it.

When the property is agricultural produce, a copy of the warrant of attachment can be affixed on the land on which such crops are grown, or where the produce has been cut or gathered, or on the threshing treading floor or fodder-stack.

Where the property to be attached is a negotiable interest which is not within the custody of a public officer, or deposited in the court, the process of attachment can be carried out through actual seizure.

Precept

The dictionary meaning of the word Precept is “ a general rule intended to regulate behaviour”, a writ or a command.

According to Section 46 Attachment can be made under percept, under which an interim attachment is provided to the decree-holder. The sections provided that the court which passed the order may on the request of the decree-holder, issue a precept to the court within whose jurisdiction the property of the judgement-debtor is lying to be attached to any property specified in the precept.

Thus, a precept aims at preventing alienation of property of the judgement-debtor not located within the jurisdiction of the court which passed the decree.

Garnishee order

Rule 46-A to 46-I of Order 21 outlines the procedure in case of garnishee orders. In a Garnishee order, the decree-holder seeks to reach money or property of the Judgement-debtor in the hands of a third party(another person). Then the third party may be ordered by the court to pay the judgement creditor the debt from him to the judgement-debtor. This type of exchange is valid.

A Garnishee is a person who is the debtor of judgement-debtor. He is that person who is under an obligation to pay his debt to judgement-debtor or to deliver any movable property to him. “Garnishor” is the one in whose favour the decree is passed i.e., decree-holder (judgement- creditor). He is the person who brings such proceedings to reach judgement’s debtor money or property held by a third party. A garnishee order helps the debt due by the debtor of the judgement-debtor to be available to the decree-holder without involving him in the suit.

Determination of attachment

Determination means the status of the attachment at a particular time. In times of cases where the property has been attached but later on the court passes an order dismissing such an execution, the court will direct the status of the attachment, i.e, whether the attachment will continue or discontinue to exist. If then the court fails to give clear direction it is considered implied that the attachment has been ceased.

Order XXI Rules 55-38 explains the circumstances under which the attachment is determined under the Code. 

1. Where the decretal amount is paid or is satisfied;
2. Where the decree is reversed or set aside;
3. Where the court highlights an objection against the attachment and makes an order for releasing the property; 
4. Where after the attachment the application for execution is dismissed;
5. Where the judgment holder withdraws the attachment;
6. Where the decree-holder fails to do what he was required to do under the decree;
7. Where the suit of the plaintiff is dismissed;
8. Where the attachment is ordered before the judgement and the defendant furnishes necessary security;
9. Where there is an agreement or compromise made between the parties;
10. Where the creditor abandons the attachment.

Private alienation of property after attachment

Section 64(1) states that a private alienation of property made after the attachment is void as against the claims enforceable under the attachment. Section 64(2) says clarifies that this section is not applicable in case of transfer of property in pursuance of a contract entered into before the attachment. This provision is inserted in the Code to stop any kind of fraud on decree-holders and to keep the interests of the judgement-creditors who are entitled to be satisfied out of the assets of the judgement-debtor. This provision in a way interferes with the rights of the owner in alienating his property and hence is construed strictly. However, since it is for the benefit of the creditor he can waive this benefit. A private transfer here means a voluntary transfer like sale, lease, gift, mortgage etc. the transfer directed by the court is not included in private transfer. Therefore a private transfer in contravention of Section 64 is not wholly void against all other transactions bit is void only against the claims enforceable under the attachment and only to the extent necessary to meet those claims.

Conclusion

In a civil suit, the decree-holder has the benefit of deciding the mode of execution of a decree passed by the court as against the judgement-debtor. The judgement-creditor can choose from the various provisions mentioned in the Code. He cannot be forced or persuaded to choose a particular mode by the court or any other person. Attachment is the first step in the process of execution and sale of the property will be carried out after the process of attachment. Sometimes, the sale can be proceeded with, without an attachment of the property as well. This does not make the sale irregular in nature. But naturally, the correct procedure to be followed is attachment followed by the sale of the property.

Attachment of Property, being one of the modes of execution of a decree recognises the right of the decree-holder. Various amendments have been carried out in the Code to protect the interest of both Judgement-debtor and judgement-creditor.

References

• http://www.aaptaxlaw.com/code-of-civil-procedure/section-63-64-code-of-civil-procedure-property-attached-execution-decrees-several-courts-private-alienation-property-void-section-63-64-of-cpc-1908-code-of-civil-procedure.html
• http://www.legalserviceindia.com/article/l422-Power-of-Indian-courts-to-issue-Garnishee-Order.html
• https://lawrato.com/indian-kanoon/cpc/section-46
• http://www.aaptaxlaw.com/code-of-civil-procedure/section-61-62-code-of-civil-procedure-partial-exemption-of-agricultural-produce-seizure-of-property-in-dwelling-house-section-61-62-of-cpc-1908-code-of-civil-procedure.html
• https://www.casemine.com/judgement/in/56ea70a5607dba369a6ee500

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 skill.

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This article is written by Sachi Ashok Bhiwgade, B.A.LLB (Hons.) student of Hidayatullah National Law University, Raipur. This article talks about the causes of delay in civil litigation and the impact it has on the public.

Introduction

As the famous dictum says Justice delayed is justice denied. It is imperative that a person gets justice within time. Refusal of timely justice is equal to a denial of justice. In India, the existing justice delivery system is not proper and takes an unnecessarily long time to deal with a case. It is due to the enormous backlog of cases. According to the National Judicial Data Grid (NJDC), there are 3.3 crore cases pending in India of which Uttar Pradesh (61.58 lakhs) accounts for the highest pendency of cases followed by Maharashtra (33.22 lakhs) and West Bengal (17.59 lakhs). Speedy justice is a fundamental right and has also been reiterated by the Apex Court in a number of cases. Inordinate delay is unjustified and violates the fundamental right guaranteed under Article 21 the Constitution of India. The Supreme Court in Hussainara Khatoon v. State of Bihar, Abdul Rahman Antulay v. R S Nayak held that the procedure which does not provide for speedy trial cannot be regarded as just, fair and reasonable. The main cause of delay in civil litigation is the complex procedure of the Civil Procedure Code, 1908 and overabundance of cases for which the present Judge’s strength is totally deficient. The number of pending cases in India is growing at an alarming rate every day and the litigants face weak prospects of their cases being deferred rapidly. The problems of delay in the existing legal system in India have been extensively examined by the Law Commission of India over the years. The Supreme Court in Imtiyaz Ahmad v. State of Uttar Pradesh coordinated the Commission to attempt an inquiry and present its suggestions for the establishment of additional Courts for the expeditious disposal of matters before a Civil Court. The real issue of delay emerges when the time taken for disposal of a case surpasses the normal time taken to dispose of the case. This undermines the efficiency of the judiciary in India. 

Dangers of delay

The most important purpose of the Judiciary is to ensure the protection of the innocent. Delay invites a lot of problems and prolong pendency of cases causes serious repercussions on the public. An effective, fair and expedient trial is the fundamental right of every citizen. The Supreme Court in recent years by invoking Article 21 have tried to give some relief to people in this regard. Some of the dangers which could be caused as a result of the delay in litigation is discussed below: 

• Faith of the common people in judiciary loses: When a judgement arrives too late it contributes to a negative model of the judiciary in the eyes of the common man. Common people’s faith in the judicial system is lost and they find it difficult to inspire confidence again which leads to a serious implication on the justice system of the country.
• Non-appearance of the witness: Many times the witnesses do not come to the Court because they realise that the procedure of the Court is complex, slow, lengthy and time-consuming. In many cases, the witnesses are not available due to death, address not known, transfer, etc 
• Wrongdoer gets the chance to avoid litigation: Delayed justice encourages the culprit to evade the law to the prejudice of the opponent. In the majority of cases, the culprit escapes liability taking advantage of the situation. Sometimes it might also happen that the opponent agrees to the terms of the wrongdoer or loses the case altogether. 
• Remedies made available are of no use: If remedies are made available to the party but the judgment is not delivered within a reasonable time the purpose of justice would be frustrated and it would eventually mean denial of justice. For instance, a simple partition suit taking 15 years’ time to be finally disposed of. 
• Memory of the witness and the Judge fades: As a consequence of the delay in a trial, the memory of the witness fades, he is not able to recollect the correct sequence of the happenings or forgets the event and in certain cases even dies and the important evidence in a case becomes stale and the party having a strong case might even lose. Even the Judge who hears the arguments fail to recall the arguments or remember them in parts or even forget it to the prejudice of the parties.
• Mental and physical agony to the party to the suit: Sometimes, when a case is stretched for a long time it causes mental and physical suffering to the party to the suit. 

Causes of delay

There are numerous reasons responsible for the resolution of cases in a timely manner. Some of the important causes are discussed here:

• Judge-citizen ratio and vacancies of the Judges: The main reason for the delay is the shortage of judges with regard to the population of the country. There are many empty vacancies for judges which is another cause that leads to delay. Recently, the Parliament has passed the Supreme Court (Number of Judges) Amendment Bill, 2019 to increase the number of Judges from 30 to 33 in the Supreme Court. Since 1987, the population of the country has considerably increased and the judge-citizen ratio currently is around 10 million to 1. In 1987, the Law Commission in its report suggested a ratio of 50 million to 1. The sanctioned strength of High Court Judges is 1079 of which 397 seats (around 37%) are vacant around 25 High Courts in India as of December 2019. 
• Deficient number of courts: The Law Commission in its 254th report mentions the establishment of additional courts for speedy disposal of cases. An inadequate number of courts is viewed as a significant problem. Further, the suggestion for the creation of additional courts to the Law Commission was also given in the matter of Imtiyaz Ahmad v. State of U.P by the Supreme Court.
• Frequent adjournments: Despite the fact that the Civil Procedure Code under Order XVII, Rule 1 provides that adjournment cannot be granted more than three times, the courts do not seem to follow this rule in the strict sense. This eventually impedes expedient disposal of civil matter.
• Transfer of judges: when the judges are transferred, the new Judge may at times order for new trial altogether which postpones the procedures. This is another cause which obstructs timely disposal of matters. 
• Huge number of appeals: when a large number of appeals are brought before the Courts they find it difficult to invest their time and energy in the disposal of important matters and as a result have to invest their time in the disposal of these large numbers appeals.
• Non-compliance with the provisions of Section 89: Section 89 provides that if there is a possibility of settling the dispute outside the court, it will coordinate the issue for ADR instead of continuing with the ordinary procedure. This section was added by the amendment Act in order to reduce the delay in civil cases if the matters are likely to be settled outside the court with the consent of the parties by the methods of arbitration, conciliation, Lok Adalat, mediation. However, judges sometimes fail to refer the matter for ADR which is another cause that hampers the timely disposal of cases. Nonadherence to Section 89 causes a delay in civil suits.
• Non-appearance of the parties: Another reason which leads to delay in civil cases is when the date and time are fixed for a matter and the parties do not turn up on the given date and time. Since the respondent knows the probability of the judgment against him most of the time he tries to take as many adjournments as possible to give his counter. Further, the delay is also caused because the parties do not appear for cross-examination. The provision of CPC provides that
• Non-adherence to Order X: The Law Commission in its 77th Report mentioned that it is crucial that the Judge should read the pleadings of the parties in advance and should be aware of the case of each party and only then the issues could be framed properly to make proper use of Order X. Order X refers to the examination of parties by the Court and hence, non-adherence to this rule affects the proceedings.
• Delay in the filing of written statement: The defendant has to file his written statement within 30 days from the date of service of summons as provided under Order VIII of CPC. However, this rule is not adhered to by the Courts properly which is another reason for the delay in civil suits. The fact remains that this provision of the Code which was designed to speed up the process is misused and not followed strictly. 

Increase in litigation

Over the years the numbers show that the cases filed in the Courts are increasing day by day due to which they are getting piled up. Currently, there are 3.5 crore cases pending in the Supreme Court, High Courts, and the Lower Courts resulting in an increased backlog of cases in the Courts. The reality is that the Courts are overwhelmed with cases and even though an increasing number of Courts are being set up, the number of cases that are recorded isn’t adequate to match with the expanded number of cases. In the last decade, the pendency of cases has significantly increased, the primary reason is that more number of cases are filed every year than the number of cases disposed of. Another significant reason why the delays happen is that the provisions of the Code are not properly observed and followed by the Courts. Hence, the growing number of backlog cases and non-compliance with the provisions of the Code have eventually led to an increase in litigation.

Position prior to amendment acts

The Civil Procedure Code dating back to 1908 has been amended several times from the time of its enactment to ensure speedy trial for disposal of cases but it still faced the problem of delay. The Code was substantially amended in the years 1999 and 2002. Earlier there was no provision for out of Court settlement in CPC. A new Section 89 has been inserted to ensure that parties settle disputes amicably by the mechanism of Alternative Dispute Resolution. Another prime factor for delay in trials was that the parties used to avoid the filing of written arguments for a long time and besides the Court also used to condone the delay for filing of written submissions. The Code did not provide for a time-limit for the service of summons to the defendants. Often it happened that the summons issued to the defendant to appear and answer the claim before the Court took a long time. The defendants used to take advantage of this by evading the summons. Also, the Courts had the general power to extend the time without any limit the outcome of which was a delay in disposal of cases and a growing list of pending cases. 

Amendments of 1992 and 2002

The Code of Civil Procedure has been considerably changed in the year 2002. Amendment to the Code was also made earlier in the year 1999 but it was not made viable. Both the amendments were made effective on 1st July 2002. The principal reason for the Amendment to the Code was to guarantee expedient disposal of Civil cases represented under the CPC.

The constitutional validity of these amendments was consequently challenged in the case of Salem Advocate Bar Association of India vs Union of India to which the Court held that the amendments are valid and if any difficulties still arise then it can be set before the committee and the committee would consider the difficulties and make suggestions regarding them. 

Primary features of the amendments

Section 26 Institution of suits

A subsection to his Section was added by the1999 Amendment Act which made it compulsory that every fact referred to in the plaint to be proved by an affidavit. Hence, the plaint now has to be presented along with an affidavit at the institution of the suit. 

Section 27 Summons to the defendant 

Section 27 talks about issuing a summon to the defendant to appear and answer the claim in the suit. Prior to the amendment in 1999, there was no time period for serving a summons on the defendant. The amendment prescribed a time-limit of 30 days. The section now provides that summons has to be issued to the defendant to appear and answer the claim within 30 days from the date of the institution of the suit.

Section 89 Settlement of dispute outside the Court

This Section was not there originally and was added by the amendment of 2002 to include settlement of disputes outside the Court by way of alternative dispute resolution methods in the CPC. Hence, the cases referred to alternative dispute resolution could be settled quickly and the defendants in this way could be spared from the injury of a long time waiting for the disposal of matters in the ordinary run.

Section 100A No further appeal in certain cases

This Section was substituted by a new Section by the Amendment Act of 2002. Section 100A states that there shall be no further appeal in case an appeal has arisen out of an original or appellate decree or order and is heard and decided by a single Judge of the High Court. 

Section 102 – No second Appeal in certain cases 

This section was amended to enlarge the scope of Section 102. It now provides that there will be no second appeal from any decree in cases where the subject matter of the original suit for recovery of money is up to 25,000 rupees. Prior to amendment Section 102 was confined to the suit of which the cognizance can be taken by the Small Causes Court and the amount was limited to 3000 rupees.

Order V – issue and service of summons 

Under this, the summons was to be delivered through a proper officer of the court only. The amendment subsequently provides that the summons may now be delivered by the officer of the court or at the expense of the plaintiff through the courier service approved by the Court. Moreover, the Plaintiff can himself impact the service of summons on an application being made by him to the court. This helps speed up the process and has been done to reduce delay at the previous stage by permitting the use of a courier, email, fax for serving summons which was regarded as illicit until now.

Order VI – Pleadings generally 

Rule 17 and Rule 18 of Order VI were deleted by the Amendment Act of 1999 and was reinstituted by the amendment in 2002. A new provision has been added which provides that a person has to an affidavit in support of his pleadings while verifying the pleadings. Further, once the trial has commenced, no application for amendment will be allowed except when the Court arrives at the conclusion that in spite of due diligence, the party could not have raised the matter prior to the commencement of the trial.

Written Submission 

After the Amendment in 2002, the parties now have to file written submissions within 30 days from the date of summons which can be extended up to 90 days.

Order XVII: Adjournment 

The amendment Act has fixed an upper limit of 3 adjournments in a civil case and could only be granted based upon a written application. 

Proposed reforms

Fast Track Court (FTC) 

Fast Track Courts were established in India in the year 2000. These are special courts set up for speedy disposal of long-pending cases in the lower Courts. This helps speed up the litigation process. The State Government is empowered to establish FTC in consultation with the High Court. The establishment of 1734 FTC’s was suggested to be set up by the 11th Law Commission of India The Commission also allocated 500 crores in this regard. It also recommended that there should be five FTC’s on average in every district with preference to be given to those districts or states with huge pendency of cases. The Judges in the FTC’s are to be appointed on an ad hoc basis. Of the total 1734 FTC’s, only 1562 were functional by the year 2005 and 1192 by 2011. 

Lok Adalat

Also known as the people’s court is one of the Alternative Dispute Resolution methods in India. Lok Adalats are established under the Legal Services Authority Act, 1987 to settle long-pending cases before any Court or cases which are at the pre-litigation stage. The award passed under the Act is considered to be a decree of the Civil Court. The parties if not satisfied with the award of the Lok Adalat are free to initiate the proceeding in the Civil Court having appropriate jurisdiction. Since its inception around 15.14 lakh Lok Adalats have been organized in India and so far more than 8.25 crores have been settled through Lok Adalat. 

Mobile Lok Adalats: Mobile Lok Adalats are organized across the nation. These Courts travel to various parts of the country from one place to another to resolve disputes through this mechanism. 

Commercial Courts 

Commercial Courts deal with commercial disputes which relate to any alleged dispute relating to the invoice, price, late delivery, etc. The commercial courts were established under the Commercial Courts Act, 2015. The Act provides for the establishment of the commercial court and division in the High Court to adjudge commercial disputes to minimize the load on the Civil Courts 

Filling up of vacancies of the judges and increase in the number of courts

Since there are many vacant posts of judges in the courts there is an urgent need to fill up the vacancies so as to reduce the burden of the Court in disposing of the cases. The existing number of courts is not adequate and increased number of judges would require more courtrooms. 

Adherence to Section 89 of CPC 

Section 89 of the Civil Procedure Code relating to out of court settlement should be strictly complied with. There is no good reason to continue a case in the court where it is plausible to be settled outside the Court. The Courts should encourage the parties to settle a matter by amicable means rather than in Court which will help in reducing the workload of the Court and also in maintaining the relation of parties as well. 

Reduction of delay in filing of written statements 

The court should strictly adhere to Order VIII of CPC in order to save the time of the Court. 

Unnecessary adjournment 

Unnecessary and frequent adjournments should be avoided and there should be a check on these adjournments. The rules of Order XVII of CPC should be followed properly.

Conclusion

Every person has a right to speedy trial and refusal to timely justice results in no justice. Pendency of cases for a long time defeats the whole idea of justice and loses people’s confidence in the judiciary. With the number of cases currently pending in India, there are certain cases that are pending in the Courts for more than 10 or maybe 20 years. The changes brought by the Amendments in 1999 and 2002 to the CPC are basic in nature yet have sweeping results as far as working of Civil Courts in the nation is concerned if they are properly followed. How long should it take to dispose of a case depends upon the facts and circumstances of each case. It is not suggested that there should be justice quickly but without observing the procedures of the Code and hastily disposing of the case by the Judges without considering the material evidence and due hearing in every case. 

References

• https://www.businesstoday.in/current/economy-politics/3-3-crore-cases-pending-indian-courts-pendency-figure-highest-cji-dipak-misra/story/279664.html
• http://lawcommissionofindia.nic.in/reports/report245.pdf
• https://timesofindia.indiatimes.com/blogs/
• http://prsindia.org/theprsblog/examining-pendency-cases-judiciary
• https://www.clearias.com/pending-cases-in-indian-courts/
• https://doj.gov.in/appointment-of-judges/vacancy-positions
• https://timesofindia.indiatimes.com/topic/fast-track-courts
• https://nalsa.gov.in/lok-adalat
• https://web.archive.org/web/20180128035603/http://chddistrictcourts.gov.in/THE%20CODE%20OF%20CIVIL%20PROCEDURE.pdf

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 skill.

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This article is written by Kaustubh Srivastava, a first-year law student at Symbiosis Law school, NOIDA. The following article is written during my internship at iPleaders.

Introduction

This article addresses the evidence of a dying declaration and critically analyses its aspects regarding the rules of its admissibility in a court of law. The rule of admissibility of evidence in Indian courts is governed by The Indian Evidence Act, 1872, which is referred to throughout the article for the purpose of citing relevant provisions applicable for determining the admissibility of a dying declaration.

A dying declaration is a piece of evidence relevant in criminal proceedings as it refers to the cause of death of a person, therefore while dealing with its admissibility, it is imperative to make sure that there is surety beyond any doubt while convicting the accused or else it may be an act of injustice on behalf of the court.

Expressing particularly about the term “dying declaration”, though does not have an exclusive definition, it is a legal concept that refers to an oral or written statement given by a person at the point of death, which concerns the cause of his or her death. Knowing that any evidence in the court is to be cross-examinable to satisfy the court, it must be mentioned that the dying declaration stands as an exception to the legal rule of admissibility of oral evidence as given under the Indian Evidence Act, 1872.

Legal provision of Dying Declaration

The legal provision to be mentioned primarily is the one regarding oral evidence, i.e. Section 60 of the Indian Evidence Act, 1872. It states that any evidence perceived by the senses of a person must be presented before the court by the person himself. It further states that these will be considered the evidence only when it is facts and not interpretation of a story by the witness. Knowing that a dying person cannot represent himself in court, the rule of admissibility of a dying declaration stands as an exception to the aforesaid rule of oral evidence.

Section 32 of The Indian Evidence Act, 1872

The admissibility of dying declaration has been explained under Section 32 (1) of the Indian Evidence Act, 1872 which states that such a statement can be proved when it is made by a person as to the cause of his death, or as to any of the circumstances of the transaction which resulted in his death. The statement will be relevant in every case or proceeding in which the cause of that person’s death comes into question. It is said that a man will not meet his maker with lying on his mouth (Nemo mariturus presumuntur mentri). In our Indian Law, it is a fact that is believed that a ‘dying man can never lie’ or ‘truth sits upon the lips of a dying man’.

Admissibility of Dying Declaration

The criminal examination under the law is an aspect that cannot be tampered with or compromised. One major reason is so that the principle of ‘Ubi Jus Ibi Remedium’ is upheld. The legal maxim provides equity to all and means that for every wrong there is a remedy. Keeping in mind the Indian Evidence Act, 1872, the hearsay evidence are regarded as inadmissible in a criminal trial as they have no factual stand in the case. These would be considered as hearsay and not oral evidence and therefore, cannot lead to valid admissibility of a declaration of the accused as a criminal.

Rule of Res Gestae

Then again, there is a rule called ‘Res Gestae’ which is a Latin word meaning ‘things are done’. It’s a rule of law of evidence and stands as an exception to the hearsay rule, that hearsay is not admissible evidence in a court of law. It is a spontaneous declaration made by the victim post an event takes place and before the mind has an opportunity to cook up a false story. This is a concept which, as a matter of principle, is employed in the English system of administration of criminal justice known as “res gestae”.

The principle has been explained by Lord Normand in Teper v. Reginam (1952):

“Nevertheless, the rule (Hearsay) admits of certain carefully safeguarded and limited exceptions, one of which is that the words may be proved when they form part of the res gestae… It appears to rest ultimately on two propositions- that human utterance is both a fact and a means of communication, and that human action may be so interwoven with words that the significance of the action cannot be understood without the correlative words and the dissociation of the words from the action would impede the discovery of truth.”

Another significant decision in relation to the Res Gestae exception is that of the Privy Council in Ratten v. The Queen (1971), which talked of the admissibility of the statement of a telephone operator who received a call from the deceased minutes before she was allegedly murdered by her husband. To this, the Council declared the statement as original evidence of ‘verbal facts’, not as hearsay evidence, as the object of admitting the statement was not to establish the truth of the statement made, but merely to establish the fact that it was made.

Observations of The Privy Council

“Words spoken are facts just as much as any other action by any human being. If the speaking of the words is a relevant fact, a witness may give evidence that they were spoken. A question of hearsay arises only when the words that are spoken have relied upon a ‘testimony’, i.e., as established by some fact narrated by the words”. Therefore, as per the observations made by the Privy Council, the rule Res Gestae applies only when one is able to determine that the statement provided by the deceased is spontaneous and the fact that it forms a factual flow of relevant information without any falsification.

Proximity with Cause and Death

In several cases, the Supreme Court has settled the legal proposition that there has been a proximate relationship between the statement and the circumstance of death. For instance, in the case of Sharad Bhirdichand Sarda v. the State of Maharashtra (supra) (1984), the declarant i.e. a married woman had been speaking to her parents and other relatives and also writing to them expressing the danger to her life. She lost her life three or four months after that. The Court held that the statement and time of death were not too remote in time from the point of death. In this case, the Court also held that Section 32 (1) of the Indian Evidence Act, 1872 applies to cases of suicide also.

Similarly, in the case of Sharad Bhirdichand Sarda v. the State of Maharashtra, under Indian law, the court stated that it is not necessary that the declarant should be under any expectation of death i.e. apprehension of death is not necessary nor that statement must be made to a magistrate. If the declarant has died and the given statements explain the circumstances causing his death, then the statement will be relevant even if no cause of death had been present at the time of the making of the statement, and will be admissible as dying declaration.

Need for Corroborative Evidence

Knowing that the Supreme Court has settled the legal proposition that there needs to be a proximate relationship between the statement and the circumstance of death. It is evident that the fact that there is a relation of the evidence with death, is a necessary factor to be analysed as per the guidelines of the court.

Then again, keeping in mind the above factors, we still need to consider cases like the case of Ram Bihari Yadav v. State of Bihar (1998), where the court recognized dying declaration as a substantial piece of evidence while opining that though the dying declaration is indirect evidence which is a species of hearsay evidence, yet it is an exception to the rule against admissibility of hearsay evidence. Here the Court stated that it is substantive evidence and like any other substantive evidence requires no corroboration for forming the basis of conviction of an accused. This says that if there is death and the statement evidently point at the events and the reason, then the process of cross-examination is unnecessary, which clearly goes in contradiction to the previous judgements where the need for proper corroboration and interrogation is mentioned as a must.

Meaning that this statement cannot have a specific format and a rigid rule to be admissible. It has to be evaluated from case to case keeping in mind the contents and evidence and then overall be evaluated to make it a just judgement.

How to record a Dying Declaration?

A dying declaration can be recorded in three forms:

1. Written
2. Oral
3. Actions (implied through signs and gestures)

Oral and Written Statements

Under Section 32, oral and written statements of a person before death are said to be dying declaration if they signify the cause of his/her death and also if it is clear through the statements that the victim had justified the amount of time to see the accused and properly identify him/her. For example, a statement of F.I.R made by a person who got hit by lathi will be considered as an oral declaration under Section 32.

Statements in the Form of Gestures and Signs

In Nirbhaya case 2012, a bench of Justice Dipak Misra, R Banumathi and Ashok Bhushan observed that the dying declaration should not necessarily be made by words or in writing and it could be through gestures as well. Not just words but even gestures can be made admissible in a court of law.

Gestures and signs can shape dying declaration in any event, when the victim doesn’t express a word. The Apex court expressed that the evidentiary estimation of the gestures and signs will have to rely upon specific variables like who recorded the statement, what are the signs, what were the inquiries posed, was the inquiries posed were basic or not and so on. Gestures can be hard to decipher yet this doesn’t imply that the accused can roam freely after causing harm to somebody. In the case of Queen-Empress v. Abdullah (1885), the throat of the deceased girl was cut and because of that, she was unable to speak. Hence, she indicated the name of the accused with the help of signs and though hand gestures. Therefore, hand gestures and signs were admissible as a dying declaration.

Factors of Admissibility of a Dying Declaration?

Realizing that evidence is of utmost importance while determining a criminal suit, there arises a need to analyse the grounds on which these pieces of evidence are admissible in court. Similarly, there are factors that dictate the admissibility of a dying declaration. The relevant factors in my views, the factors that should be kept in mind to make a dying declaration valid, are listed below.

Who can Record a Dying Declaration? 

A judicial magistrate is required to record the dying declaration statement by the victim. This is done after the evaluation by the doctor that the victim is in a state of mind to be giving the statement. The court has further notified that language is not a barrier to recording the dying declaration and its admissibility. It is said that proper care is to be taken when a statement, for instance, in Urdu is recorded in English, then every statement translated is to be carefully interpreted and properly justified.

Need for a Medical Certificate

Fitness of the victim should be examined while recording the statement as the victim could be giving stories instead of acts due to the presence of drugs. It is the judicial magistrate’s job to satisfy himself that the victim is in a fit condition to give the statement. This is done by obtaining a certificate from the doctors examining the victim. In Kushal Rao v State of Bombay (1958), The Supreme Court of India states that the court needs to be satisfied with the victim’s mental fitness to make the statement at the given moment and the fact that the victim had the opportunity to observe and identify the accused. The victim should not be making the statement under any influence as under such a state it cannot be determined if the victim’s narrative is fact or fiction.

In the Absence of a Medical Certificate

Then again, in the absence of a doctor or the medical certification from a doctor the judicial magistrate can record the statement without acquiring the medical certificate, but it is then the magistrate’s responsibility to justify in court why he found in indivisible to have a doctor’s presence. The only time that the medical certificate is given less importance, or its omission is irrelevant is when the case is not solely dependent on the dying declaration.

Format of the Statement

Question answer format is to be maintained. If the declaration isn’t in this format then it cannot be discarded for that reason alone. This is because a narrative statement is more like the incident that is perceived by the victim and therefore cannot be taken as the sole reason for accusing the person. In Kushal Rao v. the State of Bombay (1958), the supreme court clearly summarized its proposition that “a dying declaration recorded by the Magistrate in question-answer form stands on a much higher footing”, meaning that a declaration not in such a format is not deemed inadmissible, rather any statement recorded in such a manner is of higher importance as it has comparatively less scope for manipulation of facts.

Admissibility of an Incomplete Statement

Incompletion of statement is when the deceased is unable to complete the statement (for example, the motive for the crime) then the declaration is inadmissible. Then again, if the deceased has given a full narrative story but was unable to answer the last formal questions regarding what more he wanted to say, then the court says that such a declaration can be relied upon. To put it in easier terms, any statement where the victim dies before or is unable to tell the motive for death or other relevant factors which are crucial in determining whether is accused is guilty or not, such a statement cannot be accepted. At the same time, if the deceased has covered all crucial aspects but is unable to answer the last formal question, such a statement is admissible and can be relied upon.

Critical Aspect

Being fully aware of the fact that the concept of dying declaration is an exception to the rule of oral evidence stated in Chapter IV of The Indian Evidence Act, 1872, one must not overlook what the actual provision states and only focus on the exception. Under Section 60 of the Indian evidence act 1872, it is clearly mentioned that in case of any oral evidence, the person who admits having heard or having seen it or may have perceived it by any other sense is required to come and present the same in the court, i.e. it is considered his/her evidence in court. In simple terms, any oral evidence is admissible when presented in the court and may be examined by the court, as the case may require it to be. Dying declaration on the other hand, as we have already covered earlier, can not be examined in court as the person who gave the declaration is not present to testify for his/her stance, hence it is hearsay.

Further covering aspects of admissibility of dying declaration, we know that the actual rule, i.e. Section 60, states that oral evidence must be direct. A dying declaration may or may not be direct as the person who is giving the declaration and the person recording it needs the exact facts, no stories, but the victim might not even be in a state to finish the statement of facts or dictate the order of facts, let alone provide justification for his testimony (dying declaration). Only by analysing these basic requirements stated under admissibility of oral evidence, we can easily identify the fundamental flaws in having an absolute rule for admissibility.

Moreover, in The Constitution of India and the principle of Adversarial Litigation and Criminal Law, it is said that 99 criminals can be foregone but not a single innocent should be convicted. On this ground, the proper evaluation of admissibility is a must and it should be determined that the accused is guilty beyond a reasonable doubt, as this is in case of death which is not a minor offence.

The fact that the statement cannot be cross-examined is a critical aspect of my views as then there is no means of testing the truth behind the statement. Hence, I feel that unless the declaration has a proper connection with the reason of murder and other evidence also hint towards the likely hood of the statement being true, only then should the statement be admissible and be considered as evidence and not hearsay.

Conclusion

A dying declaration is a piece of important evidence which should be carefully recorded as it is one of the crucial statements admissible in court before the death of the victim stating the reason and circumstances leading to the death of the victim. It is also necessary to ensure that it is complete and should not be tampered with.

Furthermore, the Supreme Court of India said that the veracity of the dying declaration has to be taken into account to make sure there is no inconsistency, as this is a statement that cannot be cross-examined and hence, it is to be carefully examined to be admissible in the court of law.

Similarly, in my opinion, as stated before, a dying declaration should be admissible exclusively after proper evaluation and there should be no set rule for admissibility, it should firmly be as per the facts of the case. If such a statement is to be given a set standard format then many guilty may run free, more than that, an innocent may be convicted which goes against the fact that law is made for the better good of the individual and should have just execution.

References

• www.delhihighcourt.nic.in
• (1984) 4 SCC 116
• Kulwant Singh v. State of Punjab, AIR 2004 SC 2874
• Bhagirath v. the State of Haryana, (1977) 1 SCC 481
• Sharad Bhirdichand Sarda v. State of Maharashtra (supra)
• AIR 1998 SC 1850
• Kushal Rao vs The State of Bombay on 25 September 1958 AIR 22, 1958 SCR 552
• The Evidence Act, 1872 (Bare Act)
• The Constitution of India (Bare Act)
• Jstore – Adversarial and Inquisitorial model of law (Article)

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 skill.

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This article is written by Isha, a second-year student at Bharti Vidyapeeth, New Law College Pune. This article talks regarding Offences relating to Document. 

Introduction

To understand the concept of an offence relating to documents, we need to know what is a document as well as a forgery.

According to Section 3 of the Indian Evidence Act,1872 defines document as, “Document” means any matter expressed or described upon any substance by means of letters, figures or marks, or by more than one of those means, intended to be used, or which may be used, for the purpose of recording that matter.”

Forgery is defined under Section 463 of Indian Penal Code, Whosoever makes any fake document or incorrect electronic record or part of a document with an intention to cause damage or injury, to the public or to any person, or to support any claim or title, or to cause any person to share with property, or to enter into any express or implied contract, or with purpose to commit fraud or that fraud may be accomplished, commits forgery.

Forgery hence can be described as a means to achieve an end- the end is an instance of action or scheme fabricated to mislead someone into believing a lie or inaccuracy. 

Concept of false Document 

According to Section 463 of IPC, A person is declared to make a false document when;

Firstly- who dishonestly or fraudulently makes sign, seal or performs a document or part of a document makes any mark indicating the execution of a document, with the intention of causing it to be believed that such document or part of a document was made signed sealed or executed by the authority of a person by whom authority was not made, signed at a time at which he knows that it was not made sealed or executed; or

Secondly- who without legal authority dishonestly or fraudulently by withdrawing or contrarily reconstructs a document in any material part thereof after it has been made himself or by any person whether such person be alive or dead at the time of such alteration; or 

Thirdly- whoever dishonestly or fraudulently causes any person to seal, sign, execute or reconstruct a document knowing that such person by reason of unsoundness of mind or intoxication cannot by reason of deceit practised upon him, he does not know the content of the document or the nature of the alteration. 

Illustrations:

1. X has a letter of credit upon B for rupees 10,000 written by Z. X, in order to defraud B, adds a cipher to the 10,000 and makes the sum 100000 intending that it may be delivered by B that Z so wrote the letter. A has committed forgery.
2. A picks up a cheque on a banker signed by Himanshu, payable to bearer but without any sum having been inserted in the cheque. A fraudulently fills up the cheque by inserting the sum of ten thousand rupees. A commits forgery.

What Constitutes Forgery?

The very basis of the offence is the making of the false documents with the criminal intent to cause damage to any person. The making of a false document with the criminal intent to cause damage to any person. The making of a false document by itself is not punishable in The Indian Penal Court (IPC) under the provision of Chapter XVIII dealing with the offences related to document.

Forgery implies false document, signature or other imitation of the object of utility used with the intent to deceive another. Those who commit forgery are usually charged with the crime of fraud. Objects of the forgery include contracts, identification cards, and legal certificates. The most common form of forgery includes signing someone else’s name to cheque. Objects, data, and documents can also be forged. Legal contracts, historical paper, art objects, certificates, licenses, identification cards can also be forged. Consumer goods and Currency can also be forged but this crime is usually referred to as counterfeiting.

The basic elements of forgery include:

• Forgery requires Deception

In most of the jurisdiction, the crime of forgery is not imposed unless it is done with the intent to commit fraud larceny. For example, the work of art can be replicated or copied without any crime being committed unless someone attempted to sell or represent the original copies. In such cases, the act would be considered an illegal forgery. 

• Creation of fake document 

Forgery also includes the creation of fraudulent or fake documents. For instance, it can involve photocopying of the person’s signature and then artificially placing it on a document without their knowledge or consent. Moreover, On the grand scale forgery occurs in the field of art and literature.

• Forgery as Identity Theft

Identity theft is a crime wherein the defendant unjustly acquires and uses another’s person personal data in some way that involves fraud or deception typically for budgetary gain.

Initially, states have treated identity theft as deceptive imitation forgery or as theft by deception.

• The intention of the forger

Section 468 pertains only to the cases where forgery is for the purpose of cheating. Forgery has been explained before as concerning the presence of one or other of the two elements of dishonesty or fraud.

Proof: the prosecution has to prove that the:

• Accused committed forgery.
• That he did so with an intention that the document forged shall be used for the purpose of cheating. 

Forgery Law in India

Section 465 of the Indian Penal Code deals with the penalty for forgery in India. As per this Section, the offence is punishable by a jail cycle elongating up to 2 years or fine or both. It is a non-cognizable, bailable offence in India that is triable by a Magistrate of the first class. Nevertheless, this is not a compoundable offence.

Scope of Sections 463, 464 And 465 of Indian Penal Code 1860

According to Section 463 of the Indian Penal Code states that whoever misuses any paper format, computer records, important documents, identity cards or etc publicly or personally or infringing any contract shall be punishable for 2 years. It is applicable to all the citizens of India irrespective of the place or territory. The word “offence” covers every act committed outside India which, if committed in India, would be guilty under this Code. For instance, a person X who is a citizen of India commits a murder in Uganda. He can be tried and convicted of murder in any place in India in any situation which he may be found for further reference do refer to the case S. L. Goswami vs High Court Of Madhya Pradesh.

Section 464 states how the forgery of the documents occurs. Under section 464 IPC. It makes it explicit that only the one who makes a false document can be held liable under the aforesaid provision. It must be made clear in mind that, where there exists no doubtfulness, there lies no scope for understanding. As referred in the case Sheila Sebastian vs R.Jawaharaj, where Making an invalid document-A person is said to make a fake or invalid document or false electronic record First.—Who fraudulently or dishonestly constitutes;

• makes, signs, ties or administers a document or part of a document;
• makes or communicates any electronic record or part of any electronic record;
• affixes any (electronic stamp) on any electronic report;
• makes any image indicating the execution of a document or the authenticity of the electronic signature;

with the intention of making it to be believed that such document or portion of document, electronic record or electronic signature was made, signed, sealed, accomplished, transmitted or affixed by or by the authorization of a person by whom or by whose authority he knows that it was not made, signed, sealed, executed or affixed.

Punishment for Forgery

Section 465 of the Indian Penal Code describes Punishment for forgery. According to this section, Whoever commits forgery shall be punished with imprisonment of jail term either description for a span which may extend to two years or with the penalty, or with both. Under IPC it is a non-cognizable offence. If the forgery is of a promissory note of the Central Government then it is Cognizable.

In the case of Ram Narain Poply v. Central Bureau of Investigation, the court stated that the term forgery as used in the statute is used in its ordinary and popular acceptance. In order to constitute forgery, the first essential is that the accused should have made a false document. The false document must be made with an intention to cause harm or injury to the public or to any class of society or to any community.

Making a False Document or False Electronic Record

Under section 464 defines False document, when a document needs to be a false document, it is not mandatory that it must be a comprehensive document. Nevertheless, if a document, say a deed of sale is exposed before any signature, in part or in full, is put thereon, then, the deed will not be treated as a false document in as much as the offence will still remain at the stage of formation, but if the accused is caught, while signing such a deed, the offender can be declared to have been caught, when the offence had gone exceeding the stage of preparation and had already entered into the zone of attempt to commit the offence of forgery. Therefore, before the practice of the signing of deed originates, the ‘making’ of the false document will prevail under process and the crime will prevail within the stage of ‘preparation’. It will be just like forming a duplicate key to a lock for committing theft or procuring of poison for committing murder. For merely making such a key, even if the planned offence is theft, one cannot be held to have attempted to commit the offence of robbery. Similarly, procuring poison, in itself, will not establish the offence of attempt to commit murder, though the objective might have been to serve poison to a specific person. The law punishes a man not for sinful intention, but for the overt act done.

Three Forms of Making False Documents 

For the purpose of the subject of identification and comparison of signature and writing, forgery may be classified as;

1. Simulated or copied forgery: In this variety of forgery, the forger chooses a model signature or writing and tries to replicate the design of letters and other broad features depending upon his ability, practice, and competency. Such an attempt in most cases ends in a crude forgery, however, in some cases, the forger is competent enough to make a simulation which at first sight may appear to be accurate and may be passed as real by those who compare only the general outline of letters and gives little attention to the line quality and other minute details. 
2. Traced forgery: This means reproducing the exact copy of the original signature. Traced forgery is accomplished by using carbon paper, indented tracing, tracing paper, transmitted light or scanned image.
3. Forgery by memory: It belongs to the signature or writing prepared of the material by the mental impressions of forms and letters of signatures or writings of the actual writer without examining any model or writing at the time of forgery.
4. Forgery by impersonation: When a person nearly writes or signs the name of another person in his own handwriting in a normal manner rather than expressing himself to be that person with some motive involved.

Making False Documents—Some Illustrations

Making a false document is a serious matter. Someone convicted of this act could face heavy penalties or years of imprisonment, probably both. There are many techniques to falsify documents. For instance, if you respond to questions on a form by providing false data or use company letterhead without authorization, you could run afoul of the law. Forging a signature comes supporting this category as does the act of altering, covering or destroying records.

The popularity of Real Estate Forgery 

A complete example of document falsification is real estate forgery, which appears to be on the increase. This is a project whereby a homeowner’s signature is forged on a property deed so that the forger can challenge title to the property being transferred. The forger uses forged identification to get the deed notarized. Once that is done, the scammer gets the deed registered and practices it to take out a mortgage loan, then disappears with the funds. In due course, the bank begins foreclosure proceedings against the real homeowner, who, of course, had no idea a scam had occurred.

Altering of Facts

The act of altering is an instance of document falsification, which is a white-collar crime. More often, the struggle is quite sophisticated, but to a qualified investigator, this kind of illegal activity is often easy to detect. Sometimes, it is found that report entries do not match properly or that the reports have been completed by the same person every day of the year, implying that this flatware individual never demands a vacation or a weekend off. The investigator might see that the handwriting is always the same and that the same pen is always used in performing the records, which leads to the assumption that the documents were completed in organized batches.

Alteration of Birth Dates

Alteration in the date of birth can be executed by Government servant only within five years of his entry into Government service, with the sanction of a Ministry or Department of the Central Government, etc. subject to the subsequent conditions;

1. Prayer in this regard is made within five years of his entry into government service;
2. It is clearly ascertained that a genuine bonafide mistake has occurred; and
3. The date of birth so modified would not make him incompetent to appear in any school or University or Union Public Service Commission examination in which he had appeared, or for entry into Government service on the date on which he first appeared at such examination or on the date on which he entered Government service.

In the case of Union of India vs, Harnam Singh judgment held by the Supreme Court observed that in regard to government servants who had joined government service prior to 1979 the revision of date of birth should be made within a period of five years from 1979. The Supreme court also held that “Inordinate and unexplained delay or laches on the part of the respondent to seek the necessary correction would, in any case, have justified the refusal of relief to him.” Even if the respondent had sought correction on the date of birth within five years after 1979, the earlier delay would not have non-suited him but he did not seek correction of the date of birth during the period of five years after the incorporation of note 5 to Fundamental Rule 56 in 1979 either. His inaction for all this period of about thirty-five years from the date of joining service, therefore, precludes him from showing that the entry of his date of birth in service record was not correct”. 

Forged Document Comprehends Creating a New Document 

Legal provisions concerning forming a fake document under section 464 of Indian Penal Code, 1860.

Making a false document:

Section 464 of the Indian Penal Code provides that: ‘A person is said to make a false document or false electronic record’ who-

Firstly

• Dishonestly or fraudulently Composes, signs, seals or executes a document or part of a document;
• Makes or dispatches any electronic record or part of any electronic record;
• Affixes any digital signature on any electronic record;
• Makes any mark indicating the accomplishment of a document or the authenticity of the digital signature;
• With the intention of causing it to be understood that such document or part of document, electronic record or digital signature was made, signed, sealed, executed, transferred or affixed by or by the authority of a person by whom or by whose authority he knows that it was not made, signed, sealed, performed or affixed; or

Secondly

Who without statutory authority, dishonestly or fraudulently, by cancellation or otherwise, alters a document or an electronic record in any material part thereof, after it has been made, accomplished with digital signature either by himself or by any other persons, whether such person be alive or dead at the time of such modification; or

Thirdly

Who dishonestly or fraudulently causes any person to sign, seal, execute or alter a document or an electronic record or to attach his digital signature on any electronic record knowing that such person by reason of unsoundness of mind or intoxication cannot, or that by cause of deception practised upon him, he does not know the contents of the document or electronic record or the nature of the alteration”.

For instance: X without B’s authority writes a letter and signs it in B’s name certifying to X’s character, aiming to obtain employment under Z. X has committed forgery, inasmuch as he intended to deceive Z by the forged certificate, and thereby to induce Z to enter into an express or implied contract for service.

Explanation: A man’s signature of his own name might amount to forgery.

‘Making’ also covers making documents through mechanical means. It is essential that engineers document the design process so that they can communicate it to others and ensure no information is lost. It is also critical for reliable decision-makers to approve the project and move it forward. The information can also help prove originality in a patent application or, in the case of a lawsuit, show that professional design procedures were followed.

Additions and Alterations to Documents 

Under these circumstances, the document in issue has been challenged due to some alteration of the document’s text by the addition or deletion of text, numerals, dates, signatures or agreements. For instance, the date or amount of a business agreement or contract has been altered to fraudulently obtain additional property, money or altering the amount of a cheque for financial gain. Drexler Document Laboratory, LLC used state-of-the-art instrumentation to detect additions and deletions. The tests are non-destructive and consequences of illumination reactions are documented. It is noted that this examination can solely be performed on the “original” document. In addition, experiments of this type, because of the non-portability of the equipment demanded, must be conducted in the laboratory.

When Attestation would be Forgery

An attestation is a confirmation by a witness that an instrument has been performed in his or her presence according to the formalities expected by law. It is not the same as an Acknowledgment, a statement by the creator of a document that establishes its authenticity. For proving a forgery of Attestation the following cases are to be referred Motisinh Gambhirsinh vs the State, herein Supreme Court in the judgment held that before an attestation can amount to forgery, one of the main essential elements is that it must be made or signed by the person whom it does not indicate to be made or signed. Furthermore, State Of Himachal Pradesh vs Singhi Ram, in this case the Board of School Education issued a forged mark sheet to respondent No. 2 only on the command of the respondent. 

Ante-dating a Document

It is also known as “backdate”. An antedate is a date registered on a legal contract or cheque that is preceding the actual date of occurrence. The act of antedating is seen in the case, more precisely refers to the case law Mangal Singh vs the State. 

Execution without Authority

Executing without Authority begins by putting the concept of influence within the larger context of environmental, organizational, network, relational and interpersonal factors. It breaks weight down into a series of skills, moving beyond the assumption that influence is simply the product of personal charm, and instead, gives participants the tools needed to negotiate the political landscape of organizations. Participants study the foundation of effective leadership and how to apply a powerful methodology for resolving performance challenges in environments where power cannot be exerted by one individual over another. They also discover how to build networks by overcoming internal barriers and creating new contacts. Finally, execution without authority provides the necessary tools to be more influential on both a personal and more strategic level.

Whenever we face that troublesome experience “You are not authorized to use transaction XYZ” in an SAP system, it usually blocks or workflows. Quite usually we are developers in need of some tool that the SAP Basis admin has unknowingly blocked for us.

Fraudulent Alteration

Fraudulent Alteration involves the material alteration to a Telefacsimile for a fraudulent purpose by a person other than the person who signed and adjusted the instrument.

Forging a Document by Affixing Own Signature

This is an important clarification to Section 464, ‘A man’s signature of his own name may amount to forgery’ which can be explained through the given illustration.

Explanation

• X signs his own name to a bill of exchange aiming that it may be believed the bill was drawn by another person of the same name. X has committed forgery.

• Z picks up a bill of exchange payable to the order of another person of the same name. Z endorses the bill in his own name, intending to make it believe that it was endorsed by the person to whose order it was payable. Z has committed the offence of forgery.

From both the preceding illustrations, it is quite clear that a man’s signature of his own name may also amount to forgery.

Intention Not Essential Component 

Fraud is a deliberate act that results in a material misstatement in financial statements that are the subject of an audit. Two types of misstatements are related to the auditor’s opinion of fraud—misstatements arising from fraudulent financial reporting and misstatements arising from misappropriation of assets.

Fraudulent financial reporting may be accomplished by the following:

• Manipulation, falsification, or alteration of accounting records or supporting documents from which financial statements are prepared.
• Misrepresentation in or intentional omission from the financial statements of events, transactions, or other significant data.
• Intentional misapplication of accounting principles correlating to amounts, classification, method of presentation, or disclosure.

Some individuals possess an attitude, character, or set of ethical values that enable them to deliberately and intentionally commit a dishonest act. However, even otherwise honest individuals can commit fraud in an environment that imposes adequate pressure on them. The higher the incentive or pressure, the more likely an individual will be able to justify the acceptability of committing fraud.

Forgery: Intention, Dishonesty and Fraud Compared 

Falsification of documents, forgery, and fraud are classified as white color crime offences. To establish successful prosecution intention, dishonesty and fraud the prosecutor and claimant must prove the purpose i.e intention and conduct of the accused person and the presumption of intention that fall under a corresponding statutory provision. Consequently, forgery and falsification of documents are the mechanisms to commit fraud. Fraud can be defined as certain activities such as theft, corruption, conspiracy, cash laundering, bribery and corruption. Fraud basically involves using a trick to dishonestly make a personal gain for oneself and create a loss for another. The scope of this section develop two offences i.e. [1] falsifying of accounts and [2] making or abetting the making of false entry, or altering, or abetting the omission or alteration of any entry. These two sections had been read separately and autonomously. However, in forgery cases, the court approach is varied. The presumption of possession has been used in order to determine that there are intention and knowledge over the matter. Three conditions commonly are present when fraud occurs. First, the management or other representatives have an incentive or are under pressure, which provides a reason to commit fraud. Second, conditions exist- for example, the inadequacy of controls, ineffective controls, or the ability of management to revoke controls- that provide an opportunity for a fraud to be executed. Third, those involved are able to reconcile committing a fraudulent act. 

Aggravated Forms of Forgery

The aggravated forms of forgery are:

1. Forgery of a record in a court of justice or register of birth, baptism, marriage or burial or a certificate of an authority to institute or defend a suit or a power of attorney; Sec. 466.
2. Forgery of a valuable security or will: Sec 467.

Defences in a Charge of Forgery

The following are the defences available to a person charged with forgery:

1. That he did not make the false document or a part of it, or
2. That the making of the document was not with the dishonest intent:

• To cause damage or injury to the public or any particular person, 
• To support any claim or title, or
• To cause any person to part with property,
• Or to enter into any express or implied contract, or
• To commit fraud or that fraud may be committed.

3. That the accused had the complaint’s authority to sign the complaint’s name.

Forgery of a Record of Court or Public Register

Legal provisions considering for forgery of record of Court, Public register etc. come under section 466 of Indian Penal Code, 1860.

For forgery of record of Court, Public register

“Whoever forges a document or an electronic record, purporting to be a record or proceeding of or in a Court of Justice, or a register of birth, baptism, marriage or burial, or a register kept by a public servant as such, or a certificate or document purporting to be made by a public servant in his official capacity, or an authority to institute or defend a suit, or to take any proceedings therein, or to confess judgment, or a power of attorney, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.”

Scope of Section 466

Section 466 deals with forgery of the following types of documents:

1. Court records and pleadings;
2. Register of birth, death, rebirth, marriage or register maintained by a public servant as such;
3. Certificate or document purporting to be performed by a public servant in his official capacity; or
4. An authority to replace or defend a suit, or to take any proceedings therein, or to confer judgment; or
5. A Power of attorney.

Forgery of a Valuable Security or Will, etc

The words ‘valuable security‘ symbolises a document which is, or indicates to be, a document whereby any legal right is formed, extended, transferred, restricted, extinguished or released, or whereby any person recognises that he lies under legal liability or has not authorized for a certain legal rights.

P.N. Parthasarthy And Others vs G.K. Srinivasa Rao 

The Person who commits forgery shall be punished with imprisonment of either mentioned term which may extend for two years, or with fine or with both Section 467. Forgery of valuable security, will, etc.

Classification of Offence

Para I: Punishment: Imprisonment for life, or imprisonment for 10 years and fine-Non-cognizable- and Non-bailable-Triable under Magistrate of the first class- Non-compoundable.

Scope of Section 467

Section 467 of IPC deals with forgery relating to Valuable Security or will. Whoever forges a document which implies to be a valuable security or a will, or an authority to adopt a son, or which implies to give authority to any person to make or transfer any valuable security or to receive the principal, interest or dividends thereon or to receive or transfer any money, movable property, or valuable security to be an acquittance or receipt authenticating the payment of money, or an acquittance or receipt for the shipment of any movable property or valuable security, shall be punished with imprisonment for life or with imprisonment of either description for a term which may extend to ten years, and shall also be liable to penalty.

Forgery for Purpose of Cheating

Forgery which is an offence under the IPC 1860 is defined under Section 463. This section refers to a specific case of forgery in which the document is made subsidiary to cheating which is the main purpose of the offender. The main distinction between cheating and forgery is that in cheating the deception is oral on the other hand in forgery it is in writing.

Scope of Section 468

Section 468 applies only to the case where forgery is for the purpose of cheating. It has been described as involving the proximity of one or other of the two elements of dishonesty or fraud. Forgery is thus a means to an end, that end being the wrongful possession or retention of property. This must be the intention of the forger, thoughts are not necessary for the cheating motive which makes him the abettor of the cheat.

Proof

The prosecution has to establish:

• That the accused committed forgery.
• That he did so with an intention that the forged shall be used for the purpose of cheating.

To secure a conviction under Section 468 of IPC, the burden of proof lies on the ingredients of Section 463. For further reference do refer to the case State of Orissa vs. Rabindra Nath Sahu 2002.

Forgery for Purpose of Harming Reputation

Whoever commits forgery, expecting that the document or electronic record forged shall injure the reputation of any party, or knowing that it is likely to be practised for that purpose, shall be penalised with imprisonment of either description for a term which may continue to three years and shall also be liable to fine.

Using a Forged Document as Genuine

According to Section 471 of IPC using a forged document as genuine is a cognizable offence. It states that whoever fraudulently or dishonestly accepts as the genuine document which he knows or has ground to believe to be a forged document, shall be punished in the corresponding manner as if he had forged such document.

Case Laws

SHEILA SEBASTIAN V. R JAWAHARAJ 

Supreme Court, in this case, ruled that the command of forgery cannot be imposed on a person who is not a maker of the same. 

The court also held that until and unless the components of Section.463 are satisfied an individual cant be convicted under section 465 by solely relying upon the ingredients of S.464, as an offence of forgery will remain incomplete. 

IBRAHIM AND ORS V. STATE OF BIHAR AND ANR.

It is a landmark case, where the Supreme Court stated that a person is said to have made a ‘false document’ if:

• He made or executed a document claiming to be someone else,
• If he altered or tampered a document, or
• He obtained a document by practising deception or from a person not in control of his senses.

The Supreme Court also held that to get a condemnation under section 465 of IPC false document must have been made with an intention. 

MIR NAGVI ASKARI V. C.B.I

The Supreme Court held that a person is said to obtain a false document or record if he satisfies one of the three conditions as mentioned herein before and provided for under the said section:

• The supreme court held that the document has been falsified with the intention of making it be believed that such document has been made by a person, by whom the person falsifying the document knows that it was not made. Clearly, the document in question in the present case, even it to be believed that they were made by or under the authorisation of someone else.
• The second criteria of the section deal with a case where a person without legal authority alters a document after it has been made. There has been no allegation of alteration of the voucher in question after they have been made. Therefore, in our opinion, this principle of the said section is also not applicable to the present case.
• The third and final condition of the section 464 deals with a document, signed by a person who due to his mental capacity does not know the contents of the document which were made i.e because of intoxication or unsoundness of mind etc. such is also not the case before us. Therefore, the accused before us could not have been convicted with the making of a false document. 

“Intent to Defraud’ Not Synonymous With ‘Intent to Deceive’ 

Whoever makes any false document or part of a document, with the desire to cause the injurious deception is usually intended only as a means to an end.

There is no specific allegation regarding the manner in which all the accused were involved in Forgery, then the criminal proceeding against the accused needs to be quashed.

Fabricating Forged Bail Orders Causes Damage to Public At Large

The State Of U.P vs Ranjit Singh 1999

In this view of the matter if by virtue of preparing a forged document indicating it to be a document of a court of justice and by virtue of such document a person who is not authorised to be released on bail could be released then, unquestionably damage or injury has been caused to the public at large and, therefore, subsequent damages are to be paid.

Making Counterfeit Seal, etc, With Intent to Commit Forgery 

Making a seal, plate etc., with the intention to commit a forgery punishable otherwise than under section 467 of the Indian Penal Code, or possessing with like the purpose of any such seal, plate, etc and knowing the same to be counterfeit. Punishment with Imprisonment for 7 years and fine are liable.

Classification of Offence

Punishment: there shall be Imprisonment for 7 years and fine.

Cognizable offence- It is Bailable offence/Triable by Magistrate of the first class/Non-compoundable.

Fraudulent Cancellation or Destruction, etc, of Valuable Security, Will, etc

It comes under section 477 of IPC and is a non-bailable, compoundable offence with imprisonment for life or 7 years or subsequent penalty to be imposed. It states “Whoever fraudulently or dishonestly, or with intent to cause damage or injury to the public or to any person, cancels, destroys or defaces, or attempts to cancel, destroy or deface, or secretes or attempts to secrete any document which is or purports to be a will, or an authority to adopt a son or any valuable security, or commits mischief in respect of such documents, shall be punished with [imprisonment for life], or with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.”

Falsification of Accounts

Section 477A, which deals with falsification of account can be analysed as follows:

Any person being a clerk, officer or servant willfully and with intent to defraud-

• Destructs, alters, merges or falsifies any book, paper, writing, valuable or account which belongs to or is in possession of his employer or has been received by him on behalf of his employer or
• Makes (or abets) the making of any false entry in or omits or alters the omission or alteration of any material-specific from or in any such book, paper, writing valuable security or account is said to commit “falsification of account”. Section 477 comprises with punishment: imprisonment for seven years or fine or both. This section refers to offences relating to book-keeping and written accounts. It makes the falsification of books and accounts punishable, even though there is no evidence to prove misappropriation of any specific sum on any particular occasion.

Explanation

It shall be sufficient in any charge under this section to claim a general intent to defraud without naming any specific person intended to be defrauded any specific sum of money intended to be the subject of the fraud or any selective day on which the offence was committed.

Ingredients of Section 477A

The person charged must be a clerk, an officer or a servant.

He must with intend to wilfully defraud-

• Destroy alter mutilate or falsify any book, paper, writing or account which belongs to his employer or is received by him on behalf of his employers.

In the case of Tan Ker Loo v. Pendakwaraya 2011, the court ruled the knowledge over and falsifying the documents is essential to determine liabilities. The court emphasized the element of knowledge as an important aspect for determining the conviction for falsifying the specific documents for the purpose of defrauding others and obtaining specific financial advantages. 

Conclusion

It should be noted that under Section 463 intention is essential, five situations are provided in the section. The intention is the essence of the offence of forgery. To constitute it, some damage or injury must be intended to be caused by the false document to an individual or to the public.

Under section 464, it is stated that the act should be done dishonestly or fraudulently. Also, the definition given in Section 463 is in itself subjected to section 464 that is defining the essential ingredient of section 463. So, it can be said that whichever of the elements provided in section 463 is applicable, it should have been done fraudulently or dishonestly to support the allegation of forgery.

A charge of forgery often boils down to intention, the burden of proof is on the prosecution to prove the intention of accused beyond a reasonable doubt. The prosecution also needs to prove various elements that are discussed above in brief.

References

• PSA Pillai’s, Criminal Law, 13th Edition Kl Vibhute
• Bare act of IPC
• https://crlreview.in/forgery-indian-penal-code/

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 skill.

The post Offences Relating to Documents: All you need to know about it appeared first on iPleaders.

This article has been written by Lakshmi. V. Pillai of 5th year pursuing B.A. LL.B from GLS Law College, Ahmedabad. The article covers the basic concepts of Merger Regulation under EU law. This article describes the essentials which need to be looked after by the firms while doing the merging, acquisition of control or taking control of JV in the EU market. The Article also covers the concept of referrals which can be made by the parties or by the Member states, under the EU Competition Law.

Introduction

The competition law regulates the merger and acquisitions. As Merger and Acquisitions (“M&A”) leads to the concentration of economic power in a smaller number of parties which can lead to distortion of competition in the market there is a need to regulate it. European Union merger law is a part of the European Union laws. The EU merger law is charged with regulating mergers between two or more entities.

One of the major reasons why businesses are motivated to do a merger is the reduction of transaction costs in negotiating bilateral contracts. And another advantage is, increase in the economy of scale of the party and product in the market. Further, with the merger, the firm acquires market share which directly impacts the market power of the company. And this increase in market power will strengthen the negotiating position of the firm. When we look from the perspective of the firm it is absolutely a good marketing strategy, though this is bad for competitors and downstream entities like for consumers and distributors. Such mergers can result in the making of monopoly and oligopoly structure in the market. Both these structures can weaken the competition in the market, as a single or a small group of people get the power to regulate the market. Therefore, to stop the small number of parties from regulating the market, the EU checks on the mergers which comes under the ambit of the Merger Regulations of the EU law.

Overview of EU Merger Control

Brief description of the EU system of merger control

When there is a merger between two or more corporate entities it is regulated by the Competition law. While firms propose to merger they have to comply with the laws and regulations. Only with the prior permission of the European Commission, the firm can go ahead with the merger. The Commission has exclusive competence over the matters of the merger. The Commission only check those operations which have an impact on the community and that can be termed as ‘community dimension’. The Commission has jurisdiction over the matters even if they impede or not impede the competition. Therefore, while merging the rules and regulations need to be taken into consideration by the companies. If the merger fails to comply with the laws then it is blocked in the market. By this, we understand that a merger is a part of the Competition law and the provisions are provided so that the companies do not acquire the power on the free market and harm the interests of the society, the economy and the consumers as a whole. As the level of control may lead to a hike in prices, less innovation, and production which are anti-competitive in nature. However, if the merging promotes consumer welfare then under such circumstances mergers do not come under the purview of the regulations. 

Under the EU law there are two main legislative texts:

1. EC Merger Regulation;
2. The Implementing Regulation.

The EC Merger Regulation contains the main rules for assessment of concentration, whereas the Implementing Regulation contains about concerns regarding procedural issues which includes- notification, deadlines, right to be heard etc. There are certain forms which are needed to be submitted while doing mergers. Those forms are:

1. Form CO- the official form for standard merger notification;
2. Short Form CO- for simplified merger notifications;
3. Form RS- referral requests.

Institutional arrangements

The Directorate-General for Competition (DG COMP) of European Commission (“EC”) administers the subject of merger control at the EU level. It is considered as one of the most experienced antitrust enforcers in the world. Margrethe Vestager is the current head of the DG COMP, he will be serving this position for five years which will end by 2019. The fines ordered by the DG COMP between 2010-2012 in total was €5.4 bn. The matters covered by DG COMP are as follows:

1. An antitrust agreement under Article 101 and 102 of the Treaty on the Functioning of the European Union (‘TFEU’);
2. Mergers;
3. Article 106 of the TFEU- Liberalisation;
4. Article 107-109 of the TFEU- State Aid;
5. International cooperation. 

The implementing regulation and the Commission’s Notices and Guidelines

The implementing regulation

The implementing regulation has forms which are to be used and submitted while merging is planned by the firm.

Form RS: This is the form used by the parties requesting for the pre-notification referral procedures.

When firms want to do formal notifications, then they have to use the following forms:

Form CO: This form generally has the information which must be notified by the parties while submitting a full-form notification.

This form includes extensive information about the parties. The information shall include:

1. The transaction and the relevant markets.
2. Contact details for customers, trade associations, competitors and potential suppliers.

The mentioned details will be used by the commission to consult while doing investigations. 

Short Form CO: This form is used when it is qualified for the simplified procedure of the Commission and notified concentration are unlikely to raise competition concerns. Under this, only a short- form clearance decision will be issued by the Commission.

The simplified procedure is available for the following mergers:

1. The assets and turnover are below €100 million in EEA (European Economic Area) in the proposed Joint Venture (JV).
2. When the concentrations between parties not having horizontal market overlap or vertical relationships.
3. When the concentration has a horizontal market overlap but it is less than 20% and in the vertical relationships, it is less than 30%.
4. In the concentrations when there is a move made from joint to sole control of a pre-existing JV.

Commissions Notices and Guidelines

The commission from time to time issues various notices and guidelines to explain the application of the Merger Regulation regime. 

Till date the Commission has issued notices and guidelines on the following subjects:

1. The consolidated rules and limit of the jurisdiction of the Commission;
2. Guidelines on explaining the simplified procedure;
3. Guidelines on the referral of cases;
4. Notices on topics like non- horizontal, horizontal, relevant market, remedies and ancillary restraints in which the subject is explained and guidelines are provided.
5. Guidelines on the role of the hearing officer;
6. Guidelines on access to the file;
7. Guidelines on the abandonment of concentration. 

Best Practice Guidelines

The documents published by the Commission which gives out the procedure which needs to be followed by the firm. Hitherto, the Commission has given following best practice guidelines for the mergers regulated by the EU competition law:

1. Guidance on the preparation of public versions of Commission decisions adopted under the Merger Regulation; 

This Guidance outlines:

1. what undertakings can claim for redaction as business secrets and confidential information and what is not usually considered to be confidential information;
2. how confidentiality for business secrets and other confidential information can be claimed;
3. what the Commission usually redacts on its own initiative in the public version of a decision, and
4. the procedure that should be followed to settle confidentiality claims in the context of the publication of the Commission decision and the related publications. 

2. The conduct of EC on merger control proceedings;

3. The Commission’s Model Texts for Divestiture Commitments and the Trustee Mandate under the EC Merger Regulation. This includes the standard models which are based upon the experience gained by the Commission till date in the cases of merger and remedies available thereto.

Access to the Commission’s decisions

After Phase I and Phase II, the Commission issues their press release stating their decisions. The Commission also sometimes publish the non-confidential versions of its decisions at the end of Phase I and II. However, before such publications made by the Commission, the parties are given the opportunity to identify any business secrets which shall be requested to be excluded from the publication. In the ‘Guidance on the preparation of public versions of Commission decisions under the Merger Regulation’, the Commission outlines the subjects which can be considered under the confidential information.

Jurisdiction

The merger regulation of the EU competition law lays down the conditions under which the National Competition Authorities (NCAs) or the EC can have jurisdiction over ‘concentration’ mentioned in the EU competition law.

However, it should be understood that if the concentration come under the ambit of an EU dimension then only the EC COMP have the right to investigate such matters. Whereas, those which are not within the EU dimension will be investigated by the NCA as per their domestic merger control rules. There is an exception to the above general rule, the firm can relocate the jurisdiction between the Commission and the NCAs. There are two ways to it:

1. Pre-notification– Under Article 4 of the EC Merger Regulation, the firm can send a pre-notification referral to the EC using Form RS. The EC will forward the Form to all NCA’s and thereafter all NCA’s will review the Form. If there is any objection by any of the NCA then the matter will be dealt with by the respective NCA.
2. Post-notification– Under Article 9 of the EC Merger Regulation, the Member State NCA can ask the EC to refer the merger under its jurisdiction if the merger is affecting or threatens the competition in the member state market, to take appropriate steps to protect public security or to protect the prudential rules for financial services.

Article 3: Meaning of a concentration

Under Article 3 of the EC Merger Regulation, the definition of the concentration is given. By the general meaning of concentration, we understand that concentration means control by the undertaking because of the change in the shares during merging. 

The meaning of the “Concentration” includes:

1. A change of control which lasts for a long time:

• This change occurs when there is a merger of two or more previously independent undertakings or part of it;
• When the acquisition is of direct or indirect control in whole or in parts of one or more other undertakings;
• The establishment of a Joint Venture where this involves the acquisition of joint control of a full-function JV undertaking. 

2. This also includes control over the rights and contracts or any other means through which the party will get the decisive influence on an undertaking.

However, there are some exceptions to the definition of the “concentration” under Article 3 (5) of the EU Merger Regulation which are:

• Institutions like credit institutions or other financial institutions;
• The office-holder who acquires control as per the requirement of the law.

Article 3(1)(a): mergers 

The term ‘merger’ basically means when the concentration of the undertaking is deemed to arise a change of control for a lasting basis on two or more previously independent undertakings or parts of undertakings.

Article 3(1)(b): acquisition of control

The term ‘acquisition of control’ means a change in the control by controlling at least

• one or;
• one or more undertakings,

through the purchase of securities or assets, through the way of contract or by any other means, either by direct or indirect control of the whole or parts of one or more undertakings.

The concept of control 

Control basically constituted by contracts, rights or any other means either in combination or in separate, which confers the possibility of exercising a decisive influence on an undertaking. There are two types of control: 

• Sole control 

When a transaction gives the possibility of exercising decisive influence of control to one single undertaking over the part or whole of another undertaking, then such control can be termed as ‘sole control’.

• Joint control 

The term ‘joint control’ is used when a transaction gives the possibility of exercising decisive influence of control to two or more undertakings over the part or whole of another undertaking.

Changes in the quality of control

While there is sole or joint control, in two ways we can have changes in the quality of control:

1. When there is a change in the basic control system, i.e. change in the joint or sole controlling system of the concentration.
2. If there is an increase in the number of shareholders or if there is a change in the identity of controlling shareholders, then that can result in changes in the quality of the control. And this scenario can occur before or after the joint transaction.

However, if there is negative or positive sole control change occurs then that will not be considered under this concept. As the mentioned change would not affect the incentives of a negatively controlling shareholder nor the nature of the control structure. Thereby, we understand that mere changes in the level of shareholding by the same shareholders without changing the power or control structure of the control of the company on the undertaking would not be notifiable or considered change in the concentration.

The changes in the quality of control can occur under two circumstances:

1. Firstly, when there is new entry one or more entrants in the panel of controlling shareholders not considering the aspect that whether they are replacing the existing one or not;
2. Secondly, when there is a reduction in the number of controlling shareholders.

Joint ventures- the concept of full-functioning

To consider the JV under the EU Merger Regulation the following conditions are to be there which gives rise to such concentration:

1. Operational autonomy

When a JV is made, it needs to be distinct from its parent company. A JV which is depended on its parent company for its raw material or production will not be considered as autonomous. Therefore, the JV must have sufficient resources, staff, assets (intangible or tangible) and facilities which gives it autonomous power to run the venture.

2. Activities beyond one specific function for the parents

One of the essential features for the JV to be considered as a full functioning entity is that they should be doing their functions independent of the activities performed by the parent company.

For instance, if there is a JV for the management of real estate, and the JV is made just for holding the real estate of the parent company then such JV will not be considered as autonomous. However, if the JV is actively participating in the management of the real estate and have a presence in the market, this indicates the full functionality of the JV.

3. Sale/purchase relations between the joint venture and its parents

When the undertaking is autonomous it shall work independently. However, for the initial years (not exceeding three years- this time limit can vary as per the marketing conditions) when it depends on the parent company for sales or purchase then that will not normally affect its full functioning character. However, a strong marketing power or the presence of the parent company in the downstream or upstream market is a factor which is to be considered while evaluating the full-functioning character of the JV in the market.

Under this point, we can consider two aspects, sales and trade markets. To consider the JV as a full functioning company, the sales of the company shall not only to be with the parent company. The same condition will be applicable in the trade market, wherein the distribution of the products by the JV is only for the parent company. In both these cases what is essentially to be considered is the operation of the JV is not only with the parent company, but it is working independently in the market with others as well. If this condition is established then the autonomy of the JV can be considered.

5. Operation on a lasting basis

Another essential feature to be considered while considering the concentration of the JV is the operation of the company in the market is for a long-lasting basis or not. This can be determined by the clauses in the agreement regarding the dissolution of the JV. 

The duration for the JV can also be determined by the purpose of the company for which it has been established. If the JV is made specifically for the construction of railway tracks and thereafter the JV if not involved in the maintenance of the railway track then the JV will not be working on a long-lasting basis.

6. Change in the activities of the joint venture 

The changes can be as following:

• A substantial amount of additional assets, contracts, know-how or rights being transferred to the JV by the parent company; 
• A change in the organisational structure of a JV which make it qualify under the full- functionality criteria;
• When the activity of a JV changed efficiently in a way that earlier it was supplying or purchasing to the parent company only, now it started taking significant activities apart from the service provided to the parent company. 

Exceptions

As per Article 3 (5) of the EU Merger Regulation, there are three exceptional situations where the acquisition will not be considered under the concentration of the Merger Regulation.

1. When the undertaking only does normal activities which include the transactions and dealings of the securities and the securities which are held on only a temporary basis.
2. When there is no change of control and if the control is acquired by an officeholder according to the EU law.
3. When a financial holding company acquires the control under such circumstances the concentration will not be considered under the Merger Regulation. 

However, it is important to understand that the exceptions mentioned under Article 3 (5) of the EU Merger law are applicable in limited circumstances, like: 

• When there is the acquisition of control by way of purchase and not only through the acquisition of assets.
• When the transaction comes under the ambit of the ‘concentration’ naturally then only exception mentioned under Article 3 (5) (a) and (c) is applicable. 
• And when the transaction is not just a part of a single or broader transaction. 

The typical investment fund structures are also exempted from the ambit of Article 3 (5) because their rights are not limited to voting rights, as they also adopt decisions to appoint the members of the supervisory bodies and management of the undertakings or even restructure those undertakings as per the requirement. 

Further, one more situation to be discussed under the exception is the companies which are acquired while they are under the insolvency proceedings. It is to be noted that if a JV is made out and the operation meets the criteria as outlined in the law then it will be normally considered under the term of the ‘concentration’. However, if the restructuring programme is like a typical fund structure then the exception set out in Article 3(5)(a) will not be normally applicable. 

Being an insolvent can be considered as an exception when a merger scheme is proposed. Because it is already drowning into the water, saving it would not be competitive. The case of Shell’s Harburg refinery by Nynas in Nynas/Shell/Harburg Refinery was similar to this. The acquisition was allowed as otherwise, it will result in the closure of the refinery.

Article 1: Concentrations having a Union dimension

Thresholds

The threshold under the EU Merger law is to be considered purely on a quantitative basis. While checking the threshold the impact of the operation or the market position of the parties to the concentration is not considered. The object is to determine whether the transaction has a community dimension or not. And if there is a community dimension then the merging shall be notified to the respective authorities. 

There are two sets of thresholds provided under Article 1 of the EU Merger law which is applicable to consider a concentration under the ‘Community dimension’. They are provided under Article 1(2) and Article 1(3) of the EU Merger Law. 

Article 1(2)

Under this, there are three different criteria applicable:

• The worldwide turnover will be considered as an overall dimension of the undertaking concerned;
• The community turnover means the minimum level of threshold of the activities which is conducted in the community;
• By the two-thirds rule means the exclusion of the purely domestic transactions from community jurisdiction.

Article 1(3)

As per Article1(2) when the concentration is not covered under the community dimension then this Article shall be applicable. The threshold in Article 1(3) is determined when the concentration is affecting three member states of the EU. Article 1(3) shall deem to be applicable even when there is a lower turnover threshold at both community-wide and worldwide but there is a minimum level of activities which is affecting at least three member states.

As per Article 1(2) of the Merger Regulations, a concentration has a Community dimension if the following conditions are followed:

• When the combined aggregate worldwide turnover of all the undertakings concerned is more than EUR 5 000 million; and
• When the aggregate Community-wide turnover of each of at least two of the undertakings concerned is more than EUR 250 million.

Provided that each of the undertakings concerned achieves more than two-thirds of its aggregate Community-wide turnover within one and the same Member State

The term ‘turnover’ includes ordinary activities and after turnover taxes of all the undertakings concerned.

The ‘undertaking concerned’, in the case of acquisition of parts of undertakings only the turnover relating to the parts which are the subject of the concentration, shall be taken into account with regard to the seller(s).

In case, these thresholds are not met a concentration has nevertheless Community dimension, if

• the combined aggregate worldwide turnover of all the undertakings concerned is more than EUR 2 500 million, and
• in each of at least three Member States, the combined aggregate turnover of all the undertakings concerned is more than EUR 100 million, and
• in each of at least three Member States included for the purpose of the second point above, the aggregate turnover of each of at least two of the undertakings concerned is more than EUR 25 million, and
• the aggregate Community-wide turnover of each of at least two of the undertakings concerned is more than EUR 100 million, unless each of the undertakings concerned achieves more than two-thirds of its aggregate Community-wide turnover within one and the same Member State.

Notion of undertaking concerned

To clearly understand the subject matter first we need to understand the terminologies. While understanding this concept the learner shall not misinterpret the term ‘undertaking concerned’ with ‘the notion of the undertaking’. The ‘undertaking concerned’ herein to be referred from the point of view of Article 1 and 5. This terminology is basically referred to the various undertakings which may be involved in the procedure of merging. And the word ‘notion of the undertaking concerned’ refers to the notification which needs to be sent to the notifying parties, third parties, the parties which can be subject to fines or penalty payments and other involved parties as per Chapter IV of the Implementing Regulation.

Under the Merger Regulation, a notification is required to be sent when the undertakings concerned are participating in a ‘concentration’ as per Article 3(1). Once the jurisdiction is determined then under Article 5 the threshold is calculated. However, Article 5(4) gives out the detailed criteria to identify which undertaking can be concerned.

The Merger Regulation lays out the circumstances under which the notion of the undertaking to be made in each criteria:

1. Merger- The notion in the merger to be sent for each of the undertakings concerned in the transaction.
2. Acquisition of control- In the case of acquisition of control the undertakings which need to be notified are the ‘undertaking concerned’. In the matter of acquisition, there can be one or more undertakings which are participating as a whole or part in the transaction. Under this head, we can have different transactions.

Relevant date for establishing jurisdiction

Earlier there was a time period in which the relevant date was triggered. As per Article 4(1) the following time period were the relevant dates in which the undertaking used to comply to inform the authority regarding their transaction:

1. The announcement of a public bid; or
2. The acquisition of a controlling interest; or
3.  The conclusion of a final agreement.

However, in the amended law, there are no such obligations on parties to notify within a certain time period. But at the same time, the parties can not implement the planned concentration before informing the respective authority/ies. In Article 4(1)(2), it says that a notification regarding the transaction shall be made to the authority with good faith intention while concluding the agreement. And Article 4(1)(1) says that when it is concluded that the concentration is coming under the ambit of the Merger Law, then following the conclusion of the agreement, during the announcement of a public bid or the acquisition of a controlling interest, the authority shall be notified. From here we can conclude that even though no as such specific dates are mentioned though if the undertaking does not occur to notify on time then the dates of the event mentioned will be decisive.

Therefore, we conclude that the relevant date for the undertaking for establishing jurisdiction over a concentration are:

1. The announcement of a public bid;
2. The date on which the conclusion of a binding legal document;
3. The date of the first notification;
4. After the manifestation of good faith to do so.

whichever is the earlier date, the undertaking on that date shall inform the authority. 

Turnover

In Article 5 of the Merger Regulation the concept of “turnover” is used. The term turnover comes under the heading of the sale in the accounts of the company.

In the case of products- the turnover can be easily understood by identifying each commercial act regarding the transfer of ownership.

In the case of services- the turnover is understood by considering the total amount of sales.

However, in the case of advertising and package holidays, the application of services becomes a little complicated as there are intermediaries. But in the end for all services, the point is about how much service reached to the customers and the ultimate payment by the customer for the full service.

As per Article 5(1), the amount of the turnover shall include the turnover which is based on the ‘ordinary activities’ of the undertaking. The ‘ordinary activities’ generally excludes those items which come under the head of ‘extraordinary income’ or ‘financial income’.

The aid received by the undertaking is also included under the head of the turnover. The aid herein referred to as is the aid which is granted by public bodies which are directly linked to the sale of products. Therefore aid can be considered as the income received by undertaking due to the sale of products or services including the price paid by the consumer. 

The term ‘Net’ turnover, basically means the turnover which can be considered after the deduction of all components as per the Merger Regulation. The main aim of determining the ‘turnover’ is to understand the turnover is such a way to understand the economic strength of the undertaking. During the calculation of the ‘Net turnover’ rebates and taxes are also deducted. And the ‘internal’ turnover also is not considered under the ‘net’ turnover which comes under the sales which were made between the concerned undertaking with the group to which concerned undertaking belongs.

Therefore, we understand that the ‘amount’ which are taken into consideration under the EU Merger Regulation is only the sales which are made between the group of undertaking with third parties on one hand and with each other on the other.

In addition to this under Article 5(5)(a) of the Merger Regulation, the double-counting of the turnover should be avoided. As per Article 5(4)(b) ‘Double counting’ means the turnover which results from the sale of products or the provision of services between the joint venture and each of the undertakings concerned. 

Turnover calculation and financial accounts: The general rules are that the Commission always relies upon accurate and reliable figures. If any adjustments are made in the figures in the accounts then that needs to be as per the regulations. If the undertaking belongs to a non-member country, then under such circumstances the Commission can convert the accounts as per the standards of the Community regulations if seems it to be necessary. 

So as per Article 5(4) of the Merger Regulation, the following turnovers shall be added together:

1. The undertaking concerned;
2. The undertakings to which the concerned undertaking is connected directly or indirectly by way of- 

• owing more than half of the business assets or capital; or 
• having half of the voting rights; or 
• having the right to manage the affairs of the undertaking; or 
• having the power to appoint more than half the members of the supervisory board. 

1. Those undertakings which are directly or indirectly connected to the concerned undertakings have the powers like mentioned in (b);
2. Those undertakings which have powers like mentioned in (a) to (d) on the matters as mentioned in (b).

It is to be noted that there are many ways through which a relationship can be made and rights can be exercised, the Commission is only concerned with those rights which are de jure in nature.

Further, it is important to understand that there is a difference between Article 3 (2) and Article 5 (4). Article 3(2) defines the term ‘control’ in the Merger Regulation. Control means the possibility of the undertaking to have the power to exercise a decisive influence on an undertaking. That means it is not necessary to prove that the decisive influence will take place or not. But if the influence is taking place then that will lead to an effective change in the undertaking. Article 5 (4) lays out the specific criteria of the undertakings whose turnover can be considered under the undertaking concerned. In the case of Article 3 (2), the economic dependence of the undertaking is also considered even if it just leads to de facto control. However, Article 5(4) would not arise on a de facto basis when due to strong common interests between different minority shareholders of the joint venture company on the basis of shareholders’ attendance. The difference is reflected by the fact that the term used in 5(4) is the word ‘right to manage’ rather than ‘power’. 

The allocation of turnover can be further differentiated into three subheadings on the basis of difference of the way through which the turnover has been constituted:

1. Allocation of turnover of the undertakings identified;
2. Allocation of turnover in case of investment funds;
3. Allocation of turnover for state-owned undertakings.

Geographic allocation of turnover

There is no discrimination between the ‘services provided’ and ‘products sold’ in the merger regulation for the geographic allocation of the turnover. The basic principle is the turnover of that place is to be calculated where there is an alternative for the product or the service. And the real competition occurs where the actual delivery of the product and service happens. 

In the case of sales of goods or sale of moveable mobile goods, the delivery place is considered important for the allocation of the turnover. However, in case if there is a parent company which have many subsidiaries, the allocation of turnover is calculated at the place where the delivery of the goods are made. The main reason for that is the competition of the goods with the other subsidiary goods are considered for the allocation.

In the case of services, there are further three categories, the categories will be explained here by examples:

Service provider travels– a non-European company providing plane repairing services to a European country. 

Customer travels- European customer books a car directly in the USA (service is provided outside the community).

In both of the above circumstances, the place where the service was provided will be considered for the allocation of turnover.

Both service and customer not travelling– supply of software, both the parties in this example can be outside or inside the community, the turnover allocated to the place of the customer will be taken into consideration.

Conversion of turnover into Euros

When the turnover figures are converted into Euro, great care should be taken while the exchange rate is used. The first step is to convert the annual turnover of a company to the average rate for the twelve months concerned. The average rate can be obtained from the DG Competition’s website. And while taking the audited annual turnover, the figures should be converted as such that it shall not be broken into quarterly or monthly figures which then need to be converted individually. The same procedure applies even when sales are in a range of currencies.

The total turnover given in the consolidated audited accounts and in that company’s reporting currency is converted into euros at the yearly average rate. Local currency sales should not be converted directly into euros since these figures are not from the consolidated audited accounts of the company.

Provisions for credit and other financial institutions and insurance undertakings

Due to the specific nature of the sector, Article 5(3) contains specific rules for the calculation of turnover of credit and other financial institutions as well as insurance undertakings.

‘Credit institution’ means an undertaking whose business is to receive deposits or other repayable funds from the public and to grant credits for its own account.

‘Financial institution’ means an undertaking other than a credit institution, the principal activity of which is to acquire holdings or to carry on one or more of the activities listed in points 2 to 12 of Annex I.

Article 5(3) of the Merger Regulation sets out the methods of calculation of turnover for credit and other financial institutions and for insurance undertakings.

Article 21: one-stop merger control

In the EU system of Merger Regulation, the control of concentrations within EEA (European Economic Area) is based on the ‘one-stop shop’ principle. This gives the Commission the exclusive jurisdiction to review the matters which comes under the definition of Article 3 of the EU Merger Regulation on ‘concentration’ and met the thresholds mentioned in Article 1(2) or (3) of the EU Merger Regulation. When the transaction comes under the cover of one-stop shop principle they are precluded from applying under their national competition laws to such concentrations with an EU dimension as per the virtue of Article 21(3). If the thresholds are below than the requirements, then the undertaking has to apply to the Member States. The Commission in such cases does not have jurisdiction to deal with such transactions.

The benefits of one-stop merger control

Before the principle of ‘one-stop shop’, the industries had to take permission from the Commission and as well as the Member states. And secondly, the Commission had the power to intervene only after the merger had taken place. 

So after the amendment in the Merger Regulation, this principle came into practice and the above problems were resolved. Therefore, it is beneficial to the Competition authorities and businesses alike:

Benefits to the Competition authority:

• Increases administrative efficiency;
• Avoiding duplication of the work; and
• Avoids the fragmentation of the enforcement effort;
• Reduces the potentially incoherent treatment by multiple authorities. 

Benefits to the Business people:

• Reduce the cost and burden of multiple filing;
• Eliminate the risk of conflicting decisions by different competition authorities under diverse legal regimes.

The benefits of more flexible jurisdictional rules

In this case, even though Commission takes the stand first, however, the Member State authority can ask its interference if there is a competition problem which takes place in the distinct market within its territory. Under such circumstances, the Commission may take case itself or transfer the matter to the Member state. However, only one set of authority will be dealing with the matter. 

Article 4(4) and Article 9: referral of concentrations having a Union dimensions to the competent authorities of the Member states

Before starting with the topic of pre and post referrals we need to understand when referrals are used. The referrals are made when there is a compelling reason for departing from ‘original jurisdiction’.

There are two types of referrals: 

The pre-notification referrals under Article 4(4) and Article 4(5) are only made available to the undertakings. Whereas, the post-notification referrals are made by the member state under Article 9 and Article 22.

It is to be noted that making pre-filing referrals the undertakings have to comply with tight deadlines. While filing pre referrals the undertaking shall have a straightforward objective to establish and the scope of the geographic market must be clear. 

And one more thing to be noted is that post-notification referral shall not be made or to be avoided to the greatest extent possible.

Pre-notification referrals: Article 4(4)

The pre-notification referral is made by the reasoned submission of the parties regarding the concentration. Before making the pre-notification referrals two things need to be considered: 

• The merging fulfils the legal requirements which are set out in the Merger Regulation.
• The pre-notification referral shall be abided by the guiding principles outlined in the Merger Regulation.

As per Article 4 (4) there are certain legal requirements which are to be followed:

1. The concentration must be significantly affecting the competition in the market or markets;
2. The market herein referred should be in any of the Member State;
3. The market shall have characteristics of a distinct market.

While making such referrals the requesting parties shall indicate that there can be a potential impact on competition in a distinct market. Even if it is preliminary, then too without prejudice to the outcome of the investigation of the commission the undertaking has to demonstrate the potential effect. The requesting parties also need to show the geographic market where the competition is occurring.

Other factors to be considered: 

• To check the authority to whom the referral made is a proper authority or not.
• This referral can also be made when the parties are having a competition effect on different markets but all the time coordination is required and the commission can individually deal with such matters.

Post-notification referrals: Article 9

A Member State has two options under Article 9 to request referral of a case following its notification to the Commission.

Article 9(2)(a)

• The concentration must be significantly affecting the market of the Member State;
• The market referred by the Member State shall be within the jurisdiction of the Member State;
• The market shall consist of all characteristics of a distinct market.

Therefore, when the Member state makes the referral it can be on prima-facie evidence, but that shall not be prejudiced by the outcome of the investigation. And the Member State while also needs to prove that the concentration to which referral is made shall be more than national or narrower than national in scope. 

Article 9(2)(b)

Under Article 9 (2) (b), the following requirements are to be met:

• The concentration is affecting the market;
• The market referred by the Member State shall be within the jurisdiction of the Member State;
• The market shall consist of all characteristics of a distinct market;
• The market must not constitute a substantial part of the common market. 

The most important thing for the Merger state here to prove is the market to which the competition is affecting is not a substantial part of the common market. Such practices are generally applicable to the markets which are limited to a narrow geographic scope, within a Member State.

Article 4(4) and Article 9 in practice

Article 4(4) is made by the undertaking when the concentration has a community dimension but may significantly affect competition in a distinct market within a Member State.

And the undertaking can request this kind of referral on Form RS. Then the request is transmitted to all other Member States by the Commission without delay.

However, the remainders of both the Articles differ:

Under Article 4(4) timeline is as follows- 

• The Member States have 15 days to submit and express their agreement or disagreement after getting a referral from the party to the Commission. 
• If the Member State keep silence then that deem to be considered as agreement.
• If no Member States disagree, then the Commission has 10 days to accept or reject the referral. Silence on the part of the Commission will be considered as assent. And then after the assent from both the authorities the Member State can apply national law to the referred part of the case. 

The Article 9 is applicable when a Member State may request the Commission refer to it a concentration within Community dimension, or a part thereof, which has been notified to the Commission and which threatens to significantly affect competition within a distinct market within that Member State (Article 9(2)(a)), or which affects such a distinct market not constituting a substantial part of the common market (Article 9(2)(b)). 

Under Article 9 timeline is as follows-

• The Member State within 15 working days from the reception of the copy of Form CO from the undertaking shall request to the Commission regarding the particular case. 
• The Commission first will look into the matter and check whether the required legal criteria are fulfilled or not.
• After checking the legal essentials the Commission may then decide to refer the case, or a part thereof, exercising its administrative discretion.
• In the case of a referral request made pursuant to Article 9(2)(b), the Commission must (i.e. has no discretion) make the referral if the legal criteria are met. The decision must be taken within 35 working days from notification or, where the Commission has initiated proceedings, within 65 working days.
• If the referral is made, the Member State concerned applies its own national competition law, subject only to Article 9(6) and (8).

Article 4(5) and Article 22: referral of concentrations not having a Union dimension by Member states to the Commission

Pre-notification referrals: Article 4(5)

There are two basic requirement:

1. The transaction mentioned for reference shall be a concentration as per the meaning of Article 3 of the Merger Regulation.
2. At least by three Member states, the concentration mentioned shall be applicable and capable of being reviewed.

 Other matters to be considered:

• To check whether Commission is an appropriate authority for the investigation.
• To check whether the merging covers more than one member state and giving an economic impact of the concentration to more than one member state. 
• To check whether the case comes under cross-border in nature.

Post-notification referrals: Article 22

Two legal requirements which are required under Article 22 are as follows:

• There shall be effect on trade between the Member States because of the Concentration; and
• The concentration will significantly affect the competition in the territory of the Member State or the state which is making the referral.

Other factors to be considered:

• The Member States feels that the Commission is more effective to investigate on this matter.
• The matter shall have serious competition concern and the market shall be wider than the national market of the Member State.
• Even if the market is narrower than the national market if there is a substantial economic impact on the market because of this particular concentration then the Member State has right to concern such matters to the Commission.

Article 4(5) and Article 22 in practice

Article 4(5) (that the concentration does not have a Community dimension but is capable of being reviewed under the national competition laws of at least three Member States). And the undertaking can request this kind of referral on Form RS. Then the request is transmitted to all other Member States by the Commission without delay.

Under Article 4(5) timeline-

• The Member States have 15 days from the date they receive the request, for the submission to express agreement or disagreement regarding the request.

• If any Member State disagrees then the Commission will examine the matter. If there is no expressed disagreement, then that means the case has acquired the dimension of the Community dimension.
• And after that, the Commission has exclusive jurisdiction over it. In such case, the parties have to notify the Commission under the Form CO.
• On the other hand, if one or more competent Member States have expressed their disagreement, the Commission informs all Member States and the undertakings concerned without delay of any such expression of disagreement and the referral process ends. It is then for the parties to comply with any applicable national notification rules.

Under Article 22, a Member State may request that the Commission examine a concentration which has no Community dimension but which affects trade between the Member States and threatens to significantly affect competition within its territory. 

The timeline for Article 22 is as follows:

• The request must be made within 15 working days from the date of national notification or, where no notification is required, the date when the concentration was ‘made known’ to the Member State concerned. 
• The Commission transmits the request to all Member States. Any other Member States can decide to join the request within a period of 15 working days from the date they receive a copy of the initial request.
• All national time limits relating to the concentration are suspended a decision has been taken as to where it will be examined; a Member State can restart the national time limits before the expiry of the 15 working day period by informing the Commission and the merging parties that it does not wish to join the request. 
• At the latest 10 working days following the expiry of the 15 working day period, the Commission must decide whether to accept the case from the requesting Member State(s). 
• If the Commission accepts jurisdiction, national proceedings in the referring Member State(s) are terminated and the Commission examines the case pursuant to Article 22(4) of the Merger Regulation on behalf of the requesting State(s). The non-requesting States can continue to apply national law.

Article 21(4): legitimate interest clause

Article 21 (4) states that the Member State can take appropriate steps if required to protect the legitimate interests other than the points or concerns which are mentioned in the Regulation. The concerns which are raised by the Member State shall be compatible with the general principles and other provisions of Community law.

Legitimate interests provided under the Merger Regulation is a non-exhaustive list. They are as follows:

• Public security;
• Prudential rules; and
• Plurality of the media.

As per Article 21 (4), the Member State can initiate the request if it feels that the case is covered under the legitimate interests as provided in the Merger Regulation and thereby, the same can be communicated to the Commission. Within 25 days the Commission must decide on the matter. When the above essentials are fulfilled then the Commission has the sole jurisdiction on the matter and the Member State can also do parallel investigation on the matter. However, it is to be noted that Article 21 (4) is rarely used by the Member States. 

Conclusion

In this article, we understand various basic concepts of the EU Merger Regulation. It is so important for the undertakings to properly understand the law and concepts when they take part in the transactions of merging with the firms who are in the territory of the European Union or otherwise whose market is covered in the EU.

References

• https://ec.europa.eu/competition/mergers/legislation/legislation.html
• https://www.mbda.gov/news/blog/2012/04/5-types-company-mergers
• https://ec.europa.eu/competition/mergers/legislation/guidance_on_preparation_of_public_versions_mergers_26052015.pdf
• https://ec.europa.eu/competition/mergers/legislation/merger_compilation.pdf
• https://ec.europa.eu/commission/presscorner/detail/en/IP_90_156
• https://www.slaughterandmay.com/media/1501891/eu-competition-newsletter-05-nov-11-nov-2010.pdf
• https://ec.europa.eu/competition/mergers/legislation/merger_law_2013_web.pdf

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 skill.

The post Merger in EU Competition Law: Overview and Analysis appeared first on iPleaders.

This article is written by Madhuri Pilania, a first-year student pursuing BBA.LLB. from Symbiosis Law School, Noida. This is an exhaustive article dealing with the Shares, Membership and Share Capital under the Companies Act, 2013.

Introduction

A shareholder is a person who has a stake in the company till the amount the person has invested. The income of a shareholder depends upon how a company earns. They issue shares as a means to raise money. The Parliament approved the long-awaited regulation of legislation governing the companies on 9 August 2013.

The new law was aimed at easing the process of doing business in India and improving corporate governance by making companies more accountable. Under the Companies Act, 2013, the registered public and private companies need to file the following with the Registrar of Companies to commence the business – 

• A declaration by the director in the prescribed form stating that the subscribers or promoters have to pay the value of shares agreed to the memorandum.
• Confirmation needs to be filed that the company has filed a verification of its registered office with the Registrar of companies (ROC).

What is a share? Who is a shareholder and what are his/her rights?  How does membership on a company works and share capital under Company Law are some of the common questions everybody wonders about? So in this article, all the answers to such questions can be found.

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Shares

Shares can be described as a financial instrument issued by the company to raise funds from the general public. A share represents fractional ownership in a body corporate. Thus, a share is the smallest unit of the company’s overall net worth.

First issue in Demat Form

Section 29 of the Act related to public offer of securities to be in the Demat form. Every company which makes a public offer and other groups of public companies should be prescribed in a certain manner. It should issue the securities only in dematerialised form by complying with the provisions of the Depositories Act, 1996.

Allotment of shares

Allotment of shares refers to the distribution of shares among the shareholders who applied for the shares or submitted written application for the allotment of shares. As soon as the company receives the applications for shares issued by means of a prospectus, it starts allotting shares on a preset basis.

Allotment of shares cannot be made until the ‘Minimum Subscription‘ as given in the prospectus had been subscribed or applied for. Minimum Subscription is the minimum amount which, in the estimate of the directors, is required to run the business. It has to be stated in the prospectus.

Minimum subscriptions 

The first requirement of a valid allotment is the minimum subscription. The amount of subscription needs to be stated in the prospectus after the shares have been offered to the public. An amount estimated by the directors which is enough to meet the needs like purchase price of any property, preliminary expenses and working capital (not to be less than 90 per cent of the whole issue offered to the public) is called minimum subscription. 

Shares cannot be allotted unless a specified amount has been subscribed and the application money should not be less than five per cent of the nominal value of the shares.

Application money 

As per the new provision under the Companies Act, 2013 it has been implemented regarding the Share Application Money, pending allotment. As per the Section 42(6) of the Companies Act, 2013, any allotment of securities should be made within sixty days from the receipt of the application money. In case the company is not able to allot the securities within the said period of sixty days then it will have to repay the application money within fifteen days. If they fail it will be required to be repaid with interest at the rate of 12% per cent per annum from the expiry of the sixtieth day. If the money has not been paid within the prescribed duration it would be considered as default and from the seventy-sixth day, the whole application money that is held by the company will be treated as a deposit. If there is any non-compliance of the provisions then it can result in a penalty of two crore rupees.

Statement in lieu of prospectus: Section 2(70)

According to the Companies Act, 2013, under Section 2(70), if a public company does not issue a prospectus on its formation, it should file a statement in lieu of prospectus with the registrar of the company.

A statement in lieu of prospectus is a public document prepared in the Second Schedule of the Company’s Law by the public company which does not issue a prospectus on its formation with the registrar before the allotment of debentures. It should also be duly signed by every person who has his name on the prospectus. It gives the same information as prospectus gives and it is signed by all the directors or maybe proposed directors.

A company will not be allowed to allot any shares or debentures in case the company has not filed a statement in lieu of prospectus with the registrar, it is then not allowed to allot any shares or debentures. A statement in lieu of the prospectus contains the following particulars – 

• Name of the company
• Statement of capital
• Description of the business
• Name, address and occupation the directors
• Estimated initial expenses
• Names and details of the property
• Material contracts
• Interest of directors
• Minimum subscription

Opening of subscription list

Subscription list means a subscription list in substantially the form set out in Schedule 7 of the Companies Act, 2013, (Subscription List) of the implementation plan pursuant to which each Lender, Electing Charter party Owner and Electing Bareboat Owner (or its Nominated Affiliate) will agree to subscribe for, and the Company will agree to issue to them, the relevant Lender Shares or Charterparty Shares (as applicable) in accordance with the Implementation Plan. This is also known as opening of subscription list.

Shares to be dealt in on stock exchange

A company who intends to offer shares or debentures to the public for subscription by the issue of a prospectus is required to make an application to one or more stock exchanges which are recognised for permission for the shares or debentures. The intended offer is to be dealt with in the stock exchange or maybe in each stock exchange.  

When a prospectus is issued it states that an application has been made for permission under sub-section (1) for shares or debentures that are offered to be dealt in one or more recognised stock exchanges. Such a prospectus is required to state the name of the stock exchange and any allotment made on an application in accordance with the prospectus. It will be void if permission has not been granted by the stock exchange before the expiry of ten weeks from the date of closing of the subscription lists.

Certificate of shares: Section 46

Under Section 46 if any company issues any share capital, the certificate of shares held by the company cannot be issued except in these cases – 

• On surrendering of the letter of allotment or coupons of value to the company, saved in cases of issues against letters of acceptance or of renunciation, or in cases of issue of bonus shares.

1. It is provided that if the letter of allotment is destroyed, the Board can inflict or impose such reasonable terms to seek supporting evidence. The payment of out-of-pocket expenses in seeking investigating evidence is incurred by the company.
2. Every certificate of share or shares shall be in Form No. SH.1 or as near as possible and will specify the names of the people in whose favour the certificate is issued, the shares to which it relates and the amount paid-up.

It must be noted that in case the company has a common seal it should be fixed in the presence of people required to sign the certificate.

In case of a One Person Company, it will be sufficient if the certificate is signed by a director or company secretary and the company secretary or any other person authorised by the Board for the purpose.

A Director or Company Secretary will be deemed to have signed the share certificate if his or her signature is printed signature any machine, equipment or other mechanical means such as engraving in metal or lithography but not of rubber stamp, provided that the director or company secretary will be personally responsible for allowing the attachment of his signature. Hence, the safe custody of any machine or any equipment is used for this purpose.

Estoppel as to Title

A share certificate binds the company in two ways once it is issued. It is a declaration by the company that any person whose name is in certificate and it is given to him, will be a shareholder. In other words, the company is estopped if he denies title to the shares. For example, a plaintiff applied for three hundred shares in a company. A clerk did not own shares but executed a transfer in favour of the plaintiff. The clerk did not produce his registered certificate and the company issued a new certificate to the plaintiff. It was held that the company was liable to the plaintiff for damages.

Estoppel as to Payment 

If the certificate states that full amount has been paid on each share, the company is estopped as against a bona fide purchaser of the shares alleging that they are not paid. 

In the case of Bloomenthal v. Ford, A lent money to a company on a security often shares that were issued to him as fully paid. But nothing was paid to them. In winding up of company, it was held that neither the liquidator nor the company can deny that shares were fully paid and hence A can not be placed on the list of contributors.  

Transfer of shares

According to the Companies Act, 2013 shares or debentures of a member of a company may be moveable property which is capable of being transferred in the prescribed manner in the articles of the company. The regulations of the company can impose restraints upon the right of transfer. The shareholder has the right to transfer his shares without the consent of anybody to the transferee in the absence of restrictions in the articles. Even if the transaction is bona fide in nature it is out disposal of the property without retaining any interest in the shares.  

Listed public companies and pre-emptive clauses

Preemptive rights are a contractual clause which gives a shareholder the right to buy additional shares in the future issue of the company’s common stock. It should done before the shares are available to the general public. Shareholders who have such a clause are generally termed as early investors or majority owners who want to maintain the size of their stake in the company if additional shares are offered.

A preemptive right is also called an “anti-dilution provision.” It provides the investor the option of maintaining a certain percentage of ownership of the company, as it grows.

It was held that a public company who is not listed to register a transfer of shares cannot refuse on the ground of pre-emptive rights of existing shareholders. The shareholders have to carry a warning on the face of the certificate if the nature of the shares of the company are pre-emptive. 

Listed public companies

As per Companies Act, 2013 “Listed Company” means a company that has its securities listed on any recognized stock exchange. As per the Act, only public companies are permitted to list their securities in the stock exchange. Private companies cannot avail this option under the Act.

Procedure of transfer

• The indenture (deed) of share transfer in form SH-4 must be duly executed both by the transferor and the transferee.
• The share transfer indenture (deed) must have stamps according to the Indian Stamp Act, and Stamp Duty must be given in the State concerned.
• A person’s signature, name, and address should witness the signatures of the transferor and the transferee in the indenture of transfer.
• The relevant share certificate or allotment letter must be attached to the share transfer indenture and deliver the same to the company.
• The share transfer indenture must be deposited with the company within (60) sixty days from the date of such execution by or on behalf of the transferor and transferee.
• After receiving the share transfer deed, the board should consider the same. And if the documentation for transfer of shares is in order, the board can do it by passing a resolution register transfer.

Blank transfer

A blank transfer is an instrument of transfer signed by the transferor. And in this instrument, the name of the transferee and date of transfer are not filled. A blank transfer is used because the ownership of shares in a company is generally transferred from one person to another by the execution of a document by the seller and the buyer. It is not a negotiable instrument because it can be transferred by mere delivery. So the title of the transferee acquires shares through a blank transfer subject to the title of the transferor. 

Certification of transfer

The transferor hands over the certificate of shares to the transferee who then places it with the company for registration. When the number of shares transferred is less than the number of shares included in a certificate, or when they are transferred to different persons, the transferor has to place the share certificate with the company. The company gives a certificate which says that the shares have been placed with the company under transfer. This is called the certification of transfer.

In the case of Bishop v. Balkis consolidated company, A transferred his shares to two people and placed the certificate with the company. The company certificated the transfer but destroyed the original certificate and transferor who borrowed money on it. The company was held not liable to the lender. It is because the share certificate is not a negotiable instrument. 

Forgery in transfer

It may happen sometimes that a forged instrument is presented for registration. When a transfer is brought, it is not only registered once but should be written to the registered address of the shareholder. Then the respective person should be informed that the transfer has been placed.  

A forged transfer is a nullity and hence the original owner of the shares can continue to be the shareholder and the company is bound to restore his name to the register of members.

Rights to transferor and transferee

Until a non-member who is a transferee is admitted as a Substituted Member in accordance with the terms of this Agreement, 

• the transferee will have no right to exercise any of the powers, rights and privileges of a member other than to receive its share of allocations and distributions;
• the transferor will cease to be a Member with respect to such membership interest upon transfer of such membership interest and will have no further powers, rights and privileges as a Member with respect to membership Interest until relieved of such obligations by written agreement of all the other Members. They will remain liable for all obligations and duties as a Member with respect to such Membership Interest; 
• It is provided that if the Transferee reconveys such Membership Interest to transferor within ten days after the Transferor becomes aware that the Transferee will not become a Substituted Member, the Transferor will be once again entitled to all of the powers, rights, and privileges of a Member.

Priority between transferees

Priority of rights created by transferees can be understood under Section 48 of the Companies Act 2013. When a person claims to create a transfer, the rights over immovable property, cannot exist or be exercised to their full extent together. In the absence of a special contract or reservation, it binds the earlier transferees which shall be subject to the previously created rights. 

Transmission of shares

If a member of the Company dies, the survivor or the nominee or legal representatives (the sole holder) will be recognised by the company as they have the title to his interest in the shares. 

Any clause in the transmission of shares cannot release the estate of the deceased joint holder from any type of liability in respect of any share which had been jointly held by the person with other people. 

Any person who is entitled to a share in the result of the death or insolvency of a member may be required by the Board and subject if pieces of evidence have been produced either – 

• He registers himself as the holder of the share.
• He made the transfer of the share as the deceased or insolvent member would have made.

If the member is insolvent or deceased he has to transfer the share before his death or insolvency.

The board, in either case, will have the same right to decline or suspend registration as it would have had. 

If the person who is entitled to elect to be registered as holder of the share himself, he can deliver or send the company a notice in writing by him which states that he can elect. 

If the person can elect to transfer the share, he will testify his election by executing a transfer of the share.

Then all the limitations, restrictions and provisions of these regulations relating to the right to transfer and the registration of transfers of shares shall be applicable to any such notice or transfer as previously mentioned.

A person will be entitled to exercise any right granted by membership related to the meetings of the company if the person is registered as the holder of the share before being registered as a member. A person who is entitled to a share by reason of the death or insolvency of the holder will be entitled to the same dividends and other advantages to which he would be entitled.

Facilities for nomination

Shares of a company are known to be transferable assets under law. A shareholder is free to transfer shares held by him in a public company subject to reasonable limitations inflicted under the Articles of Association of the company. Nomination further enables a shareholder to provide sufficient directions to the company in consideration to disposal or transmission of shares held by him in case his death occurs. 

Section 72 of the Companies Act 2013, provides that every holder of securities of a company can nominate any person to whom his securities will be vested in the occurrence of his death. The term Securities includes shares of a company and if the shares are held by joint holders, such joint holders will have to nominate a single person as nominee. 

The Act does not limit the choice of persons who could be designated as a nominee. Even a minor can be recommended by the shareholder. If the nominee is minor, the shareholder should appoint any person who is entitled to the shares in the occurrence of the death of the nominee during his minority. 

A nomination can be filed anytime during the lifetime of the shareholder. It has to be filed in writing to the company in the prescribed Form SH-13. A nomination once filed can be cancelled or altered by filing form SH-14. The cancellation or variation can take effect from the date on which the notice of such variation or cancellation is received by the company.

Mortgage or pledge of shares

With the ratification of the Companies Act, 2013, the companies creating pledge over shares are mandatorily required to register the charge, which was not the case with its precursor (predecessor). A company cannot enforce a pledge created by its own against it by any creditor until the pledge is registered as per the amenities (provisions) of the Companies Act, 2013. Hence it is mandatory to register the charge. 

The Companies Act, 2013 projects a duty on the company to register with the Registrar of Company the following – 

• The particulars of creation.
• The modification of pledge along with the instrument within a stipulated time period. 

The mode and manner of registration is provided in the Companies (Registration of Charges) Rules, 2014.

Return as to Allotment: Section 75

When a company who has share capital makes any allotment of its shares, the company needs to do the following within thirty days – 

• File a return of allotments with the registrar which should be stating the number and minimum amount of shares comprised in the allotment. The name, address and occupation of the allottees are required. Also, it is required that the company mentions if any amount is to be paid or due and payable on each share. It must be noted that the company cannot show any shares in return having been allotted for cash if cash has actually not been received in respect to allotment. 
• In case the shares are not bonus shares they are allotted as fully or partly paid-up and paid in cash. They are produced for inspection and examination of the Registrar which is a contract in writing that constitutes the title of the allottee to the allotment together with any contract of sale or contract of services. It may be other consideration in respect of the allotment and such contracts are duly stamped and filed with the Registrar, the copies verified in the prescribed manner of all the contracts, A return is also filed stating the number and nominal amount of shares that are allotted. 
• In the case of bonus shares, a return would state the number and nominal amount of such shares comprising in the allotment, The names, addresses and occupations of the allottees and a copy of the resolution authorising the issue of such shares is required. In the case of issue of shares at a discount, some of the requirements like a copy of the resolution passed by the company that authorises such issue together with a copy of the order of the Court sanctioning the issue are required. If the maximum rate of discount exceeds ten per cent, a copy of the orders of the Central Government permitting the issue at the higher percentage is also required.

Companies Act (Amendment), 2014 –

(1) Whenever a company having a share capital makes any allotment of its securities, the company is required to file a return of allotment in Form PAS-3  with the Registrar within thirty days, along with the fee as specified in the Companies (Registration Offices and Fees) Rules, 2014.

(2) It must be attached to the Form PAS-3, a list of allottees stating their names, address, occupation and number of securities allotted to each of the allottees and the list will be certified by the signatory of the Form PAS-3 as being complete and correct as per the records of the company.

Issue of shares at discount: Section 54

• A company cannot issue shares at discount except as provided in Section 54. 
• If a company issues a share at a discounted price it shall be considered void. 
• If a company violates the provisions of the section, it will be punishable with fine to an extent of one lakh rupees which can further extend to five lakh rupees. Any officer who is in default will be punishable for a term of six months or fine not less than 1,00,000 which can extend to five lakh rupees. 

Sweat Equity Shares: Section 53

Sweat equity shares are issued by a company under Section 53 to its directors or employees at a discount or for some consideration, other than cash to provide their rights that are available in the nature of intellectual property rights or value additions.

The sweat equity shares issued will be treated as a part of managerial remuneration for the purpose of Sections 197 and 198 of the Act if the following conditions are fulfilled:

1. The sweat equity shares are issued to any manager or director;
2. They are issued for consideration other than cash, which does not take the form of an asset and can be carried to the balance sheet of the company in accordance with the applicable accounting standards.

The accounting value of sweat equity shares will be treated as a form of compensation to the employee or the director in the financial statements of the company if the sweat equity shares are not issued in accordance with the acquisition of an asset if sweat equity shares are issued during an accounting period. 

If the shares are issued in accordance with the acquisition of an asset, the value of the asset determined will be carried in the balance sheet as per the Accounting Standards. The excess amount of the asset acquired of the value of sweat equity shares will be treated as a form of compensation to the employee or the director of the company. 

The sweat equity shares issued to directors or employees must be non-transferable for a period of 3 years from the date of allotment and the share certificates are under lock-in. The period of expiry of lock-in should be stamped in bold or mentioned in any other prominent manner on the share certificate. The sweat equity shares to be issued should be valued at a price determined by a registered valuer as the fair price giving justification for such valuation.

Buy-back of shares: Section 77-A

Under Section 77-A the following norms should comply with the private companies and unlisted public companies for buy-back of their securities. The statement to the notice of the general meeting shall in accordance with Section 102 which should contain the following disclosures:

• the date of the board meeting at which the offer for buy-back was approved by the board of directors of the company;
•  the objective of the buy-back;
•  the group of shares or other securities intended to be purchased under the buy-back;
•  the number of securities that the company offers to buy-back;
•  the method to be adopted for the buy-back;
•  the price at which the buy-back of shares or other securities will be made;
•  the basis of arriving at the buy-back price;
•  the maximum amount to be paid for the buy-back and the sources of funds from which       the buy-back will be financed;
• the time-limit for the completion of buy-back;
• the agglomeration shareholding of the promoters and of the directors of the promoter, when the promoter is a company and of the directors and key managerial personnel as on the date of the notice convening the general meeting:

• the number of equity shares purchased or sold by persons under sub-clause (1) during a period of twelve months preceding the date of the board meeting at which the buy-back was approved and from that date until the date of the notice convening the general meeting;
• the maximum and minimum price at which purchases and sales referred to in sub-clause (2) were made along with the specified date.

1. If the people mentioned in sub-clause (1) of clause (j) that intends to tender their shares  for buy-back:

• the quantum of shares proposed to be tendered;
• their holdings and details of their transactions for the last 12 (twelve months) prior to the date of the board meeting at which the buy-back was approved including information of number of shares acquired, the price and the date of acquisition.

1. A confirmation is needed that there is no default in repayment of deposits, interest payable,  redemption of debentures or redemption of preference shares or payment of dividend due to any shareholder, or repayment of any term loans or interest payable thereon to any financial institution or banking company.
2. A confirmation that the Board of directors have made a full enquiry into the affairs and prospects of the company and that they have formed the opinion –

• following the date on which the general meeting is convened there shall be no grounds on which the company could be found unable to pay its debts;
• the year following that date having regard to their intentions with respect to the management of the company’s business during that year and the amount of the financial resources which will in their view be available to the company during that year, the company will be able to meet its liabilities  when they fall due and will not be rendered insolvent within a period of 1 (one year) from that date; 
• the directors should take liabilities into account including prospective and contingent liabilities, as if the company was being wound up under the provisions of the Companies Act, 2013.

1. A report addressed to the Board of directors by the company’s auditors stating that-

• they have inquired into the company’s state of affairs;
• the amount of the  capital payment for the securities in question is in the view properly determined;
• that the audited accounts on the basis of which calculation with reference to buy back is done is not more than six months old from the date of the offer document; and provided that the audited accounts are more than 6 months old, the calculations with reference to buy back should be on the basis of un-audited accounts not older than 6 months from the date of the offer document that is subjected to limited review by the auditors of the company;
• the Board of directors have formed the opinion as specified in clause (m) on reasonable grounds and that the company, having regard to its state of affairs, shall not be rendered insolvent within a period of one year from that date.

1. The company which has been authorised by a special resolution shall, before the buy-back of shares, file with the Registrar of Companies a letter of offer in Form No. SH.8, along with the fee. It is provided that such letter of offer should be dated and signed on behalf of the Board of directors of the company by not less than two directors of the company, one of whom shall be the managing director, where there is one.
2. The company is required to file with the Registrar, along with the letter of offer, and in case of a listed company with the Registrar and the Securities and Exchange Board, a declaration of solvency in Form No. SH.9 along with the fee and signed by at least two directors of the company, one of whom shall be the managing director, if any, and verified by an affidavit as specified in the said Form.
3. The letter of offer should be dispatched to the shareholders or security holders immediately after filing the same with the Registrar of Companies but not later than twenty days from its filing with the Registrar of Companies.

Underwriting commission

This section allows the company to pay commission to any person if he is subscribing for shares or debentures or if he agrees to procure subscription for shares or debentures of the company. The company would like to ensure the success of the issue of shares when shares are offered to the public.  

Brokerage 

Brokerage is a commission paid to a bank, stockbroker or any other marketing mediator for placing shares on an effort basis or for inducing a broker’s clients or customers to subscribe for the company’s shares or any other securities and if it reasonable in amount it is lawful. 

In other words, brokerage is a fee or commission given to or charged by a broker. When the owner of the property employs a broker to find a purchaser and he agrees to compensate him then consideration is known as Brokerage Commission. The listed companies can only pay brokerage of 5% on private placement of capital. Brokerage can only be paid for the services rendered under a contract with the company.

Issue of shares at premium: Section 52

1) Under Section 52, when a company issues shares at a premium for cash, a sum equal to the amount of the premium received on those shares will be transferred to a “securities premium account” and the provisions of this Act relates to reduction of the share capital of a company and except as provided in this section if the securities premium account were paid-up share capital of the company.

(2) The securities premium account under sub-section (1) to be applied by the company:

•  towards the issue of shares of the company that are not issued, to the members of the company as fully paid bonus shares.
•  to write off the preliminary expenses of the company;
•  to write off the expenses of  the commission paid or discount allowed on, any issue of    shares or debentures of the company;
•  to provide for the premium payable on the redemption of  redeemable preference shares or of the debentures of the company; 
•  for the purchase of their own shares or any other securities under Section 68.

(3) The securities premium account in spite of contained in sub-sections (1) and (2), can be applied by some class of companies as prescribed. The  financial statement shall comply with the accounting standards prescribed for such class

of companies under Section 133:

• in paying the equity shares of the company that are not issued to be issued to members of the company as fully paid bonus shares;
• to write off  the expenses of or the commission paid or discount allowed on any issue of equity shares of the company;
• for the purchase of its own shares or other securities under Section 68.

Penalty for fraudulently inducing investment

Any person who induces or attempts to induce another person either knowingly or not promise or forecasts anything false, deceptive and misleading to offer to enter into – 

(a) any agreement with a view for acquiring, disposing of, subscribing for, or underwriting shares or debentures.

(b) any agreement having pretended purpose which is to secure a profit to any of the parties from the shares or debentures, by reference to fluctuations in the value of shares or debentures. It will be punishable with imprisonment for a term which can extend to 5 years, or with fine which can extend to 1,00,000 or both.

Personation for the acquisition of shares: Section 38

(1) Under Section 38 any person who:

(a) abets to make an application in a  name which is fictitious to the company to acquire, or subscribe for its securities;

(b) makes or abets to make  multiple applications to a company in different names or in different combinations of his name or surname for subscribing for its securities;

(c) induces directly a company to allot, or register any transfer of securities to him, to any other person in a fictitious name, will be liable for action under Section 447.

(2) The provisions of sub-section (1) will be reproduced in every prospectus issued by a company and in every form of application for securities;

(3) When a person has been convicted under this section, the Court has the right to order discharge by seizure and disposal of the securities in possession of such person.

(4) The amount received through discharge or disposal of securities under sub-section (3) will be credited to the Investor Education and Protection Fund.

Shareholders or Members

Who may be a member?

A member is a person who subscribes the memorandum of the company. A shareholder is a person who owns the shares of the company and shareholders are the one whose name is entered in the register of Company are the members.

Calls on shares: Section 49

1. Under Section 49 of the Company Act, 2013 the Board can make calls upon the members from time to time in respect of any monies (a current medium of exchange in the form of coins and banknotes) unpaid on their shares on account of the nominal value of the shares or by way of premium and not by the conditions of allotment made payable at fixed times.
2. It should be provided that a call on shares should not exceed one-fourth of the nominal value of the shares. It will be payable in less than one month from the date fixed for the payment of the last preceding call on share.  
3. Each member will receive at least fourteen days’ notice which will specify the time or times and place of payment, payment to the company, and the amount called on his shares.
4. A call can be revoked or postponed at the option of the Board.

• When the Board authorises by passing a resolution then a call will be deemed to have been made at that time and it may be required to be paid by instalments.
• The joint holders of a share can be jointly and severally liable to pay all calls.
• The person from whom the sum is due should pay interest if the sum is not paid before or on the day appointed for payment. The amount of interest will be calculated from the appointed for payment to the time of actual payment at ten per cent per annum or at the rate at which the Board determines. The Board has the liberty to waive payment of any such interest wholly or partly.
• Any amount of a share becomes payable on allotment by the terms of issue on account of the nominal value of the shares or by way of premium. It will be deemed to be call duly made and payable on the date with some regulations. 
• In case of non-payment of an amount, all the relevant provisions of these regulations as to the payment of interest and expenses, forfeiture or will apply as um had become payable by virtue of a call duly made and notified.
• The Board – (a) can receive all or any part of the monies uncalled and unpaid from any member willing to advance the same upon any shares held by him and (b) upon the monies that are advanced may pay interest at such a rate which not exceeding. The company in general meeting will direct 12% per annum as agreed between the Board and the member paying the sum in advance. 

Payment in kind

Payment in kind means use of a good or service as payment instead of cash. It also refers to a financial instrument that pays interest or dividends of bonds, notes to investors. It may be preferred stock with additional securities or equity instead of cash. They are attractive securities to companies and prefer not to make cash outlays and are used as buyouts. 

Forfeiture of shares

The Board can serve a notice on the member requiring payment either on call on shares or if the instalment is unpaid if the member fails to pay any call or instalment of a call on the day which was appointed for the payment. If the member fails to do so then he will have to pay the interest which may have been accrued. 

1. The notice will contain the following particulars – 

• a day not earlier than the expiry of 14 (fourteen days) from the date of service of the notice or before which the payment is to be made  required by the notice;
• state in the event of non-payment on or before the day so named, the shares in respect of which the call was made will be liable to be forfeited.

1. If the requirements of any such notice as previously mentioned are not complied with, then any share can be forfeited by a resolution of the Board in respect of the notice at any time after or before the payment. It is required by the notice that it must be forfeited by a resolution of the Board.
2. A forfeited share can either be sold or disposed of on the terms and manner prescribed as the Board thinks. The Board can cancel the forfeiture on shares at any time before a sale or disposal of the shares. 
3. A person whose shares have been forfeited will cease to be a member in respect of the forfeited shares but will remain liable to pay to the company all monies at the date of forfeiture. Payable by him to the company in respect of the shares. The liability of the person will cease if the company has received payment in full of all such monies in respect of the shares.

• A duly verified declaration in writing id required that the declarant is a director, the manager or the secretary of the company and a share in the company has been duly forfeited on a date stated in the declaration. All these will be  conclusive evidence of the facts stated as against all persons claiming to be entitled to the share;
• The company can receive the consideration given for the shares on any sale or disposal  and may execute a transfer of the shares in favour of the person to whom the share is sold or disposed of;
• The Transferee should be registered as the holder of the share;
• The Transferee will not be bound to the application of the purchase money nor will his title to the share be affected by any irregularity or invalidity in the proceedings of forfeiture, sale or disposal of the share.

1. The provisions of the regulations as to forfeiture will apply in the case of nonpayment of any sum by the terms of issue of a share. It becomes payable at a fixed time, either on account of the nominal value of the shares or by way of premium as if the same had been payable by a call duly made and notified.
2. The company can increase the share capital by an amount by an ordinary resolution to be divided into shares as specified in the resolution from time to time. Subject to the provisions of Section 61, the company can by ordinary resolution – 

• convert all or any of its fully paid-up shares into stock, and reconvert that stock into fully paid-up shares of any denomination;
• sub-divide its existing shares or any of them into shares of smaller amount as fixed by  the memorandum;
• cancel any shares at the date of the passing of the resolution, have not been taken or agreed to be taken by any person.

1. When shares are converted into stock – 

• it is provided that the Board can fix the minimum amount of stock transferable from time to time however minimum amount should not exceed the nominal amount of the shares from which the stock arose.
• the holders of stock should have the same rights, privileges and advantages as regards dividends, voting at meetings of the company, and other matters as if they held the shares from which the stock arose according to the amount of stock held by them, but no such privilege or advantage except participation in the dividends and profits of the company. In the assets on winding up, it should be conferred by an amount of stock which would not have conferred that privilege or advantage.
• such regulations of the company are applicable to paid-up shares must apply to stock and the words “share” and “shareholder” in those regulations and also include “stock” and “stockholder” respectively.

1. The company can reduce in a manner made by special resolution, subject to any incident authorised by law – 

• share capital;
• any capital redemption reserve account;
• any share premium account. 

1. The Board should have power – 

• to make such provisions, by the issue of fractional certificates or by payment in cash or otherwise as it thinks fit, for the case of shares becoming distributable in fractions; or
• to authorise any person to enter, on behalf of all the members entitled into an agreement with the company to provide for the allotment to them credited as fully paid-up. Any further shares to which they may be entitled upon such capitalisation, or as the case may require, for the payment by the company on their behalf, by the application of their respective proportions of profits resolved to be capitalised, of the amount or any part of the amounts remaining unpaid on their existing shares.

1. Any agreement made under such authority has to be effective and binding on such members.

Surrender of shares

Surrender of shares means a voluntary return of shares by a member of the company and it is also a shortcut to forfeiture of shares. Shares can be surrendered by the holder if he desires and these shares will be liable to be forfeited on default in the payment of calls. The voluntary surrender of shares are accepted by the company but it authorised by the Articles of the Company. The Directors may accept a surrender of shares only when:

• Under the situation which will justify forfeiture of shares, which means non-payment of amount due in respect of shares that are not fully paid;
• If the share or certificate gets torn or mutilated and can be exchanged with a new one.

Register of members: Section 88

(1) Every company is required to keep and maintain the following registers in such form

and in such manner, as  prescribed in Section 88:

• register of members indicating separately for each class of equity;
• preference shares held by each member residing in or outside India;
• register of debenture-holders; and
• register of any other security holders.

(2) Every register is required to maintain under sub-section (1) should include an index of the names included.

(3) The register and index of beneficial owners are maintained by a depository under Section 11 of the Depositories Act, 1996, will be deemed to be register and index for the purposes of this Act.

Right of inspection

The Register is kept under the sub-section (1) of Section 170 – 

• It should be open for inspection during the business hours and the members have a right to take extracts and copies on a request by the members provided to them free of cost within thirty days;
• It should keep the register open for inspection at every general meeting of the company and make it accessible to any person who attends the meeting. 
• If any inspection is provided in clause (a) of sub-section (1) is refused, or if any copy required under the clause is not sent within thirty days from the date of receipt of such request, the Registrar can make an application to him ordering immediate inspection and supply of copies required.  

Shares in Demat Form

The Companies (Prospectus and Allotment of Securities) Rules, 2014, have been amended by the ministry. It is stated that every unlisted company is expected to facilitate the dematerialisation of the securities in coordination with the depositories and share transfer agents. Every unlisted company makes an offer for issue of any securities buyback of securities or issue of bonus shares or rights offer are required to comply with certain requirements as per the rules. Unlisted public companies are expected to facilitate the dematerialisation of the securities in coordination with the depositories and share transfer agents. Every company who makes a public offer and other groups of public companies prescribed will issue the securities only in dematerialised form by complying the provisions of the Depositories Act, 1996. 

Rectification of register of members: Section 59

• If the name of a person is entered in the register of members of a company without any sufficient cause or the name has been omitted without any sufficient cause which means any default is there. If any unnecessary delay takes place in entering in the register, the fact of any person is ceased to be a member, the person aggrieved, or any member of the company, or the company can appeal as it is prescribed by the norms to the Tribunal, or to a competent court outside India, specified by the Central Government by notification, in respect of foreign members or debenture holders, residing outside India, for rectification of the register.
• The Tribunal can appeal under sub-section (1) after hearing the parties, can either dismiss the appeal or direct that the transferor or transmission must be registered by the company within a period of ten days of the receipt of the order. Further, it can direct rectification of the records of the depository or the register and in the latter case, direct the company to pay damages sustained by the aggrieved party.
• The provisions of this section can not restrict the right of a holder of securities, to transfer these securities. Any person acquiring such securities will be entitled to voting rights unless the voting rights have been suspended by an order of the Tribunal.
• The Tribunal made by the depository, company, depository participant, the holder of the securities or the Securities and Exchange Board can direct any company or a depository to set right the contravention and rectify its register or records concerned if the transfer of securities is in contravention of any of the provisions of the Securities Contracts (Regulation) Act, 1956, the Securities and Exchange Board of India Act, 1992 or the Act is in force at that time.
• If there is any default in complying with the order of the Tribunal under this section, the company will be punishable with a fine of not less than 1,00,000 (one lakh rupees) which may extend to 5,00,000 (five lakh rupees) and every officer of the company who is in default will be punishable with imprisonment for a term of 1 year or with fine of not less than 1,00,000 (one lakh rupees)  which can extend to 3,00,000 (three lakh rupees) or both.

Directors’ power of rectification of entries

It depends on the discretion of the directors to rectify members who have been registered even when an entry has been detected. There is no certain requirement in this scenario to apply to the Tribunal for an order of rectification.

The Board can itself affect the necessary corrections if the situation is such that the Tribunal would order rectification. An application to the court is essential when the company disputes the right to rectification. There is no certain reason why directors agree if they are bona fide (someone who is genuine) and that a shareholder has the right to avoid a contract. It should not assent to the cancellation of the contract and rectify the register in the appropriate manner. 

However, the directors have no power to rectify the register by substituting the name of another person in the place of an existing member, except on an application for transfer duly made in compliance with the provisions of the Act.

Amendment of Section 111 by the Depositories Act

Under Section 111 it is inserted that a company means a private company and includes a private company which had become a public company by virtue of Section 43A of the Act. 

Lien on shares

A lien is a legal right granted by the owner of the property, by law or otherwise acquired by a creditor. A lien serves to guarantee an underlying obligation, such as the repayment of a loan. If the underlying obligation is not satisfied, the creditor may be able to seize the asset that is the subject of the lien.

The company is required to have a first and most important (paramount) lien:

• on every share which is not fully paid share for all monies whether it is presently payable or not called at a fixed time, in respect of that share;
• on all shares which are not fully paid shares but stands registered in the name of a single person, for all monies presently payable by him or his estate to the company.

It is provided that the Board of Directors can declare any share to be wholly or in part exempt from the provisions of the clause at any time – 

The company’s lien on a share can extend to all dividends payable and bonuses declared in respect of such shares from time to time.

The company can sell any shares on which the company has a lien provided that no sale shall be made in such manner as the Board thinks – 

(a) unless a sum is presently payable in respect of which the lien exists;

(b) until the fourteen days expire, after a notice in writing stating and demanding payment of part of the amount in respect of which the lien exists as is presently payable. It would be given to the registered holder for the time being of the share or the person entitled by his death or insolvency.

• To give effect to any such sale, the Board needs to authorise some person to transfer the shares sold to the purchaser.
• The purchaser must be registered as the holder of the shares comprised in any such transfer.
• The purchaser will not be bound to see to the application of the purchase money, nor will his title to the shares be affected by any irregularity or invalidity in the proceedings in reference to the sale.

The proceeds of the sale will be received by the company and applied in payment of such part of the amount in respect of which the lien exists as is presently payable.

If there is any residue left it will be subject to a lien for sums not presently payable as existed upon the shares before the sale but paid to the person entitled to the shares at the date of the sale.

Annual returns: Section 92

1. Under Section 92, every company is required to prepare a return also known as annual return in the prescribed manner containing the particulars regarding financial year –  

• registered office, principal business activities, particulars of the holding, subordinate and associate companies;
• shares, debentures and other securities and shareholding;
• indebtedness;
• members and debenture-holders along with changes because of the close of the previous financial year;
• promoters, directors, key managerial employees along with changes since the close of the previous financial year;
• meetings of members of the Board and its various committees along with attendance details;
• remuneration of directors and key managerial employees;
• penalty or punishment imposed on the company, its directors or officers and details of compounding of offences and appeals made against such penalty or punishment;
• matters relating to certification of  disclosures as prescribed;
• details of shares held by or on behalf of the Foreign Institutional Investors which would their names, addresses, countries of incorporation, registration and percentage of shareholding held by them; and other matters as prescribed, and signed by a director and the company secretary, or if there is no company secretary then by a company secretary in practice.

It is provided that the annual return is required to be signed by the Company Secretary or by the director in relation to a One Person Company. 

(2) A company’s paid-up capital, annual return filed by the listed company and the turnover prescribed by the norms will be certified by the Company Secretary in practice in the prescribed form. It should state that the annual return will disclose the facts correctly and adequately. Also, the company has complied with all the provisions of the Act. 

(3) An extract of the annual return shall be prescribed in the form of part of the Board’s report.

(4) Every company is required to file a copy of the annual return with the Registrar within 60 days from the date on which the annual general meeting is held. When an annual general meeting is not held in any year then within sixty days from the date on which the annual general meeting should have been held together along with a statement specifying the reasons for not holding the annual general meeting. Also with fees or additional fees as prescribed, within the specified time under Section 403.

(5) The company will be punishable with a fine not less than 50,000 (fifty thousand rupees) that can extend to 5,00,000 (five lakhs rupees) and every officer of the company who is in default will be punishable with imprisonment for a term which may extend to six months or with fine, not less than 50,000 (fifty thousand rupees) but which may extend to 5,00,000 (five lakh rupees) or both if the company fails to file its annual return under sub-section (4), before the expiry of the period specified under Section 403 with additional fee.

(6) If a company secretary in practice certifies the annual return in conformity with the requirements of this section or the rules made under the section then he can be punishable with fine, not less than 50,000 (fifty thousand rupees) which may extend to 5,00,000 (five lakh rupees).

Share Capital

A share includes stock in the share capital of the company, this is in accordance with Section 2(84) of the Companies Act, 2013. In other words, a share is a measure of the interest in the company’s assets that a shareholder holds.

Kinds of share capital: Section 43

The share capital of a company limited by shares is divided into kinds: 

(a)  equity share capital

(b)  preference share capital

It is provided that the effect of the rights of the preference shareholders who are entitled to participate in the proceeds of winding up before the commencement of the Act. 

• Equity share capital means all share capital that is not share capital limited by shares.
• Preference share capital is a part of issued share capital of the company which carries or would carry a preferential right reference to any company limited by shares. 
• payment of dividend, either as a fixed amount or an amount calculated at a fixed rate, which can either be free of or subject to income-tax;
• repayment, in the case a company is winding-up or repayment of capital, of the amount of the share capital, paid-up or deemed to have been paid-up. There is a preferential right to the payment of any fixed premium or premium on any fixed scale that is specified in the memorandum or articles of the company. Capital will be deemed to be preference capital, that it is entitled to either or both of the following rights:
• in respect of dividends, in addition to the preferential rights to the amounts specified in sub-clause (a) of clause (2), it has a right to participate, fully or to a limited extent, with no capital entitled to the preferential right;
• capital, in addition to the preferential right to the repayment, on a winding-up, of the amounts specified in sub-clause (b) of clause (2), it has a right to participate, fully or to a limited extent, with capital not entitled to preferential right in any surplus which may remain after the entire capital has been repaid.

Types of Preference shares

There are eight types of preference shares. In case of dissolution of the company, any of the eight types can be paid before other types of equity:

Cumulative: In cumulative shares, all dividends are carried forward until specified, and are paid only at the end of the period specified.

Non-cumulative: The non-cumulative shares are the opposite of cumulative shares. Dividends are paid out of profits every year. There are no arrears carried over a time period to be paid at the end of the term.

Redeemable: Redeemable preference shares are claimed after a fixed period or after giving due notice.

Non-Redeemable: Non-Redeemable shares cannot be redeemed during the lifetime of the company, but can be redeemed at the time of winding up of a company or acquisition of assets.

Convertible: These shares can be converted into equity shares after a period of time or as per the conditions laid down in the terms.

Non-convertible: Non-convertible preference shares cannot be converted into equity shares at any point of time.

Participating: Such shares have the right to participate in any additional profits, after paying the equity shareholders. The surplus of profit and the fixed dividend paid up for preference shares are different.

Non-Participating: Non-participating preference shares do not possess any right to participate in surplus profits or any surplus gained at the time of liquidation of the company.

Redeeming preference shares: Section 55

1. Under Section 55, a company limited by shares cannot issue any preference shares that are irredeemable after the commencement of the act. A company may issue preference shares that are liable to redeemed within a period that does not exceed twenty years from the date of their issue subject to certain conditions if the company is authorised by its articles. 
2. A company has the right to issue preference shares for a period exceeding twenty years for infrastructure projects if provided. It is subject to the redemption of shares as determined on an annual basis at the option of preferential shareholders. 

• Shares cannot be redeemed except in the case of profits, it would be available for dividend or form the fresh issue of shares that are made for the purposes of redemption. 
• Shares will not be redeemed unless they are fully paid.
• When shares are redeemed out of the profits of the company then it will be transferred and will be called Capital Redemption Reserve Account. It should be noted that the sum will be equal to the nominal amount of shares and this will be governed under the provisions of this Act and it relates to a reduction of the share capital of the company. 
• A company’s financial statement complying with the accounting standards given under Section 133. If any premium is payable on redemption it will be provided out of profits of the company before the shares have been redeemed. 
• Premium shall be payable on redemption of any preference shares issued on or before the commencement of this Act by any company and it will be provided out of the profits of the company or out of the securities of the company before the shares are redeemed.

In case it does not fall under sub-clause, premium will be payable on redemption if it out of the profits of the company or out of the securities of the company premium account before the shares are redeemed.

3. A company can further issue redeemable preference shares equal to the amount due if the company is not in a position to redeem any preference shares or dividend in agreement with the terms of issue. Such shares are also known as unredeemed preference shares. It can do it with the consent of the holders of three-fourths in value of the shares with the approval of the Tribunal on a petition made. Then these unredeemed preference shares will be deemed to have been redeemed. The tribunal should give approval under the sub-section and order the redemption of shares that are held by people who have not consented to the further issue of redeemable preference shares. 
4. The capital redemption reserve account can be applied by the company to pay the unissued shares of the company to be issued to members of the company as fully paid bonus shares.

Ordinary and preference shareholder compared

Ordinary shareholders are eligible to participate in the surplus profits or assets of the company which remain after repayment of capital whereas preference shareholders have no right to participate in surplus profits until the right to participate in surplus profits is expressly given in the Articles. 

Alteration of capital: Section 61

Section 61 of the Companies Act, 2013 deals with the power of a limited company to alter its share capital. According to this section, a limited company having a share capital can alter its share capital by passing an ordinary resolution in general meeting if authorised by the articles. Such alteration does not require confirmation by the National Company Law Tribunal. However, the notice of such alterations should be given to registrar within 30 days of such alteration in e-form SH-7 with certified copy of ordinary resolution along with explanatory statement and altered copy of Memorandum of Association of the company.

Reduction of capital: Section 66

1. Under Section 66, a company limited by shares or limited by guarantee which has share capital can reduce the share capital in any manner by a special resolution.
2. The Tribunal is required to give notice of every application made to it under sub-section (1) to the Central Government, Registrar and to the Securities and Exchange Board of India, in the case of listed companies, and the creditors of the company. It should also take into consideration the representations if there are any and made to it by the Government, Registrar, the Securities and Exchange Board, and the creditors within a period of three months from the date of receipt of the notice.
3. It is provided that if no representation is received by the Central Government, Registrar, the Securities and Exchange Board (SEBI) or the creditors within the given period, it will be presumed that they have no objection to the reduction of the capital. The tribunal can make an order confirming the reduction of share capital if it is satisfied that the debt or claim of any creditor of the company has been discharged or determined or has been secured or the consent has been obtained.
4. It is also provided that an application cannot be sanctioned for reduction of share capital by the Tribunal until the accounting treatment is proposed by the company for such reduction. It should be in conformity with the accounting standards specified in Section 133 or any other provision of the Act and a certificate needs to be filed with the Tribunal with the effect by the company’s auditor. The order of confirmation of the reduction of share capital by the Tribunal under sub-section (3) will be published by the company in the manner directed by the Tribunal. 
5. The company is required to deliver a certified copy of the order of the Tribunal under sub-section (3) and approved by the Tribunal showing – 

• the amount of the share capital; 
• the number of shares into which it is to be divided; 
• the amount of each share; and
• the amount at the date of registration deemed to be paid-up on each share, to the Registrar within thirty days of the receipt of the copy of the order, who will register the same and issue a certificate to that effect. 

1. This section does not apply to buy-back of its own securities by a company under Section 68. 
2. A member of the company, past or present, will not be liable to any call or contribution in respect of any share if held by him exceeding the amount of difference between the amount paid on the share, or reduced amount if any, which is to be deemed to have been paid and the amount of the share as fixed by the order of reduction. 
3. When the name of any creditor is entitled to object to the reduction of share capital under this section is, by reason of his ignorance of the proceedings for reduction or of their nature. The effect with respect to his debt or claim, not entered on the list of creditors, and after such reduction, the company is unable, within the meaning of sub-section (2) of Section 271, to pay the amount of his debt or claim,— 

• Every person, who was a member of the company on the date of the registration of the order for reduction by the Registrar, will be liable to contribute to the payment of that debt or claim, an amount not exceeding the amount which he would have been liable to contribute if the company had commenced winding up on the day immediately before the said date; and
• If the company is wound up, the Tribunal can settle a list of persons so liable to contribute and make and enforce calls and orders on the contributors settled on the list, as if they were ordinary contributors in a winding up on the application of any such creditor and proof of his/her ignorance.

1. This section can not affect the rights of the contributors among themselves-

• If any officer of the company knowingly conceals the name of any creditor who is entitled to the reduction;
• If he knowingly misrepresents the nature or amount of the debt or claim of any creditor;
• If he abets to any such concealment or misrepresentation he will be liable under Section 447. If a company fails to comply with the provisions of sub-section (4), it will be punishable with a fine of not less than 5,00,000 (five lakh rupees) which may extend to 25,00,000 (twenty-five lakh rupees). 

Further issue of capital: Section 62

Under Section 62, a company proposes to increase its subscribed capital by the issue of further shares and these shares will be offered to – 

• To people who are the holders of equity shares of the company in proportion to the paid-up share capital on those shares by sending a letter of offer to some conditions – 

(i) the offer will be made by specifying the number of shares offered by notice and limiting a time not less than fifteen days. Also, it should not  exceed thirty days from the date of the offer within which the offer, if not accepted it will be deemed to have been declined; 

(ii) unless the articles of the company states the offer it will be deemed to include a right which can be exercised by the person to relinquish the shares offered to him or any one of them in favour of any other person. The clause (1) contained in the notice will be in the statement of the right.

(iii) The Board of Directors can dispose of the notice in such a manner which is not disadvantageous to the shareholders and the company, to employees under a scheme of employees’ stock option which will be subject to a special resolution passed by the company and to some conditions as prescribed. 

• The notice in sub-clause (i) of clause (a) of sub-section (1) should be despatched through registered post or speed post or through electronic mode to all the existing shareholders at least three days before the opening of the issue.
• It is provided that if the terms and conditions of such conversion are not acceptable to the company it can appeal to the Tribunal after hearing the company and the Government pass such order within sixty days from the date of communication of such order. 
• The Government has the due regard to the financial position of the company, in determining the terms and conditions of conversion under sub-section (4) and the terms of issue of debentures or loans and the rate of interest payable on such debentures or loans and such other matters it considers. 
• When the Government has made an order under sub-section (4), which directed that any debenture or loan or any part can be converted into shares in a company and no appeal is referred to the Tribunal under sub-section (4) or where such appeal has been dismissed, the memorandum of such companies will effect increasing of the authorised share capital of the company.

Employees Stock Option 

It means the option given to the directors, officers or employees of a company or of its holding company or subordinate company or companies which gives directors, officers or employees, the benefit or right to purchase, to subscribe the shares of the company at a future date at a price which is predetermined. 

Power to convert loans into capital

The Central Government has taken a new power to convert the debentures into debentures that is issued to and taken from the Government by the amendment of 1963. The Central Government can direct that any debenture that shall be converted into shares in the company. These debentures have been issued by a company to the Government or been taken by any loan. The Government can exercise such power only when such conversion appears to be necessary in the public interest. The conversion of debentures on such conditions will take place only when the Government finds them reasonable. The financial position of the company, the original terms of the issue, the rate of interest, the capital of the Company, its liabilities, its reserves and the profits of the company must be taken into consideration. 

The Government needs to be careful to avoid serious imbalance in the ratio of debt to equity capital of the company. The company can appeal to the court within thirty days if the terms and conditions proposed by the Government are not acceptable to the company. The decision of the court will be final and conclusive. A copy of every order issued by the Government has to be laid in draft before each House of Parliament for a period of thirty days. 

The capital of the company will increase by an equal amount and memorandum altered if the Government or any public financial institution has converted its debentures or loans into capital under Section 94-A  inserted by the amendment of 1974.

Voting Rights 

Any member of a Company limited by shares and holding equity share capital under the provisions of Section 43 and sub-section (2) of Section 50, has a right to vote on every resolution placed before the company. His voting right on a poll will be in proportion to the shares in the paid-up equity share capital of the company. Any resolution for the winding up of the company or for the repayment or reduction of its equity or preference share capital and his voting right on a poll should be in proportion to his share in the paid-up preference share capital of the company. It is provided that the proportion of the voting rights of equity shareholders to the voting rights of the preference shareholders will be in the same proportion as the paid-up capital in respect of the equity shares bears to the paid-up capital in respect of the preference shares.                                                          

Variation of shareholders’ rights: Section 48

1. When share capital of the company is divided into different groups of shares, the rights attached to the shares of any class may vary with the consent of the holders of not less than three-fourths in writing. The issued shares of that group or class is passed at a separate meeting of the holders of issued shares under Section 48.

• If the memorandum or articles of the company contains the provision with respect to variation;
• The variation is prohibited by the terms of the issue of shares if any provision in the memorandum or articles is absent. It must be noted that if there is a variation even by one group of shareholders then consent of three-fourths of such shareholders will be obtained and all the provisions under this section should apply to the variation. 

1. When the shareholders of the issued shares do not hold less than ten per cent, did not consent to the variation or vote in favour of the special resolution, they may apply to the Tribunal to cancel the variation. If any such application is made, the variation should not effect until it is confirmed by the Tribunal. It is provided that an application under the section should be made within 21 (twenty-one) days after the date on which consent was given or resolution was passed. Also, it should be made on behalf of shareholders who are entitled to make the application.
2. The decision made by the Tribunal will be binding on the shareholders on any application under sub-section (2). 
3. The company is supposed to file a copy with the Registrar within thirty days of the date of order of the Tribunal.
4. The company will be punishable with fine which will be not less than twenty-five thousand rupees which can extend to 5,00,000 ( five lakh rupees) if the company is not complying with the provisions of the section. Any officer of the company who is in default will be punishable with imprisonment for a term that can extend to six months or fine not less than 25000 (twenty-five thousand rupees) that can extend to 5,00,000 (five lakh rupees).

Power to Nominate

• Every holder of securities of a company can nominate any person to whom his securities are vested in the event of his death in the prescribed.
• When the securities of a company are held by more than one person jointly, the joint holders can together nominate, any person to whom all the rights in the securities have vested in the event of death of all the joint holders in the prescribed manner. 
• When the nominee is a minor, it should be lawful for the holder of the securities, to make the nomination to appoint any person to become entitled to the securities of the company, in the event of the death of the nominee during his minority in the prescribed manner. 

Share Warrants

A Share Warrant is a document issued by the company under its common seal, which states that the bearer is entitled to the shares or stock specified. Share warrants are negotiable instruments. They are transferable by delivery without registration of transfer.

Purchase by Company of its own shares: Section 68

A company can purchase its own shares or any other specified securities under Section 68 out of: 

• Free reserves
• Securities Premium Account
• Proceeds of issue of any shares or any other specified securities, buyback of any kind of shares or any other specified securities will be made out of the proceeds of the issue of the same kind of shares or the same kind of security is not provided.  

A company cannot purchase its own shares or any other specified securities under sub-section (1) until – 

• The buyback of shares are authorised by the articles
• A special resolution is passed at a general meeting of the company which authorises the buyback.
• The buyback of shares is 10% or less than the total paid-up equity capital and free reserves of the company and the buyback has been authorised by the Board by passing a resolution in the meeting. 
• The buyback is 25% or less than the aggregate of paid-up capital and free reserves of the company. It is provided that in respect of buyback of equity shares in a financial year, the reference to 25% will be interpreted with respect to the total paid-up equity capital in that financial year.
• The ratio of secured and unsecured debts owed by the company should not be more than twice the paid-up capital and free reserves. The Central Government can notify a higher ratio of debt to capital and free reserves for a class of companies.
• The shares or other specified securities for buyback must be fully-paid.
• The buyback of shares or other specified securities listed on the stock exchange is in agreement with the regulations made by the Securities and Exchange Board in this behalf.
• The buyback of shares or other specified securities other than those specified in the clause (f) is in agreement with the rules as may be prescribed. It is provided that no offer of buyback under the subsection is made within one year from the date of closure of the preceding offer of buyback. 

The notice of the meeting is passed at the proposal of special resolution under the clause – 

• A full and complete revelation of all the material facts;
• Necessity for buyback of shares;
• The group of shares or securities to be purchased under the buyback shares;
• The amount to be invested under buy-back;
• The time limit for completion of buy-back.

Every buyback should be completed within a period of one year from the date of passing of the special resolution passed by the Board under clause (b) of subsection (2).

The buy-back under sub-section, from the existing shareholders or security holders on a proportionate basis;

• from the open market;
• by purchasing the securities that are issued to employees of the company in accordance with a scheme of stock option or sweat equity.

1. When a company offers to buy-back its own shares or any other specified securities under this section in fulfilment of a special resolution under clause (b) of sub-section (2). According to the provision, the company should file a register,  the Securities and Exchange Board and a declaration of solvency signed by at least to directors of the company. One would be the managing director and prescribed by an affidavit to the effect that the Board of Directors of the company has made an inquiry into the affairs of the company. As a result, they formed an opinion which is capable of meeting its liabilities and shall not be rendered insolvent within the period of one year from the date of the declaration adopted by the board. 
2. It is provided that declaration of solvency will not be filed with the Securities and Exchange Board by a company whose shares are not listed on any stock exchange. When a company buys back its own shares or any other specified securities, it will physically destroy the shares or securities bought back within seven days of the last date of completion of buy-back. 
3. When a company completes a buy-back of its shares or any other specified securities under this section, it will not make a further issue of the same kind of shares or other securities including allotment of new shares under clause (a) of sub-section (1) of Section 62. The securities which are specified within the period of six months, except a bonus issue or the discharge of obligations such as conversion of warrants, sweat equity or conversion of preference shares or debentures into equity shares.
4. When a company buys back its shares or any other specified securities under this section, it is required to maintain a register of the shares or securities bought. The consideration paid for the shares bought back, the date of cancellation of shares or securities, the date of extinguishing and physically destroying the shares or securities and other particulars should be prescribed by the company. 
5. A company is required to file a return with the Registrar and Securities and Exchange Board of India after the completion of buy-back under the section. It should contain particulars relating to the buy-back within thirty days of such completion. It is provided that return cannot be filed with the Securities and Exchange Board of India by a company whose shares are not listed on any stock exchange. The company will be punishable with fine if it makes any default in complying with the provisions of the regulation made by the Securities and Exchange Board. The purpose of clause (f) of sub-section (2) applies if the company is punishable with fine which should not be less than 1,00,00 rupees which can extend to 3,00,00. Any officer of the company who is in default will be punishable with imprisonment for a term of 3 years or fine which will not be less than 1,00,000 rupees which can extend to 3,00,000 rupees or maybe both. 

Declaration of solvency 

Declaration of solvency comes under Section 305 –

1. The majority of directors can make a declaration verified by an affidavit at a meeting of the Board when the company proposes to wind the company voluntarily when there are more than two directors. The declaration verified by the affidavit to the effect that they have made a full enquiry into the affairs of the company. They form an opinion that the company has no debt or will it be able to pay its debts in full by selling their assets in voluntary winding up.

• it is made within 5 (five) weeks preceding the date of the passing of the resolution for winding up the company and it is delivered to the Registrar for registration before that date;
• it contains a declaration that the company is not winding up to defraud any person or persons;
• it is accompanied by a copy of the report of the auditors of the company prepared in accordance with the provisions of the Act, on the profit and loss account of the company for the period beginning from the date up to which the last such account was prepared and ending with the latest practicable date immediately before the making of the declaration and the balance sheet of the company made out as on that date which will also contain a statement of the assets and liabilities of the company on the specified date;
• when there are any assets of the company they should be accompanied by a report of the valuation of the assets of the company prepared by a valuer who is registered.

1. A declaration made under sub-section (1) will have no effect for the purposes of this Act.
2. When the company is winding up in accordance with a resolution passed within a period of 5 (five) weeks after the making of the declaration, but the debts are not paid or provided for in full then it will be presumed that until the contrary is shown that directors did not have reasonable grounds for their opinion under sub-section (1).
3. If any director of a company makes a declaration without having reasonable grounds for the opinion that the company will be able to pay its debts in full from the proceeds of assets sold in voluntary winding up he will be punishable with imprisonment for a term not less than 3 years which can extend to 5 years or with fine, not less than 50,000 rupees but which can extend to 3,00,000 rupees or both.

Physical destruction of securities 

After the buy-back of shares is over, the securities shall be destroyed physically within seven days of the last day of completion of buy-back of shares. The company is required to maintain a register containing the particulars of the securities bought back.

Further issue after buy-back

A company cannot make a further issue of securities within a period of six months if the company has resorted to the buying back of its securities. However, a company may make a bonus issue of shares and discharge its existing obligations like conversion of warrants, stock option schemes, conversion of preference shares or sweat equity into equity shares. Such restriction only applies to securities bought back. The company is free to issue any other type of securities. 

Register of bought back securities

A register has to be maintained which contains the particulars of the bought back securities including the consideration paid, the date of cancellation and other particulars. 

Return of buy-back

The company has to file a return with the Securities and Exchange Board of India and registrar after completing the process of buyback. It should be filed within thirty days from the date of completion. 

Penalty

If the company defaults in complying with the requirements of the section and rules made under it is a punishable offence. The company and any officer of the company will have to face imprisonment who is in default. The imprisonment may extend up to two years or fine which can be rupees fifty thousand rupees or both. 

Transfer of money to Capital Redemption Reserves Account

When a company purchases its own shares out of reserves or securities premium account, a sum equal to the nominal value of the shares purchased will be transferred to the capital redemption reserve account and details of the transfer will be disclosed in the balance sheet of the company. 

Prohibition of buy-back in certain circumstances

A  company does not directly purchase its own shares or other specified securities:

• It does so by the way of any subordinate company including its own subordinate companies;
• By way of  any investment company or group of investment companies; 
• If the company is in default, in the repayment of deposits accepted either before or after the commencement of this Act, interest payment thereon, redemption of debentures or preference shares or payment of dividend to any shareholder, or repayment of any term loan or interest payable to any financial institution or banking company. Provided that the buy-back is not prohibited if the default is remedied and a period of three years has elapsed after such default ceased to subsist. 

A company cannot directly or indirectly, purchase its own shares or any other specified securities in case the company has not met with the provisions of Sections 92, 123, 127 and Section 129. 

Conclusion 

A company has many components which are important for shareholders, members and other people who are affected by the decisions of the Company. The company may be a private, public or a one-person company. The amendments in the Companies Act, 2013 aimed at easing the process of doing business in India and improving corporate governance by making the companies more accountable.

The Act introduced new concepts such as Small Company, Dormant Company and Corporate Social Responsibility. The new act of 2013 has increased the limit of the number of members from 50 (fifty)  to 200 (two – hundred) in a private company. In the Companies Act, 2013 it was decided to adopt Table F as standard set of Articles of Association of the Company with relevant changes to suite the requirements of the company.

Further, every copy of Memorandum and Articles (MOA) were issued to members and they shall contain a copy of all resolutions/agreements that are required to be filed with the Registrar of companies (ROC). The Companies Act, 1956 Act provided the companies to elect an accounting year whereas The Companies Act 2013 Act eliminates the flexibility in having an accounting year different than 31 March. The 2013 Act provides that the accounting year for all companies should end on 31 March, with exceptions approved by the National Company Law Tribunal (NCLT). 

References 

• http://www.bareactslive.com/ACA/act2853.htm
• https://taxguru.in/company-law/faqs-share-warrants.html
• https://www.advocatekhoj.com/library/bareacts/companies2013/171.php?Title=Companies%20Act,%202013&STitle=Members%92%20right%20to%20inspect
• http://ebook.mca.gov.in/Actpagedisplay.aspx?PAGENAME=23277

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This article is written by Pranjal Rathore studying in Maharashtra National Law University, Aurangabad pursuing B.A.LL.B.(Hons.). The private defence related to the body has been discussed in this article.

Introduction

The privilege of private defence is a significant right and it is essentially preventive in nature and not punitive. It is accessible even with hostility when the state help isn’t accessible. Section 96 of IPC doesn’t characterize the articulation ‘right of private defence’. It simply shows that nothing is an offence, which was done in the ‘right of private defence’. Section 97 is bestowed with the subject matter of private defence, which contains the right to secure the body or property of the people practising the right or of some other individual. The privilege may be practised against all offences influencing human body or endeavour or sensible danger of the commission of any such offence or offence of burglary, theft, mischief or criminal trespass and endeavours to carry out any of such offences in connection to the property. This privilege is accessible for the insurance of one’s own body or collection of some other individual or one’s property or the property of some other individual in the face of animosity concerning body or property against specified offences. Indian law on the right of private defence doesn’t necessitate that the defence must be identified with the individual whose body or property is topic of hostility. It offers right to everyone to protect anyone’s and everyone’s body or property against offences for which right of private defence, is given there is no opportunity to take plan of action to the assurance of the open specialists and the power utilized isn’t more than what is important to ensure the body or property of an individual.

Basis of the Right of Private Defence

To protect oneself is a characteristic sense in man which shares for all intents and purposes with each other creature. As said by B. Parke: “Nature prompts a man who is stuck to oppose, and he is legitimized in utilizing such an extent of power as will forestall a redundancy.” Obviously, the degree of acknowledgement of this privilege of Private Defence depends upon the limit and assets of the state to secure its subjects. The privilege of Private Defence is a profoundly prized and significant right conceded to the resident to secure himself and his property by effective obstruction against unlawful hostility. The essential guideline fundamental for the privilege of Private Defence is that when an individual or his property is looked with risk and prompt guide from the State machinery isn’t promptly accessible, that individual is qualified secure himself and his property. The law observes that each resident will hold his ground manfully against animosity.

No man is normal when he is assaulted by lawbreakers. To be sure the privilege of Private Defence must be encouraged by the residents of each free nation. The activity of the privilege of Private Defence should never be noxious or malicious. The privilege of Private Defence serves a social reason and that privilege ought to be generously construed. Such a privilege not exclusively will be a controlling impact on terrible characters yet it will empower the right soul in a free resident. There is nothing more debasing to the human soul than to flee in the substance of danger. Where the individual who is assaulted by the accused is not the aggressor, no privilege of Private Defence can be guaranteed by the accused by any stretch of the imagination. The idea of Private Defence lays on the rule that it is legitimate for an individual to utilize a sensible level of power to ensure him or another against any unlawful utilization of power which is coordinated towards him.

The privilege of Private Defence must be recognized from the precept of need. Law takes not of such outer impulse and believes the demonstration to be reasonable. The State has the obligation to shield its residents and their property from hurt. Nonetheless, conditions may emerge at the point when the guide of State machinery isn’t accessible and there is inevitable peril to an individual or his property. In such circumstances, an individual is permitted to utilize power to avoid the quick risk to his or another person’s individual or property. This is the right of Private Defence. Be that as it may, such a privilege or right is dependent upon certain limitations and not accessible in all conditions. The privilege of Private Defence isn’t accessible against community workers acting in the exercise of their legitimate forces.

The Right of Private Defence in India: Legislative Framework

Jeremy Bentham, an English Legal Luminary, once opined, “This privilege of defence is completely essential. The cautiousness of the Magistrates can never compensate for the watchfulness of every person on his own behalf. The dread of the law can never limit awful men so efficaciously as the dread of the aggregate to individual resistance. Remove this privilege and you become, in this manner, the associate of every single awful man.” This privilege depends on two standards;

1. It is accessible against the aggressor just; and
2. The privilege is accessible just when the defender engages sensible fear or reasonable apprehension.

The right to private defence of a resident, where one can for all intents and purposes take law in his own hands to shield his very own individual and property or that of others, is unmistakably characterized in Section 96 to Section 106 of the Indian Penal Code. Section 96 discusses things done in private defence that nothing is an offence, which is done in the activity of the privilege of the private defence. Right of private defence can’t be said to be an offence consequently. The privilege of self-defence under Section 96 is not outright, however, is obviously qualified by Section 99 which says that the right for no situation reaches out to the incurring of more damage than it is essential with the end goal of private defence. It is very much settled that in a free battle, no right of private defence is accessible to either party and every individual is answerable for his very own demonstrations. The privilege of private defence will totally clear an individual from all blame in any event when he causes the demise or death of someone else in the accompanying in the following circumstances:

1. On the off chance that the deceased was the genuine attacker, and
2. On the off chance that the offence submitted by the deceased, which occasioned the reason for the activity of the privilege of private protection of body and property falls inside any one of the six or four classifications identified in Section 100 and Section 103 of the Indian Penal Code.

Section 97 discusses the right of private defence of the body and of property:-Every individual has a right, subject to the limitations contained in Section 99, to protect; 

1. His very own body, and the body of some other individual, against any offence affecting the human body;
2. The property, regardless of whether moveable or steady, of himself or of some other individual, against any demonstration which is an offence falling under the meaning of burglary, devilishness or criminal trespass, or which is an endeavour to carry out burglary, theft, mischief for criminal trespass.

This section limits exercise of the privilege or right of private defence to the degree of supreme need. It must not be more than what is vital for guarding animosity. This section separates the right of private defence into two sections, for example, the initial section manages the right of private defence of the individual, and the second part with the right of private defence of property.

General Principles 

The two-judge bench of SC in Darshan Singh Vs State of Punjab and Another outlined the principles of Right of Private Defence as pursues:

1. Self-defence is the essential human nature and is appropriately perceived by the criminal statute of every single socialized nation. All free, law-based and enlightened nations perceive the privilege of private defence inside certain sensible points of confinement;
2. The privilege of private defence is accessible just to one who is all of a sudden stood up to with the need of turning away a looming peril and not of self-creation;
3. An insignificant sensible misgiving is sufficient to place the privilege of private defence into activity. At the end of the day, it is not fundamental that there ought to be a real commitment of the offence so as to offer ascent to one side of private defence. It is sufficient if the accused captured that such an offence is examined and it is probably going to be submitted if the right of private defence is not worked out;
4. The privilege of private defence starts when sensible fear emerges and it is seen with the duration of such fear;
5. It is unreasonable to anticipate that an individual under attack should adjust his protection bit by bit with any arithmetical exactitude;
6. In private defence, the power utilized by the accused should not be completely unbalanced or a lot more prominent than would normally be appropriate for the security of the individual or property;
7. It is all around settled that regardless of whether the accused doesn’t argue self-defence, it is available to consider such a request if the equivalent emerges from the material on record;
8. The accused need not demonstrate the presence for the privilege of private defence past a sensible apprehension;
9. The Indian Penal Code gives the privilege of private defence only when that unlawful or illegitimate act is an offence;
10. An individual who is in imminent and sensible peril or danger of losing his life or appendage may exercise self-protection or private defence perpetrate any mischief in any event, stretching out to death on his aggressor either when the assault is endeavoured or straightforwardly compromised.

Right of Private Defence Essentially a Defensive and not a Punitive Right

In the case of State Vs Chaturbhujh Singh, Hon’ble High Court observed the following; Self-defence is regarded and perceived as it is a fundamental right of an individual to shield his body, someone else, or property, particularly when the plan of action to open authority isn’t accessible. The said right is practised against the attacker. “The privilege to the private defence being a protective right is principally intended to be preventive in nature and not punitive.” It’s anything but a privilege of animosity or response or right to rebuff. The burden lies on the charged to demonstrate that he had no opportunity to take the plan of action to open authority before he practised the right to defend himself, another or property under Section 97 of the IPC. The punitive resolution perceives that each individual has a right, subject to the limitations contained in Section 99 of the IPC to secure his very own body, the body of some other individual against any offence influencing the human body. The individual additionally has right to safeguard his property or that of some other individual against any demonstration which falls under the meaning of burglary, theft, insidiousness or criminal trespass or endeavours to carry out burglary, theft, naughtiness or criminal trespass. Under Section 99, IPC states that privilege to private defence isn’t accessible where there is an ideal opportunity to have a plan of action for insurance from the open position and doesn’t stretch out to perpetrating more mischief than should be expected with the end goal of safeguard.

So, Right to private defence is a defensive right and not a punitive right was observed in the above-mentioned case.

Right of Private Defence not Available to Aggressors 

It is all around a settled legal position that the right of private defence is accessible as it were to safeguard against an animosity when the security of the state authority is not accessible gave the equivalent is practised inside the constraints recommended in Section 99 of the IPC and other related arrangements. It is a settled legal position that no assailant can guarantee right of private defence.

In Kishan v. Province of M.P., the pre-eminent Court held that the accused who was an attacker was not qualified for the right of private defence.

Free Fight 

No right to private defence is available in the case of the free fight when both the parties are willingly fighting with each other. In such a case right to private defence can not be given to either of the parties.

Right of Private Defence not Available Against Lawful Acts 

So as to verify the assurance of Section 99 of the Indian Penal Code, it is basic that the demonstration done or endeavoured to be finished by a local official must be: 

1. In compliance with common decency or in good faith;
2. Under colour of his office, and
3. Though that demonstration may not be strictly justifiable by law.

Good faith

Section 52 of the Indian Penal Code characterizes “good faith” as under:

“Nothing is said to be done or trusted in ‘accordance with some basic honesty’ which is done or accepted without due care and consideration”. Due care and consideration suggest a certified exertion to come to the truth and not the prepared acknowledgement on sick natured conviction. Nevertheless, the inquiry of good faith is an issue of certainty and must be assembled from the encompassing conditions. Good faith doesn’t require consistent dependability yet due care and alert which should for each situation be considered with reference to the general conditions and the limit and knowledge of the individual whose faith is being referred to.

In Kesho Ram v. Delhi Administration, the Supreme Court held that insusceptibility under Section 99, I.P.C. can be asserted by a local official, on the off chance that the demonstrations in good faith and under the shade of his office, despite the fact that the lawfulness of the demonstration could not generally be continued.

Colour of office

“Under the colour of his office” that is bonafide accepting that it was public worker’s obligation to play out the act whether he was acting legitimately or unlawfully in the release of his duty. The expression “colour of office” refers to unpredictable as distinguished from unlawful acts. In the event that what has been done will be done in compliance with common decency under colour of his office no privilege of private defence would emerge. It shows that the act was inside purview, that the locale has been practised sporadically or on deficient grounds. So, the act has been done wrongly however it may have been done properly.

Not strictly justifiable by law

Short of a sensible reason for fear of death or of intolerable hurt a public worker acting in compliance with common decency and for acts done under colour of his office is safe from any request of the right of private defence. On the other hand at the end of the day, the right of private defence can’t be practised against such public official. There is a huge improvement between acts which is ultra vires from the earliest starting point and one which isn’t strictly justifiable by law. The words “not strictly justifiable by law” are not proposed to fix the need of jurisdiction however just an incorrect exercise of it.

Section 99 is intended to secure a local official, what’s more, to confine the measure of resistance which might be offered to him. Section 183 of the I.P.C. then again isn’t a section for the assurance of the local official, yet empowers him to attack and prosecute anyone who opposes the taking of property by legitimate position. It is one thing to give that a local official who is acting bona fide in the activity of his office however in an overabundance of his expert truth be told, is to be shielded from acts of savagery. Protection from the act of a public official acting true blue however in an overabundance of his position may well offer ascent to some charge in the idea of attack, yet it can’t bear the cost of any establishment for prosecution under Section 183 of the I.P.C. It applies to protection from the taking of property by the legitimate authority of a local official, and there are no words in that section, as there are in Section 99, I.P.C. broadening the activity of the area to acts which are not strictly justifiable by the law. “Strictly” in Section 99 of the  I.P.C. has been intentionally embedded by the governing body to show that this section was not expected to apply to situations where the act was completely unjustified. It doesn’t expand to situations where there is a finished need of jurisdiction. 

In Jograj Mahto v. Emperor, the Patna High Court saw that it has been held in a progression of cases that Section 99 of the  I.P.C. applies just where there is locale to do an act yet that ward has been, in certain regards, illegitimately worked out. The articulation utilized in this Section is “strictly justifiable by law”. “Strictly” which more likely than not been purposely embedded by the legislature shows that this section was not expected to apply to situations where the act was completely unjustified. It doesn’t reach out to situations where there is a finished need of jurisdiction. 

Right of Private Defence Against Acts of Infants, Insane, Intoxicated Persons

Infancy

Section 82 incorporates an act of a youngster beneath seven years old. Nothing is an offence which is done by a kid under seven years old. Assume a youngster beneath seven years old, squeezed the trigger of the weapon and caused the death of his dad, at that point, the kid won’t be at risk.

Section 83 incorporates an act of a kid over seven and under twelve of juvenile comprehension. Nothing is an offence which is done by a youngster over seven years old and under twelve, who has not yet accomplished adequate development of comprehension to pass judgment on the nature and repercussions of his lead during that event. For example: Suppose an offspring of 10 years slaughtered his dad with a firearm in the shadow of youthfulness, he won’t be at risk on the off chance that he has not accomplished development.

In Krishna Bhagwan v. State of Bihar  Patna High Court maintained that if a youngster who is accused of an offence during the act, has achieved the age of seven years or at the hour of choice the kid has accomplished the age of seven years can be sentenced on the off chance that he has the comprehension and information on the offence submitted by him.

Insanity

Under Section 84 of the IPC nothing is an offence which is done by an individual who at the time of performing it, by reason of unsoundness of brain, is unequipped for knowing the idea of the act, or that he is doing what is either off-base or in opposition to the law. For example, A, who is crazy or unsound, executed B with a blade, believing it to be a fun game, won’t be at risk for B’s demise as he didn’t know about the idea of act and law. He was unequipped for intuition sensibly.

In Ashiruddin Ahmed vs The Emperor, the charged Ashiruddin was told by somebody in heaven to forfeit his very own child,  aged 4 years. Next morning he took his child to a mosque and murdered him and afterwards went directly to his uncle, however finding a chowkidar, took the uncle close by a tank and revealed to him the story. The Supreme Court opined that the accused can guarantee the defence as, despite the fact that he knew the idea of the act, he didn’t have a clue what wasn’t right.

Intoxication

Section 85 says that nothing is an offence which is finished by an individual who at the hour of doing it, is, by reason of intoxication, unequipped for knowing the idea of the act, or that he is doing what is either off-base or in opposition to law, given that the thing which intoxicated him was controlled automatically without his will or information. For example, ‘A’ drank liquor given by a companion believing it to be a virus drink. He got intoxicated and hit an individual on driving his vehicle back home. He won’t be at risk as liquor was regulated to him without his will and information.

Section 86 applies to situations where an act is done, is not an offence unless done with a specific information or aim, an individual who did the act in condition of intoxication, will be at risk to be managed as though he had a similar information as he would have had on the off chance that he had not been intoxicated, unless the thing which intoxicated him was directed to him without his insight or without wanting to.For example, An individual, intoxicated, cuts someone else under the impact of liquor which was regulated to him in the gathering without wanting to, won’t be subject. In any case, on the off chance that that individual had wounded that individual under intentional inebriation, at that point he will be subject.

In Babu Sadashiv Jadhav Vs State of Maharashtra, the accused came home drunk and poured lamp fuel on his wife and set her ablaze and lit in the fire. The court held that, he proposed to cause substantial damage which was probably going to cause her death under Section 299.

Burden of Proof

The burden of proof that the act being referred to was in the exercise of the right of private defence as for both bodily offences just as an offence against property is on the denounced.

In Rizan and another v. State of Chattisgarh, the court saw that the question, whether an individual acted in exercise of the right of private defence is needy on the encompassing conditions of the case. The court additionally decided that it is well settled that it isn’t fundamental for the accused to argue in such a large number of words that he acted in self-defence. In a guaranteed case the court can think of it as regardless of whether the accused has not taken such a request however such an end is perceivable from the accessible material on record.

Under Section 105 of the Indian Evidence Act, 1872 the burden of proof is on the accused, who takes the request of self-defence to demonstrate the equivalent. The inquiry in such a case would be a question of evaluating the genuine impact of the prosecution proof and not an inquiry of the accused releasing any weight. Where the privilege of private defence is argued, the protection must be a sensible and plausible form, fulfilling the court that the mischief brought about by the denounced was fundamental for either averting the assault or for hindering further sensible fear from his side. The burden of proof of self-defence would stand released by appearing prevalence of probabilities for that request based on material on record. It can’t be expressed as an all-inclusive guideline that at whatever point there are wounds on the body of the accused people, an assumption can fundamentally be drawn that they had caused wounds in the exercise of their privilege of private defence.

In any case, insignificant non-clarification of the reason for those wounds by the prosecution may not influence the prosecution case in all cases. The rule applies to situations where the wounds continued by the accused are minor, furthermore, shallow or where the proof is so clear and apt, so free and impartial, so likely, predictable and trustworthy that it far exceeds the impact of the exclusion with respect to the prosecution to clarify the wounds. The courts have seen that a request for private defence can’t be founded on construes and hypotheses. So as to discover whether the privilege of private defence is accessible to the accused, the whole occurrence must be inspected with care and seen in its legitimate setting. The wounds got by denounced to the advent of risk to his security, the wounds brought about by the denounced and the conditions regardless of whether the accused had the opportunity to have a response to the open experts for security are on the whole pertinent elements to be considered. In the above-mentioned case, the court held that the accused hurrying to the house, getting the table and assaulting the deceased are in no way, shape or form of usual result. These acts bore the stamp of a structure to murder and thus it removed the case from the domain of right of private defence.

Limits of the Right of Private Defence

The privilege of private defence of an individual articulated in the matter of its degree under Section 97 IPC it is explicitly dependent upon the confinements contained in the succeeding sections, especially Section 99. Section 99 sets out the points of confinement of this privilege of private defence. The three significant restrictions set down by Section 99 are: 

1. That there is no privilege of private defence against the act of a local official or any individual acting under his guidelines if the act of the local official or the individual acting under his directions is bonafide and legal however not carefully legitimate in law and doesn’t cause sensible fear of passing or terrible hurt;
2. That there is no opportunity to have a plan of action to the insurance of the open power;
3. That the accused must not utilize more power than is fundamental in the activity of right of private defence.

Acts of Public Servants

The law concerning public servants might be condensed as stated below:

1. So long as a public servant acts lawfully in the activity of his official forces, there is no privilege of Private Defence against him, for the straightforward explanation that his act isn’t an offence;
2. If his acts are entirely unlawful, he is in a similar situation as any private individual and isn’t qualified for any extraordinary security;
3. But assurance is stretched out even to those acts of local officials or of people acting under their expert for heading which is not strictly justifiable and however is not completely approved given the accompanying conditions are fulfilled: 

1. I) That the act doesn’t cause sensible apprehension of death or of shocking hurt;
2. ii) That the act is done in accordance with some basic honesty;

iii) That the act is done under colour of his office;

1. iv) That the inconsistency doesn’t violate the breaking point of being ‘strictly justifiable by law.’

Right does not Extend to Causing more Harm than Necessary

Another limitation on the activity of right of Private Defence is that in no case this right ought to be utilized to deliver more harm than that is essential for the reason behind the resistance. The resistance extended must not be more noteworthy than is essential for self-defence. It must be proportionate to and similar to the quality and character of the act it is expected to meet. It is in this way, in light of the fact that the privilege is for the insurance and not for decimation. It stipulates that the privilege of Private Defence for no situation reaches out to the delivering of more damage than it is important to exact with the end goal of defence.

In Mohinder Pal Jolly v. State of Punjab, there was a question between the labourers and the administration over interest for compensation. The labourers tossed brickbats at the industrial facility. The proprietor of the industrial facility turned out and terminated with a pistol slaughtering one specialist. The Court held that the proprietor surpassed his right of Private Defence in murdering the labourer. Essentially, when an accused was assaulted by the expired and the accused cut him with the blade in the heart; it was held that the accused surpassed his ideal for Private Defence.

In Baljit Singh v. State of Uttar Pradesh, the accused party was in the ownership of some contested land. The complainant’s party trespassed into the land outfitted with lathis. The denounced party attempted to shield the land from trespass, accordingly of which the accused assaulted the expired and caused 72 wounds which brought about the death of expired. It was held that the accused surpassed his privilege for Private Defence.

In Onkarnath Singh v. State of Uttar Pradesh, there was an episode of hooking between the denounced party and the complainant party. After some time, the complainant party began escaping. In any case, the blamed party pursued them and made a lethal attack. The Supreme Court held that the two occurrences, for example, the occurrence of the real grappling between the parties and the lethal attack from that point, were two separate occurrences both in the purpose of time and separation. There was nothing to legitimize the dangerous assault. The power utilized was out of extent to the alleged threat, which never again existed from the complainant party. 

The inquiry whether the right of Private Defence practised by an accused is in abundance of his right and whether the accused has caused more mischief than should be expected, is completely an issue of truth to be settled on the conditions of each case. The exercise of the right of Private Defence should never be noxious or malicious. A malevolent act by an individual suggests that the act was not accomplished for securing himself or his property yet with the thought process of taking revenge. The right doesn’t enable a person to pursue and murder his aggressor who is fleeing from the scene. However, there can be the question that in making a decision about the direction of an individual who acts that he had the privilege of Private Defence, remittance has fundamentally to be made for his inclination at the applicable time. When an individual is looked with impending danger of life and appendage of himself or of others, he isn’t expected to say something brilliant scales the exact power expected to repulse the risk. The individual confronting a sensible apprehension of danger to him is not required to regulate his barrier bit by bit with any number juggling exactitude of just that much which is required to the thinking about a man in standard occasions or under ordinary conditions.

When the Right of Private Defence of Body Extends to Causing Death

No state has such a great amount of asset to put a cop with each person. Accordingly, the Indian Penal Code perceives an individual‟s right to secure body and property of himself and any other individual against a looming risk when the state help can’t be received and in this manner gives the right of Private Defence to ensure them under Section 96 to Section 106 of the Indian Penal Code (IPC). This right is given to guarantee the security of the residents and an individual isn’t dependable in law for his activities. This right must be practised when the conditions legitimize it and not something else. Likewise, this right is dependent upon limitations given under Section 99 of the IPC. The right of Private Defence of the body reaches out to causing of intentional passing of the attacker in seven conditions that have been identified beneath. Additionally, the assault under the seven conditions isn’t just an assault however a bothered type of attack. It implies assault combined with some other unjust act;

1. Such an assault as may sensibly cause the apprehension that demise will generally be the result of such attack;
2. Such an assault as may sensibly cause the dread that intolerable hurt will generally be the outcome of such assault;
3. An assault with the expectation of committing rape;
4. An assault with the goal of satisfying an unnatural lust;
5. An assault with the goal of  kidnapping or abducting;
6. An assault with the goal of improperly binding an individual, under conditions which may sensibly make him capture that he will not be able to have a plan of action to the open experts for his discharge;
7. An act of tossing acid or an attempt to toss or regulate acid attack which may sensibly cause the anxiety that grievous hurt will generally be the outcome of such an act.

The seventh provision managing acid attack has been included by the Justice Verma Committee through the Criminal Law Amendment Act, 2013. Cases are utilized to examine the right of private defence under Section 100 and hence each condition is additionally clarified with the assistance of applicable case laws.

Reasonable Apprehension of Death or Grievous Hurt Sufficient

The first and the second clause of Section 100 sets down and stipulates that the right of Private Defence to the degree of causing death is accessible when the attack done by the aggressor sensibly cause the anxiety that death or grievous hurt will generally be the result of such assault. Such an apprehension must be genuine and not be imagined and the danger must be imminent. And on that occasion, the accused can go to the degree for causing the death of the attacker in the activity of right of Private Defence despite the fact that no genuine damage may have been perpetrated. The burden is on the accused to demonstrate that he had a right of private defence which reached out to causing death.

James Martin v. State of Kerala set out that there are various elements that should be considered to discover whether the right of private defence is accessible or not. Factors, for example, wounds got by the accused, the advent of risk to his security, wounds that are brought about by the denounced and furthermore the conditions wherein the wounds were caused are taken into consideration. It is hard to anticipate that an individual should measure the power required. Such circumstances are sober-mindedly seen, remembering ordinary human response and conduct.

Assault with the intention of

committing rape

or Gratifying unnatural lust

The third and the fourth provision of Section 100 stipulate that the privilege of Private Defence to the degree of causing death is accessible in instances of assault with the expectation of submitting assault of satisfying the unnatural desire or committing rape. This right, being a preventive right should be used with most extreme consideration and alert. Since the burden is on the accused to demonstrate that he has practised his privilege of private resistance, he need not demonstrate it, however just on the prevalence of likelihood that makes question in the brain of the judge. 

Supreme Court in the instance of Yeshwant Rao v. State of Madhya Pradesh explains the position of law as respect to the third and the fourth provision of Section 100. For this situation, the expired attempted to have sex with the little girl of the accused while she went to the toilet at the backside of her home. The accused, on observing the little girl being assaulted hit the deceased with the spade and the deceased died as an outcome. The Supreme Court held that the accused was supported in practising the privilege of Private Defence of the body against the perished and subsequently was prosecuted. Here it tends to be seen that the assault that occurred on the girl was adequate to make sensible apprehension in the brain of the accused and in this way his demonstration was supported under Section 100. The privilege of private defence was practised by the accused to secure the body of another. 

In Bhadar Ram v. State of Rajasthan, where the litigant spared her widow sister-in-law from the grip of Nand Ram and assault him with gandasa while he was running was given the exemption under provision third of Section 100 of the IPC. For this situation, the appellant’s sister-in-law was a widow woman who was caught by Nand Ram in the dead hour of the night so as to harm her modesty for submitting assault. Hearing her shout, the appealing party came arranged with a gandasa and assaulted Nand Ram while he was attempting to rape the widow woman. It can be seen here that there was sensible dread of the threat to the body of appellant’s sister, therefore the privilege of Private Defence for this situation was properly profited against the danger that was genuine, present and inevitable.

Assault with the Intention of Kidnapping or Abducting

The fifth condition of Section 100 IPC states that the right of private defence is accessible when the assault is made with the expectation of kidnapping or abducting. Kidnapping is an offence against the human body and happens when an individual is constrained to go from any place. Whoever, by power, propels, or by any deceitful methods instigates, any individual to go from wherever is said to steal that person. Abduction given under the fifth condition of Section 100 of the IPC must be taken in its plain importance as specified in Vishwanath v. State of Uttar Pradesh. In  this case, the accused’s sister left her husband’s house and was dwelling with her dad and sibling. At some point, the deceased spouse went to the house and attempted to take his wife with him to which she revolted and got hold of the entryway. In the meantime, so as to shield her sister from the deceased, the accused took out a blade and wounded the deceased spouse. As an outcome, he died. The accused argued that he should be given the advantage under the fifth provision of Section 100. The Allahabad High Court gave the judgment for the litigant and held that the accused won’t be given the privilege of private defence as no there was no other plan combined with abduction. Supreme Court dismissed the conflict and held that the word ‘abduction’ in condition fifth must be perused in a plain significance as characterized under Section 362 of the IPC and in this way acquitted the accused. It held that this privilege is accessible for the abduction and, as it were when constrained by power. In the second classification of abduction by misleading methods given under Section 362, Private Defence isn’t accessible as there is no impulse by force. The Supreme Court said that at the time the blamed mediated, his sister was persuasively constrained to go from the spot of the accused and in this way, there was an assault with the aim of kidnapping under Section 100, condition fifth. The accused accordingly had the ideal for the private defence that could even stretch out to causing the death of the attacker.

Assault with the Intention of Wrongful Confinement

The sixth provision of Section 100 gives the right of Private Defence reaching out to causing death is only accessible when an assault is done with the expectation of illegitimately keeping an individual or wrongfully confining him. Nonetheless, so as to benefit this in that spot, must be proof that there was an assault and that was with the expectation of wrongful constrainment. Additionally, it must be demonstrated that the conditions were with the end goal that caused sensible fear in the brain of the accused that he won’t have the option to take the plan of action to the public authorities for his release. Even if the demonstration fulfils all these requirements, it needs to fall under the limitations referenced in Section 99 of the IPC. 

As expressed in Abdul Habib v. State, when an individual is unjustly captured and taken to the police station for being given over to the police, can’t be said to have sensible dread that he will not have a plan of action to the public authorities for his discharge. For this situation, the appealing party attempted to take away the bike of Swaran Singh. Swaran Singh endeavoured to stop him and grasped his bike and the appealing party so as to spare himself gave a cut blow right elbow with a blade and fled. Swaran Singh raised a shout and numerous individuals came for the escaping appealing party. Naresh Kumar is said to have heard the trademarks that the litigant must be captured and in this manner ran towards him yet the appealing party, so as to dodge his capture, struck up his blade and wounded him. Naresh Kumar endeavoured to submit an assault in any case, the expectation was to capture the appealing party and take him to the police headquarters. The inquiry under the watchful eye of the court was, whether this act of capturing added up to illegitimate restriction or wrongful constrainment or wrongful confinement of the person. Wrongful Confinement implies willfully deterring any individual in order to keep that individual from continuing toward any direction in which that individual has an option to proceed. The court held that the expectation was a greater amount of improper repression to let him move just inside the breaking points of the spot of capture. It was too held that that the conditions were not with the end goal that any sensible individual would have captured that he would not have the option to verify the assistance of the open experts in acquiring his discharge. There was no right of Private Defence of individual given for this situation. Likewise, the court saw that for no situation can an individual perpetrate more mischief than is important to avoid the risk. For this situation, it can’t be said that the appealing party had surpassed the right since he had no right of Private Defence in any case.

Act of Throwing or Administrating Acid

The seventh provision under Section 100 says if there is an act of tossing or overseeing corrosive or an endeavour to toss or administer acid that causes sensible fear in the brain of the accused that terrible hurt will be caused, at that point the privilege of Private Defence to the degree of causing death will be available. This provision dealing with acid assault has been included by the Justice Verma Committee through the Criminal Law Amendment Act, 2013. According to the Law Commission of India, there was no particular provision managing acid assault and henceforth cases were enlisted under various sections of Indian Penal Code especially those managing hurt, grievous hurt by destructive substances and endeavour to murder and murder. The Committee recommended that these conditions specified in that ought to likewise reach out to one side of private defence if there should arise an occurrence of an acid attack, which was made an offence under Section 326A according to the Criminal Law Amendment Act, 2013.

The administration needed to give a stringent law to the general population and in this manner included acid attack as explicit offences under IPC. Corrosive assault offenses were rarely given any explicit arrangements under IPC before the correction. Since acid falls under the class of destructive substance, subsequently, offences identifying with it fell under Section 324 and Section 326 that deals with terrible hurt by “destructive substances” which incorporates acids. Likewise, the provision of Section 100 gives the right of private defence to the degree of causing death when there is a sensible apprehension that grievous hurt will generally be the consequence. In this way, passing by this Section, sensible worry of horrifying hurt by a corrosive substance is effectively secured under the second provision of Section 100. In any case, this has demonstrated to be a deficient clarification for excluding hurt by acid as grievous hurt under Section 320. The provision was included with the affection of giving the corrosive or acid attack a particular heading thinking about the augmentation in the quantity of such cases.

Commencement and Continuation of the Right of Private Defence of Body

Section 102 and Section 105 deals with initiation and continuation of right of private barrier of body and property separately. The privilege of private defence of body starts, when a sensible dread of the threat to the body emerges from an endeavour or danger to submit the offence, in spite of the fact that the offence might not have been submitted and keeps going till such sensible fear lasts. In the event that in the wake of supporting genuine damage there is no misgiving of a further threat to the body or property then clearly the privilege of private defence would not be accessible.

State of Orissa vs Rabindranath

Basically, in this case, the Orissa High Court has summarised the Right of Private Defence as follows:

1. It is the obligation of the State to shield an individual’s body and property. Similarly, it is the obligation of each individual to take cover under the machinery of the state. In any case, that such a state help isn’t accessible, he has the privilege of private defence.
2. Regardless of whether an individual was permitted to utilize his privilege of private defence without the plan of action of public authorities relies on the idea of the risk of inevitable threat. The privilege of private defence of the property begins when a sensible dread of the threat to the property initiates.
3. After the genuine peril or danger has initiated, the topic of applying for the security of the public authorities doesn’t emerge.
4. The law doesn’t anticipate that an individual should flee for assurance under public authorities when somebody assaults on an individual possessing the property. The minute sensible apprehension of upcoming peril to the property begins, the privilege of private defence is accessible to the person. There is no obligation on the accused to run for insurance for public authorities.
5. At the point when an individual under possession is assaulted by trespassers, he has the right to drive away from the aggressors by use of power. At the point when the individual who is in physical ownership of the property is seized by the trespasser, he is entitled in the exercise of the privilege of private defence to drive away such trespasser gave that the trespasser has not gotten settled belonging over the property.
6. On the off chance that the accused in spite of the fact that has the physical belonging for the property however at the hour of assault, on the off chance that he is absent at the spot, is qualified to practice his entitlement to drive attacker to not to go into the property or to dismiss the assailant when he comes to realize that the trespasser is getting into ownership of his property or is endeavouring to do as such.
7. In the event that there is an approaching risk to the property and the individual under possession cause adequate damage, he is qualified for shield the act of assailant without requesting the guide of the state.
8. Because the area of police headquarters was not away from the wrongdoing scene, it doesn’t imply that an individual can’t practice his privilege of private defence. This can be considered on the off chance that it is demonstrated or proved that could have been auspicious and successful. The viability of the police help relies upon the likelihood that convenient data to the police and getting opportune help from the police was conceivable and successful.
9. In managing instances of private safeguard, a differentiation must be made between implementing a privilege and keeping up the right.
10. On the off chance that the assailant was getting ready for the assault, this doesn’t imply that the other individual has no privilege of private defence. It must, in any case, be demonstrated that there was no opportunity to take the plan of action of open specialists.

Conclusion

Self-defence is a rule of Criminal law and in this manner, the state gives people the right to ensure and protect themselves. The privilege of Private Defence of the body goes under the reasonable defence where the attention is more on the demonstration of the person. The advantage out of the conduct exceeds the malevolence of the offence. Nonetheless, the Courts while giving the defence under Section 100 have been extremely cautious. The burden is on the denounced to demonstrate that he had practised his privilege of private defence. The conditions that power the people to submit the offence are seen. The state has given us a few rights to shield ourselves and our property from looming risk when the state isn’t accessible to do likewise. This privilege is additionally accessible to ensure the body or property of some other individual. It reaches out to causing of death of the attacker in specific conditions. Be that as it may, there must be sensible anxiety or fear of genuine or impending danger to benefit this right. Section 100 is an extremely crucial section under the Indian Penal Code. It gives the privilege to murder a person. In any case, it additionally puts down a few limits that should be pursued to benefit this right. The power utilized must not exclusively be fundamental to stay away from the assault yet in addition proportionate to the damage undermined.

References

• Indian Penal Code, 1860, Bare Act.
• Law Commission of India, 226th report, 2009.
• Justice Verma Committee Report on Criminal Law Amendment Act, 2013.
• http://www.legalserviceindia.com/article/l470-Private-Defence.html
• https://www.srdlawnotes.com/2017/05/right-of-private-defence-section-96-to.html
• https://www.omicsonline.org/open-access/private-defence-a-look-at-definitional-aspects-and-burden-of-proof-2169-0170.1000122.php?aid=26081
• http://lawcommissionofindia.nic.in/reports/report226.pdf
• https://www.legalhelplineindia.com/law-against-acid-attacks/
• https://blog.ipleaders.in/acid-attack-and-the-law-in-india/

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 skill.

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This article is written by Nishtha Pandey (batch 2023), student of Dr. Ram Manohar Lohiya, National Law University, Lucknow. This article seeks to give some insights on Consideration as per the Indian Contract Act, 1872.

Consideration is defined under Section 2d of the Indian Contracts Act, 1872. It is defined as when the promisee at the request to the promisor has:

• Done or abstained from doing something,
• Does or abstains from doing something,
• Promises to do or abstain from something,

Then such act or abstinence is called consideration.

Why do we need consideration

Only the promises that are backed by consideration are enforceable because any promise made without any obligation is usually very rash and without any sort of deliberation. The reason for making consideration an essential part of a contract is because it levies a sort of burden on the parties to fulfil the terms of the contract. For Example, if, A promises to give B a car without B doing or abstaining to do anything for it, makes the promise by an unenforceable. This will be a gift and not a contract per se.

Legal requirements as to consideration

• Must move at the desire of the promisor- Section 2d of the Indian Contract Act, 1872, clearly mentions that the consideration should be at the desire of the promisor if the consideration is made at the will of the third person or is not according to the promisor then it is not a good consideration.

• Can move from the promisee or another person- Unlike English law in which the consideration must move at the desire of the promisor, in Indian law as long as there is consideration it is immaterial as to who has furnished it. Moreover, in the case of Chinnaya vs Rammyya the consideration can also move at the desire of the third party but only in the condition where he is the beneficiary of the contract. 

• Can be an act, abstinence or even a promise- If the promisee does something or abstains from doing something for the promisor, at his desire, then it will be a good consideration.
• Can be past, present or future:

PAST- When the consideration is given before the promise was made. For example- A saves B at the latter’s desire. B after a month promises to pay A. the act of A will amount to past consideration for the payment made by B.

PRESENT- When the consideration is given at simultaneously to the promise made, then this is present consideration or executed consideration. For example- cash sales.

FUTURE- When the consideration of the promise made is to be passed at a future date then that is called future or executory consideration. For example- A promises to pay B, when the latter will fetch newspaper for him.

• Consideration need not be adequate- It is not necessary that the consideration is equal or adequate for the promise made. However, it is mandatory that the consideration should be something in which the law attaches some value. It is for the parties to decide the value of the consideration and not a court of law. For example- A sells table to B and B gave him rs 500. It will be difficult for the court to ascertain the value of the table, so if A is satisfied with the amount given then the consideration is valid.

• Should be real- although the consideration need not be adequate it should be real and not illusory. The consideration should not be physically impossible, legally not permissible or based on an uncertain event or condition.

• Should not be something which the promisor is already bound to do- a consideration to do something which the promisor is already required to do is not a good consideration. For example- the public duty done by a public servant.
• Should not immoral, or against the public policy of the state- under Section 23 of the Indian contract it is given that consideration should not be illegal, immoral or against public policy. the court should decide the legality of the consideration and if found to be illegal than no action on the agreement should be allowed.

Stranger to a contract

It is a general principle that the contract can be enforced only at the behest of the parties to the contract. No third party could enforce it. It arises from the contractual relationship between the two parties. However, Lord Dennings has criticised this rule a number of times as this rule has never benefited the third party whose roots go deeper in the contract. This rule has two consequences-

• No third party could enforce the contract.
• The contract between the parties cannot levy an obligation on any person other than those party to a contract.

Exception

There are three exceptions to this rule:

• Marriage settlements- When an agreement is made with regards to marriage, family settlement or partition and is made in such a way that it benefits another person who is not a party to the contract then he may sue for the enforcement of the contract.

• Covenants running with the land- in cases of the contract of property the purchaser will be bound by all the conditions and covenants of the land, even though he was not a party to the original contract. 
• Acknowledgement of estoppels- in case the terms of the contract require that an agreement has to be made with the third party, then this has to be acknowledged. This acknowledgement could be expressed or implied. This exception covers the areas where the promisor either expressly or by conduct has posed himself to be an agent.

Past consideration

It is the consideration which is made before the agreement. It is something which the promisee has already done at the desire of the promisor. 

For example- A rescues B. B promises to give him Rs. 1000 for the same. Here it is a past consideration as the act of rescuing happened before any agreement. 

In English law past consideration is no consideration. If A saves B and B promises him to pay but later refuses to do so, then under English law, A cannot enforce it in a court of law. B can give him the money, but that would not be considered as a past consideration but it would be by way of gratitude. This, however, causes a lot of inconveniences, as if a person would pay for the past act then he shall have to recognise the past consideration which is not valid under English Law. the report of the law commission of England proposes to remove this rule.

In India however, there is no compulsion to follow the English law and past consideration is regarded to be valid. 

Past act at request good consideration

The past act done for consideration would be a good consideration. In the case of Lampleigh vs Brathwait, in which the defendant requested the plaintiff to help him get a pardon from the king. The plaintiff put in efforts, travelled up to the king etc.his request was not sanctioned. The defendant promised to pay him for the same. Later he refused to do so. Plaintiff sued him in a court of law. The court held that the defendant must pay the plaintiff because he has himself requested him to help him. Hence the act of the plaintiff, although done in the past, would still be regarded as a valid consideration.

Past voluntary service

If a person renders voluntary services without any request or promise from another and the person receiving the services makes a promise to pay for the services, then such a promise is enforceable in India under Section 25(2) of the Indian Contract Act, 1872 which states: ‘‘An agreement made without consideration is void unless it’s a promise to compensate, wholly or in part, a person who has already voluntarily done something for the promisor, or something which the promisor was legally compellable to do; or unless.’’

For Example- Peter finds Noah’s wallet on the road. He returns it to him and Noah promises to pay Peter Rs 500. This is a valid contract under the Indian Contracts Act, 1872.

Past service at request past and executed

An act done before the giving of a promise to make a payment or to confer some other benefit can be a consideration for the promise. The act must have been done at the promisor’s request, the parties must have understood that the act was to be remunerated either by a payment or the conferment of some other benefit, and payment or the conferment of a benefit must have been legally enforceable had it been promised in advance.

Executory Consideration

Consideration may be something which is done or in the process of being done. It also consists of an act which is promised to be done in the future. There may be promises which form the consideration for each other. Before the completion of a promise which forms a part of the consideration of the other promise, then such consideration is called executory consideration.

For example- if A promises to pay B when he will sell the goods to him. Until time A does not get the goods, the consideration is executory, when he got the goods and paid for the same, the consideration is executed. If B does not sell the goods then A could also breach for the suit.

Value need not be adequate

Consideration is defined as an act of abstinence from doing something, at the desire of the promisor. The consideration should be of some value in the eyes of law, but the courts have been very liberal in interpreting and anything of value by the parties is regarded as a valid consideration. 

The value need not be adequate for the promise made. The court will not enquire whether the value of the consideration is equivalent to the promise that is made. If the parties agree to the value of the consideration then it is sufficient. This rule is applicable as per Indian and English law.

Inadequacy as evidence of imposition

The inadequacy of consideration is regarded to check whether the consent is freely given. For example- A agrees to sell his property worth Rs 1 crore to B for Rs 10,000. denies that his consent for the sale of the property was not freely given. A party seeking to set aside the transaction based on the inadequacy of the consideration must show that he was unable to understand it or was by way of some imposition. If the court is satisfied that the contract was freely entered into then it would not matter whether the consideration was adequate or not.

Where the consideration is inadequate it could be because of fraud, coercion, mistake etc. the same would be the case when the consideration is so low that it shows some serious inequality of the bargaining power. 

Forbearance to sue 

The most usual form of forbearance is the forbearance to sue within a reasonable time. This promise to forebear can be expressed or implied from the circumstances. Sometimes it is very difficult to construe from the fact whether it was an agreement to forbearance (which is not a good consideration until not backed by the request of the promisor) or actual forbearance. Hence to clarify in the case Bittan Bibi vs Kuntu Lal, it was held that the promise of forbearance should move at the desire of the promisor.

Forbearance to sue on a claim which is void is not a consideration. Moreover, abstaining to sue could be valid consideration only when the person who is abstaining, has a valid right to sue. Also, it is not necessary to specify the time for such abstinence. A request for forbearance without specifying the length is understood to be a forbearance for a reasonable time.

Compromise good irrespective of merits

It is an important kind of forbearance which is undertaken by way of a compromise of a doubtful claim. The important element here is to ascertain the limits of which the compromise will function and will still be a good consideration. The difference between forbearance and compromise is that in the latter claim is not admitted and the claimant promises to abandon the claim.

The abandonment of a doubtful or disputed claim is a good consideration even if it later turns out to be unsustainable. The test is to find whether the person thought in good faith and he has a case which he was abandoning. A compromise of a claim arising out of an illegal contract is insufficient as a consideration unless the compromise arises out of a dispute of fact as to whether the contract is illegal.

Performance of existing duties

Performance of legal obligations

The performance of what one is already bound to do, either by general law or by a specific obligation to the other party, is not a good consideration for a promise, because such performance is not a legal boundation a person. Moreover, on the performance of a legal obligation, a reward from the private organisation is taken then it would be against the public policy. It should be ensured that the legal duty actually exists. But if a man who already has a legal obligation undertakes to do something or to do something in any of the admissible way i.e. the person has forgotten the choice that the law allows him to take is a good consideration.

Moreover, the actual performance of an existing duty may confer a factual benefit, because on actual performance the promise is saved of pursuing a legal remedy for its breach. 

Performance of contractual obligations

Pre-existing contract with the promisor

Usually, the performance of a duty already owed under the contract to the promisor is not good consideration. Even in terms of public policy, it is necessary to discourage a tendency to use improper pressure or threatening to break one’s contract unless another party complies by paying or promising to do so. The promisee must find it beneficial to perform the promise immediately rather than paying for its breach which may not fully compensate the promisor.

Promise to pay less than the amount due

A promise to pay less than what is due in the contract cannot be regarded as consideration. This rule was given in Pinnel’s case. The court held that a smaller amount cannot in whole satisfy a larger sum. However, a gift of the horse, robe etc can be considered as a good satisfaction because under certain circumstances it is considered to be more beneficial than money, otherwise, the person would not accept it.

This holding was criticised in a way wherein several cases the jurist held that if the party is content to receive any amount be it less than the sum and he is satisfied by the same, then it should be considered to be a valid consideration. However, in spite of all this criticism, the Pinnel’s Case was applied unanimously in various circumstances.

Exceptions to the rule in Pinnel Case

Part-payment by the third party

The part payment by the third party may be a good consideration for the whole debt.

Composition 

Payment of a lesser amount would be a good consideration for the larger sum where this is done for some already entered compromise. 

Payment before time 

Payment of a lesser sum before the time or in a different mode, a different place than agreed by the parties or the gift of a horse or robe etc is a valid satisfaction of the goods.

Promissory estoppel

The doctrine of promissory estoppel is considered to be a departure from the doctrine of consideration. A promise that was made in future is estoppel. If the promise is made with the intention that it would be acted upon and it was in actuality acted on, then the promisor cannot be allowed to back out and it could be enforced in a court of law as well.

Promissory estoppels differ from traditional contract theory. It protects reliance. This doctrine was developed to prevent injustice if the promisee suffers from any injustice due to the reliance on the promise of the promisor, even though it was not required a consideration. However, in English law, the doctrine of promissory estoppel is used only as passive equity and is invoked only in the cases of defence.

Position under the Indian contract act is different than under English Law

Under English Law

It is an established rule under English law that the third party cannot sue a contract made for his own benefit. Apart from special circumstances. A person who is not a part of the contract cannot enforce or rely for protection on its provisions. Such right can be conferred to a property by way of trust but it cannot be on a stranger to a contract as a right to enforce the contract.

Under Indian Law

It is established that the consideration can move from a third party but it cannot sue for its own agreement. However, there was lots of confusion on this point. Although the definition of “consideration” is wider in the Indian than in the English law since common law is applicable, therefore it is generally applied that the third party cannot enforce the contract.

Law Commission of India in one of its reports mentioned that the contract must be enforceable by a third party if it expressly for his benefit but the defences of the party to the contract must also be considered. It is also proposed that the parties cannot alter the terms of the contract once the third party takes over the contract.

Pre-existing contract with the third party

A promise to perform a pre-existing contractual obligation with a third party can be a valid consideration for another contract. The point of conflict in these kinds of arrangements is regarding the presence of consideration for the promisor. This conflict was settled in the case of Shadwell vs Shadwell, where the plaintiff got engaged and his uncle wrote him a letter promising him to pay 150 pounds throughout his lifetime. 

The jurists in the above case held that there was adequate consideration for the contract as it could be construed from the fact that it was made because of the engagement of his nephew. Moreover, marriage is of great interest to the near relatives. Also, the contract is binding on the uncle as it is possible that the plaintiff has undertaken many liabilities on account of the promise given by the uncle and if the payment is withheld then the plaintiff could face a lot of embarrassment. 

Under these provisions, the person should be safeguarded from any further payment which is not enforceable as per the contract. Like in the case of Syros Shipping vs Elaghil Trading co. a vessel which was prepaid had to deliver tractors to Yemen. The charters defaulted their payment to the shipowner because of the congestion in the ports. During this period the shipowner asked for extra payment, the consignees agreed to pay but later refused. The court held that since there was no consideration for the promise, moreover no estoppel was created hence the contract is not enforceable.

Consideration and motive

Consideration is not the same thing as motive or a mere desire. The requirement of consideration is vital and the contract could not be satisfied with just a moral obligation. Consideration for a promise is always a motive for the promise, unless it is nominal or invented, while a motive for a promise may not always be a consideration for it. Motive induces a promise to be given. Similar holding was given in the case of Dwarampudi Nagarathnamma vs Kuruku Ramayya, where the Karta of a Hindu Undivided Family gifted his concubine a portion of the property beyond the cohabitation was a motive and not a consideration, and it should be considered as invalid because it was motivated by the desire to compensate for his past services.

Absence of consideration

If the promissory note is neither genuine nor fraud then it is recoverable under the provision of this code, with interest. The court said that mere denial of the passing of consideration does not make any defence. Something which is probable has to be brought on record.

Exceptions under Section 25, Indian Contract Act

In English law, a contract which is under the seal is enforceable without consideration. In Indian law, there are no such provisions but still, The general rule is the ex nudo pacto non-oritur action, which means that no right of action arises from the contract which is entered into without any consideration. Still, under Section 25 of the Indian Contract Act,1872.it provides certain exceptions under Section 25 of the Indian Contract Act.

Fiduciary relation

In case of a contract entered into between the relatives or on account of natural love and affection is enforceable without consideration. The meaning of love and affection is not judicially construed but parties who are nearly related would have instinctive love and affection. However, this could be overruled with regards to some external circumstances, like between the wife and husband who are compelled to live separately because of quarrelling. But a settlement to be given to a man by the wife by way of maintenance could be enforced without any consideration because it will result in peace and family harmony.

The term “family” (in this context) should be understood as a group of people living together and possessing a right of succession, inheritance etc., but the family could be construed as a people who are bonded by natural love and affection.

Past voluntary services 

A promise to compensate the person who has done something voluntary in the past for the promisor is enforceable. This exception is attracted in the cases when the services are rendered voluntarily. Thus where a service is rendered on behalf of a company which is not in existence, a subsequent promise to pay would not attract this provision. Even where the promisee has done something for the promisor, which he had to do legally, then it will also be covered under this exception.

In Case of a Minor

In Karam Chand vs Basant Kaur, the court held that even where the promisor after attaining majority, promises to pay for the goods attained in minority will also fall under this provision. The court said that although the promise made by a minority is void but is the promise is made by a person of full age to the promisee who has done something for him voluntarily when the promisor was a minor, then it will also attract this exception.

Time barred debt

A promise to pay a time-barred debt is enforceable and it should be signed by the person or his agent. It could be to pay for the whole debt or in part. The debt to be enforced could be paid except for the law of limitation. However, the person who is under no obligation to pay to another person is under no obligation under this clause. 

The promise to pay the debt must be expressed, it is not sufficient if the intention to pay could not be gathered from the circumstances. 

Acknowledgement of the debt is different from the promise to pay the debt. The acknowledgement of the person should be done before the period of limitation. Promise to pay a time-barred debt is a new contract. It is not just merely an acknowledgement of the existing liability.

Gift actually made

The provisions of “Consideration” do not affect the gift actually made. Under this Section, gift is defined as: 

• The gift is of movables then it should be accompanied by its delivery.
• The gift is of immovables then should be along with registration. 

If the above conditions of gifts are fulfilled then lack of consideration would not affect the validity of these gifts. However, apart from the consideration, they could be questioned otherwise. 

Where the gift of the property was made by a registered deed and is attested by two witnesses, it was not allowed to be questioned on the ground that she was the victim of fraud, moreover, she was not able to establish it.

Inadequacy of consideration

Adequacy of the consideration means that the consideration which is paid is equal in value to the value for which it is paid. Consideration can be terms of money, property etc. inadequate consideration is not void but it renders the contract unenforceable because of the improper bargaining or by itself.

Inadequate consideration must be distinguished from nominal consideration. Nominal consideration is deliberately given to make the contract effective but inadequate consideration is less than the amount promised. Although the act does not make any distinction between the nominal and inadequate consideration but it was made in the case of Midland Bank trust vs Green. 

Conclusion

Consideration is defined under Section 2d of the Indian Contract Act,1872. It could be past, present or future, and must only concern the parties to the contract and not any third party. But there are various exceptions present under Section 25 of the Act, these exceptions are made keeping in view various circumstances, so that the interest of the parties of the contract or even the third party is not compromised. Moreover the consideration need not be adequate, however it should be valuable according to the parties of the contract. 

References

• https://www.toppr.com/guides/business-laws/indian-contract-act-1872-part-i/legal-rules-regarding-consideration/
• https://www.legalbites.in/consideration/
• Pollock and Mulla Indian Contract Act, 1872
• Avtar Singh Law of Contract

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 skill.

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This article is written by Nishtha Pandey (batch 2023), student of Dr. Ram Manohar Lohiya National Law University, Lucknow. This article highlights the Judgements delivered under the Criminal Procedure Code, 1973.

Introduction

“The people’s good law is the highest law” – Cicero 

Judgement is a basic term used in our daily lives. Generally, it means analysing a certain situation and forming a notion thereafter. In a legal sense, judgement is the decision given by the Court, after hearing both sides, it contains reasons for reaching such a conclusion. The judgement thus forms an important part of a legal process. A faulty judgement has the potential to deteriorate the very foundation of the legal justice system in the country. Therefore it is imperative to study various aspects of judgement from a judicial point of view.

Object and scope

Chapter XXVII of the CrPC, 1973, deals with Judgement. However there is no definition of “judgement” present in the Code, but it is to be understood as the final order of the Court. In the case of Ismail Amir Seikh vs. the State of Maharashtra, it was held that a judgment is the act of judging. It was pointed out that judgment should clearly mention the reason for accepting an argument and rejecting the other.

This chapter is very important as it shed light on the various provisions related to “judgement” in a Criminal proceeding.

This chapter applies all across India.

Form and contents of the judgment under Section 353

In a judgement Ratio decidendi and Obiter dicta form an integral part. Ratio decidendi is the binding statement in judgement and Obiter Dicta is the “by the way” remarks delivered by the judge which is not necessary to the case at hand. These two are very important as they define the legal principles which are useful to the legal fraternity.

If the judgement is of acquittal-

• Whether the evidence of the prosecution absolutely failed to prove the guilt of the accused or merely failed to prove it beyond a reasonable doubt.
• If the act or omission from which the liability might arise doesn’t exist.

If the judgement is of conviction-

• The essential elements of the offence committed by the accused and the intervening circumstances which led to the commission of this offence.
• Participation of the accused as the principal perpetrator, or accomplice or accessory.
• The penalty that is imposed on the accused.

Language and contents of judgment

1. Under Section 354, of CrPC, it is stated that every judgement should be:

• In the language of the Court.
• Shall contain the points of determination and the reason for the same.
• The offence should be specified and the reason for the same should be given for the same. The offence so committed must be mentioned in the IPC or any other law under which the crime is committed and the punishment is given.
• If the offender is acquitted, the offence for which he was acquitted, the reason for the same and it must be specified that a person is now a free man.

2. If the judgment is passed under the IPC and the judge is not certain as to under which Section the offence is committed or under which part of the Section, the judge should specify the same in the judgement and should pass orders in both the alternate situations.

3. The judgement shall furnish a proper reason for the conviction if it is a sentence for a term of life imprisonment and in case of death sentence the special reason has to be given.

Judgment given by Metropolitan Magistrate under Section 355

Under Section 355 of the CrCP, it is mentioned that the judge instead of giving the judgement in an above-mentioned way, can deliver it in an abridged version that would contain-

• The serial number of the case,
• Date of the commission of the offence,
• Name of the complainant,
• Name of the accused person, his parentage and residence,
• Offence complained of or proved,
• Plea of the accused and his examination,
• Final order,
• Date of the order,
• In cases where the appeal lies from the final order, a brief statement of reasons for the decision.

Post-conviction orders in lieu of punishment

Post-conviction dilemma

Under Section 357 of the Code, if the judgement is that of the conviction then the Court can order the accused to pay compensation over and above the sentence of fine or imprisonment that is awarded to him. The Court can, ask the offender, to pay compensation.

Further, under Section 358, the Court can order compensation to be given to the person who is groundlessly arrested by the one who led to such false arrest. The compensation is recovered as a fine and is given to compensate for the loss of time and money of the person.

Moreover, in the case of non-cognizable offences under Schedule 1 of the code, and the judge has received a private complaint about the same. The judge can ask the accused, after convicting him, to pay to the prosecutor the necessary amount and expenses incurred in the process of prosecution.

Under Section 360 of the Code, one of the most important forms of post-conviction order is mentioned, whereby the accused is not convicted but is led free while imposing some restrictions on his liberty as a free man.

Convict to be released on good conduct or admonition

Section 360 of the CrPC mentions a provision in which a person could be released on good conduct or after admonition. In this, if a person is not under the age of 21 years and is not convicted of an offence which is punishable with a fine or a term which is seven years or less. Also if a person is more than 21 years of age or a woman is convicted of an offence which is not punishable with death sentence or life imprisonment and no previous conviction is against the person then if the Court deems it fit in accordance with the age, character, antecedents of the offender and the circumstance under which such offence was committed, that it is expedient to release the person on good conduct and the Court instead of punishing him may order him to be released in the sureties or not, as per the Court. Such a person has to appear before the Court to receive the sentence of the punishment not exceeding 3 years and in the meantime peace and good behaviour, must be exercised.

If the first offender is convicted by the magistrate of the second class then the magistrate has to record its opinion to that effect and submit it to the first class magistrate. The first class magistrate will hear the case in the same manner as if it originally came to his Court and he may order further inquiries if he feels that it is necessary to do so. He may order to record evidence or may do it by himself. If a person is convicted of theft, misappropriation cheating or any other offence under the IPC, and is punishable with not more than two years of imprisonment or fine. In this case, the person is not previously convicted of any other offence, the Court may if it thinks fit can release the person based on his age, antecedent, mental and physical condition, character, the trivial nature of the offence, or any circumstances which took place. The Court may release him after due admonition. An order under this Section could be given by Appellate Court or High Court or Court of Session while exercising its power of revision.

The Court should ensure that the offender and his sureties must get a place of living and a regular occupation of observation as specified by the Court.

Exercise of judicial discretion in sentencing without adequate knowledge about the offender

Currently, India does not have structured sentencing guidelines. In March 2003, the Malimath Committee issued a report that emphasized the need to introduce sentencing guidelines in order to minimize uncertainty in awarding sentences. 

In 2008, the Madhava Menon Committee asserted the need for statutory sentencing guidelines. Moreover, the government is working to establish a “uniform sentencing policy” in line with the United States and the United Kingdom to do away with varied judgements, given by the judges.

The sentencing procedure is established under the CrPC, which provides broad discretionary sentencing powers to judges. It is asserted by many authors that, in the absence of an adequate sentencing policy it comes down to the judges to decide which factors to take into account and which to ignore. Moreover, broad discretion gives a lot of room for personal prejudices of the judges to dictate the judgement.

Where the offender is not traced or identified, but the victim is identified, and where no trial takes place, the victim or his dependents can make an application to the State or the District Legal Services Authority for compensation. Upon receipt of such recommendations or application, the State or the District Legal Services Authority after due enquiry can award adequate compensation by completing the enquiry within two months.

Decisions as to punishments

Judicial discretion in sentencing

Judicial discretion means that the judiciary is given some discretion to adjudicate certain cases accordingly. Under the doctrine of separation of power, this comes under judicial independence.

The main part of the judicial discretion is present Under Section 360 of the CrPC which gives the power to the Judges to release the convicts on probation. But this power is limited to only a few conditions:

• Where the convict is a woman and is not punished for life imprisonment or the death sentence,
• Where the convict is above 21 years of age and is not punished for more than 7 years of the term,
• Where the convict is under the age of 21 years and he is not punished for the death sentence or life imprisonment.

Also if the crime committed is of such a nature that the punishment awardable cannot be more than 2 years or a simple fine then, having consideration to the various factors connected to the convict, the Court may leave the convict without a sentence at all after mere admonition. The Court also takes steps in case the person does not comply with the rules laid down at the time of release as provided under this Section such as re-arrest of the person. For release under these provisions, it is necessary that either the convict or the surety are residing or attend regular occupation in the jurisdiction of the Court.

The Code through Section 361 makes the application of Section 360 necessary wherever possible and in cases in which there is an exception to state clear reasons. The judge must give special reasons for awarding the punishment which is below the minimum prescribed under the relevant laws of the country. The omission to record the special reason is an irregularity and can set aside the sentence passed on the ground of failure of justice. The Probation of Offenders Act, 1958 is very similar to Section 360 of the CrPC. It is more elaborate in the sense that it explicitly provides for conditions of release order, a supervision order, payment of compensation to the affected party, powers and predicaments of the probation officer and other particulars that might fall in the ambit of the field. Moreover, Section 360 would cease to have any force in the States or parts where the Probation of Offenders Act is in force.

Sentence of death

The old code of 1898, before the normal punishment for the person committing murder, was death and life imprisonment was an exception. The effect was that the Court had the discretion to either give death sentence and life imprisonment. However, in the new code of 1973, which is legislated according to the current scenario, the punishment now to the one committing murder is of life imprisonment and the death sentence is to be given in an exceptional case. The death sentence should be awarded only when the sentence of life imprisonment seems inadequate. The number of victims, however, will not make a case, rarest of the rare.

Where the offence committed is vindictive and done in a pre-planned manner. The offence is committed in a cold-blooded fashion then it will amount to a crime which is rare of the rarest case. Death penalty should be imposed only where the whole society expects the judiciary to award death sentence. While giving death penalty certain conditions should be kept in mind:

• Manner of commission of murder,
• The motive of the commission of murder,
• Anti-social nature of the murder,
• The personality of the victim (more).

Sentence of imprisonment

Under Section 354 of the CrPC, when the conviction is for an offence punishable with imprisonment for life or imprisonment for a term of years, the judgment shall state the reasons for the sentence awarded, and, in the case of the death sentence, the special reasons for it. Moreover, when the conviction is for an offence punishable with imprisonment for a term of one year or more, but the Court imposes a sentence of imprisonment for a term less than three months, it shall record its reasons for the same, unless the sentence is one of imprisonment till the rising of the Court or the case was tried summarily.

Sentence of fine

Under Section 357 of the Code, when a Court imposes a sentence of fine or a sentence in which fine is also included then the Court while passing judgment may order the whole or any part of the fine recovered to be applied:

• In defraying the expenses incurred during the prosecution.
• In the payment to any person as compensation for any loss or injury caused by the offence, when compensation is recoverable in the Civil Court.
• When any person is convicted of any offence for causing the death of another person or have encouraged the commission of such an offence, have to pay compensation to the persons who are, under the Fatal Accidents Act, 1855 entitled to recover damages from the person sentenced for the loss resulting to them from such death.
• When any person is convicted of any offence which includes theft, criminal misappropriation, criminal breach of trust, or cheating, or dishonestly receiving or retaining, or voluntarily assisting in disposing of stolen property knowing or believing the same to be stolen then compensation has to be given to the bona fide purchaser of such property for the loss of the same if such property is restored to the possession of the person entitled.

If the fine is imposed in a case which is appealable, no such payment shall be made before the period allowed for presenting the appeal has lapsed, or if an appeal is presented then before the decision of the appeal is delivered.

Moreover, when a Court imposes a sentence, in which fine is not included, the Court while passing judgment may order the accused person to pay, by way of compensation the amount as may be specified in the order to the person who has suffered any loss or injury by reason of the act for which the accused person has been sentenced. An order can also be made by an Appellate Court or by the High Court or Sessions Court while exercising its powers of revision.

It is important to note that at the time of awarding compensation in any civil suit relating to the same subject matter, the Court will take into consideration any sum paid or recovered as compensation under this Section.

Precautionary and preventive orders

Certain habitual offenders required to notify their whereabouts

Under Section 356 of the CrPC, 1973, when any person, having been convicted by a Court in India of an offence punishable under Section 215, Section 489A, Section 489B, Section 489C or Section 489D or Section 506 of the IPC, 1860, or of any offence punishable under Chapter XII or Chapter XVII of IPC, with imprisonment for a term of three years or more, is again convicted of any offence punishable under any of the above-mentioned Sections or Chapters with imprisonment for a term of three years or more by any Court other than that of a Magistrate of the second class, such Court may, if it deems fit, at the time of passing a sentence of imprisonment on such person, also order that his residence and any change of, or absence from, such residence after release shall be notified as provided for a term not exceeding five years from the date of the expiration of such sentence. These provisions also apply to criminal conspiracies to commit such offences and to the abetment of such offences and attempts to commit them. However, if the conviction is set aside on appeal or otherwise then such an order will become void.

Moreover, an order under this Section may also be made by an Appellate Court or by the High Court or Court of Session when exercising its powers of revision. The State Government may, by notification, make rules to carry out the provisions of this Section relating to the notification of residence or change of or absence from residence by released convicts. Such rules may provide for punishment for the breach thereof and any person charged with a breach of any such rule may be tried by a Magistrate of competent jurisdiction in the district in which the place last notified by him as his place of residence is situated.

Compensation and costs

Guilty person to compensate the victim and to pay the costs of the prosecution

Under Section 357A of the CrPC, every State Government has to coordinate with the Central Government and prepare a scheme for providing funds for the purpose of compensation to the victim or his dependents who have suffered loss or injury as a result of the crime and also require rehabilitation.

Whenever a recommendation is made by the Court for compensation, the District Legal Service Authority or the State Legal Service Authority will decide the quantum of compensation to be awarded under the scheme.

The State or the District Legal Services Authority, as the case may be, to alleviate the suffering of the victim, may order for immediate first-aid facility or medical benefits to be made available free of cost on the certificate of the police officer not below the rank of the officer in charge of the police station or a Magistrate of the area concerned, or any other interim relief as the appropriate authority deems fit.

Moreover, under Section 357B The compensation payable by the State Government under Section 357A shall be in addition to the fine to the victim under Section 326A, 376AB, 376D, 376DA, 376DB of the IPC.

In Section 357C, all hospitals, private or public, whether run by the Central Government, State Government, local bodies or any other person, shall immediately, provide the first-aid or medical treatment, free of cost, to the victims of any offence mentioned under Section 326A, 376, 376A, 376AB, 376B, 376C, 376D, 376DA, 376DB or Section 376E of the IPC, and shall immediately inform the police regarding the incident.

Successful complainant to get costs in non-cognizable cases under Section 359

Under Section 359 of the Code, it is held that whenever the Court convicts the offender in a non-cognisable offence, then along with the sentence of the crime, it can order the payment of expenses that are borne by the complainant, these expenses would include the fees of the witness, pleaders fees or any other which the Court deems fit. The payment could be made in full or in instalments. In case of default of such payment, the Magistrate may order imprisonment not exceeding thirty days.

Compensation for wrongful arrests under Section 358

Under Section 358, it is stated that in case a person compels the police to arrest another person, which the Magistrate thinks that there is no ground for such arrest, the Magistrate may order compensation not exceeding Rs 1000, to be paid by the person who causes such arrest. The fine is given as a way of compensation for the loss of time and expenses or other matter, as the judge may think fit. If more than one person is arrested on such basis, then each of them should be awarded a compensation not exceeding Rs 100, as the Magistrate thinks fit. Such compensation shall be recovered as a fine and if the person does not pay the compensation then the Magistrate can sentence him to imprisonment not exceeding 30 days unless the compensation is sooner paid.

Pronouncement of judgment

Modes of pronouncing the judgment under Section 353

Under Section 353, of the CrPC, the judgment in every trial in any Criminal Court of original jurisdiction must be pronounced in open Court by the presiding officer just after the termination of the trial or at some subsequent time. The notice of that time shall be given to the parties or their pleaders. The various modes of pronouncement of judgement are:

• by delivering the whole judgment.
• by reading out the whole judgment.
• by reading out the operative part of the judgment and explaining the substance of the judgment in a language which is understood by the guilty or his pleader.

If the whole judgment is delivered the presiding officer shall take it down in short-hand, sign the transcript and every page of it as soon as it is made ready, and write on it the date of the delivery of the judgment in the Open Court. However, in practice, the judgements are usually delivered in the fag end of the day so that the transcribed copy of the judgement is available to the judge in the morning itself.

However, where the whole judgment or the operative part of it is read out or as the case may be, it shall be dated and signed by the presiding officer in Open Court and if it is not written with his own hand, every page of the judgment shall be signed by him. This also takes place when the judgment is dictated to the shorthand writer.

Where the operative part of the judgment is pronounced in the manner specified under the Section then whole judgment or a copy of it shall be immediately made available to the parties, or to their pleaders (if they apply for the same) free of cost. The person who is in custody will be brought in the Court to hear the judgement.

If the accused is not in custody, he shall be required by the Court to attend to hear the judgment pronounced, except where his personal attendance during the trial has been exempted and the sentence is only of fine and he is already acquitted. However if there are more than one accused and some of them are not present, the Court can pronounce the judgement in his absence to do away with the undue delay.

No judgment delivered by any Criminal Court shall be considered invalid by reason only in the absence of any party or his pleader on the day or from the place notified for the delivery of it, or of any omission to serve, or any defect in serving the parties or their pleaders, or any of them, the notice of that day and place.

This Section would not limit the extent the provisions of Section 465, of the CrPC.

Court not to alter judgment under Section 362

Under Section 362, it is categorically mentioned that except otherwise provided in the Code, the Court will not alter the Judgement or the order once signed by it to dispose of it, except to correct any clerical or arithmetical errors.

Copy of judgment to be given to the accused and some other persons under Section 363

Section 363 of the CrPC states that when the sentence of imprisonment is pronounced, the guilty must be immediately, given the copy of judgement-free of cost. If the accused applies, the copy of the judgment in his language (if possible) or in the language of the Court shall be translated and given to him in every instance where such a case is appealable. This copy should be given to him free of cost. However if the High Court confirms the death sentence of the accused, then he should be given a copy of the judgement even if he has not applied for the same. Except for these cases, the accused will get a copy of the judgement or order, would be given to him on payment of the specified charges, or in special cases, as the Court shall deem fit, will give it to him free of cost. Moreover, if the appeal to the judgement lies in the higher Court, then the accused must be informed of the time within which he should appeal, and his appeal must be preferred. Moreover, other persons who are not affected by the judgement of the High Court shall get the copy of the same after payment of specified prices and following of certain conditions as ascertained by the High Court in the rules made by it.

Translation of judgment under Section 364

Section 364 of the Code holds that the judgement needs to be filed along with the proceedings. Moreover, if the judgement is recorded in the language that is different from the Court’s language and the Court, the accused requires that the translation needs to be done in the language of the Court, then such judgement needs to be translated.

Court of Session to send a copy of finding and sentence to District Magistrate under Section 365

Under Section 365, it is stated that in cases where the proceedings are held in the Court of Judicial Magistrate or Sessions Judge, the copy of all the findings and the sentence need to be given to the District Magistrate, under whose local jurisdiction the trial is held.

Conclusion

Judgement forms an important part of any legal proceedings, it mentions the decisions that are taken after hearing the argument from both sides and the reason for the same. Chapter XXVII of the Criminal Procedure Code, 1973, gives a detailed description of the judgement in criminal matters. Provisions relating to the language, contents etc are provided. The judgement in cases of a death sentence, fine or imprisonment separate provision is present for delivering of judgement.

References

• https://batasnatin.com/law-library/remedial-law/criminal-procedure/655-judgment-definition-and-form-contents.html
• https://blog.ipleaders.in/judgement-cr-p-c/
• http://www.preservearticles.com/education/pronouncing-the-criminal-case-judgment-in-open-Court/26947
• Ratan Lal and Dhiraj, Commentary on Code of Criminal Procedure, 1973.

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This article is written by Isha, a second-year student at Bharti Vidyapeeth, New Law College Pune. This article talks about Misrepresentation in Contract.

Introduction

A misrepresentation is an untrue statement of a material fact made by one party which affects the other party’s decision in corresponding to a contract. If the misrepresentation is identified, the contract can be declared void and depending on the situation, the unfavourably impacted party may seek damages. In such a contract dispute, the party who made the misrepresentation becomes the defendant and the aggrieved party is the plaintiff.

Misrepresentation in contract law is especially important in business dealings where huge transactions occur with high frequency. Misrepresentations of the value and/or risk correlated with an agreement can cause enormous financial losses to businesses and individuals while increasing the risk of collaborative business ventures. Accordingly, misrepresentation contract law is vital to ensuring fairness and diminishing the risk of entering into agreements between individuals and businesses.

Definition

Misrepresentation is defined under Section 18 of the Indian Contract Act, 1872 which says, a misrepresentation is a form of a statement made preceding to the contract being completed. There are two varieties of statement that can be performed before a contract is formed, these will either:

1. Form part of the contract.
2. Not form part of the contract, therefore it becomes a representation.

Concept of Misrepresentation

For understanding the concept of misrepresentation first, we need to know the meaning of representation in terms of the contract. A representation is said to be such statement which generates the entry into a contract but is not a part of a term of the contract.

Misrepresentation is about giving of inaccurate information by one party (or their agent) to the other before the contract is made which induces them to make the contract. If a person makes a contract in reliance on misrepresentation and has to face loss as a result, they can revoke the contract or claim damages.

Unwarranted Statements

A statement made without any reasonable basis is an unwarranted statement. When a person makes a positive statement of a fact without any trustworthy source of information and believes that statement to be true, the act amounts to misrepresentation. When something is unwarranted it is not called for under the provided circumstances. For instance, arguing the merits of someone’s talent is one thing, but addressing them stupid is unwarranted.

Breach of duty

Once a duty has been established in relation to the defendant we must find that the defendant has breached the duty. A breach of the duty of care occurs when one fails to achieve his or her duty of care to act wisely in some aspect. Commonly, if a party does not act in a reasonable manner to prevent foreseeable injuries to others, the duty of care is breached. Breach of duty is defined in a very interesting case named Vaughn V. Menlove which it states that the defendant is found to have overdue of the claimant and if he acts below the reasonable standard then a breach of duty would have been committed 

• they may find out the cause of the breach and try to remedy it;
• they may dispute that a breach has occurred;
• they may argue that there is an exclusion clause or other terms in the contract limiting their liability for the breach; or
• they might argue that there is a cause for their breach, or that the contract is invalid.

Inducing mistake about subject matters

Inducing mistake about subject matter involves around mistake of fact. This happens when both the parties misunderstood each other leaving them at a crossroads. Such a wrongful act or a mistake can be because of an error in understanding, or ignorance or omission etc. But a mistake is never intentional, it is an innocent commanding. These mistakes can either be unilateral or bilateral which is explained below.

Bilateral Mistake

Section 20 defines a bilateral mistake. Where both parties of a contract are under a mistake of fact required to the agreement, such a mistake is called a bilateral mistake. Here both the parties have not permitted or given their consent in the same sense as per the definition of consent. Considering there is an absence of consent altogether the agreement is void.

However, to make an agreement void the mistake of fact should be about some crucial fact that is important in a contract. So if the mistake is about the presence of the subject matter or its title, quality, price etc then it would be a void contract. But if the mistake is of something inconsequential, then the agreement is non-void and the contract will remain in place.

For instance, X agrees to sell to B his goat. But at the point of the agreement, the goat had already died. Neither X nor B was cognizant of this. Therefore, there is no contract at all i.e. the contract is non-enforceable due to a mistake of fact.

Unilateral Mistake

A unilateral mistake is when only one person to the contract is under a mistake. In such a case the contract will not be considered void. So Section 22 of the Act states that just because one party was under a mistake of fact the contract will not be voidable or void. So if only one party has made a mistake of fact the contract remains a valid contract.

However, there are some limitations to this. In certain conditions, even a unilateral mistake of fact can occur withdrawing or voidable agreement. 

Types of Misrepresentation

There are three types of misrepresentation present in the contract:

• Fraudulent misrepresentation

Fraudulent misrepresentation will happen when a false representation is made and the party making the representation let say X knew it was false or was reckless as to whether it was correct or incorrect- the lack of an accurate belief in its truth will present it a fraudulent one. If A honestly believes the statement to be true it cannot be a fraudulent misrepresentation, negligence in creating a false statement will not result in fraud. However, if it can be shown that A suspected that the statement might be incorrect or wrong, but made no enquiries to check the position, that will be sufficient. It will not be mandatory to prove a dishonest motive.

• Negligent misrepresentation

Negligent misrepresentation under the Misrepresentation Act 1967 (MA 1967) befalls where a declaration is made by one contracting party to another negligently or without reasonable grounds for believing its truth. The test is an impersonal one.

There is no obligation to establish fraud. If the innocent party can prove the statement was false, it will be for the maker of the statement to establish that it rationally believed in the truth of the statement (that is, the representation).

A solution for negligent misrepresentation remain at common law, however, its use in contractual situations has been considerably lessened as a result of Section 2(1) of the MA 1967.

• Innocent misrepresentation

Misrepresentation made completely without fault can be described as an innocent misrepresentation.

If X is unable to show it had objective grounds to believe its declaration was true the misrepresentation will be fraudulent or negligent.

Suppression of Vital Facts

Raymond Woollen Mills Limited v. Income Tax Officer, Centre Circle Xi, Range Bombay And Others 

In the above-cited case, the appellant has argued that the Department has made a grievous mistake. In coming to the conclusion. In this case, the court does not have to give a final decision as to whether there is a suppression of evidence. The fact is not a thing to be considered at this stage. We are of the view that the Court cannot strike down the reopening of the case in the facts of this case. It will be open to the assessee to the understatement of profits. This information was obtained by the Revenue in a subsequent year’s assessment proceeding. There was prima facie of the fact on the basis of which the department could reopen the case further. The sufficiency or the correctness of the fact or material is not a thing to be considered at this stage.

Raj Kumar Soni Vs. State of U.P 2007

Here in the case again the suppression of material facts has been held to be the opposition of process of law and it has been held that the party guilty of not representing the right facts is not to be benefited with any perks as it has to be held that such a party would not have to knock the doors of the court with clean hands.

Remedies of Misrepresentation 

As we know the contract made in misrepresentation is voidable which is not done intentionally by the party. So by keeping this in mind, The remedies for misrepresentation are:

• Rescind: Rescind means to cancel. When the aggrieved party wants he can claim for cancellation of the contract and/or damages. Under contract law, rescission is defined as the unmaking of a contract between the parties. Rescission is the unwinding of a transaction. This is made to bring the parties, as far as possible, back to the position in which they were before they entered into a contract (the status quo ante).
• Insist upon the performance: The aggrieved party can claim to the first party who have committed misrepresentation to get the object in the manner which was prior to the contract that they directly.

Limitations available to remedies

A condition can be included in a contract that limits the remedies that will be available wherever a party has the right to make a misrepresentation claim. For instance, such a clause could limit the remedies to those available for breach of contract- definitely excluding the right of the innocent party to revoke the contract.

Representation of state of mind

Representation initiates and induces a contract. It is the information by which a contracting party decides whether to continue with the contract. A representation is an express or implied statement that one party to the contract forms to the other before or at the point of the contract. It is entered with regard to past or existing fact. An illustration might be that a seller of some commodity represents that no notification of patent infringement had been received.

A representation initially cannot be a part of a contract and a claim for damages due to a misrepresentation ordinarily would not be allowed. Instead, a claim that a misrepresentation induced a contract might be pursued in fraud, either to revoke the contract or for damages. In some cases, a claim might be based on the tort of negligent misrepresentation.

Consequences of Making a Misrepresentation

The consequences of misrepresentation are explained under the case of Bskyb V. EDS in this case, judgement passed in the year 2010, that EDS had made fraudulent misrepresentations as to its capacity to deliver a project within a specific timetable and in a particular manner that it had carried out a proper investigation to enable it to make this statement. The judge also found that it was a consequence of these misrepresentations that BSkyB had been induced to enter into a contract with EDS. The damages that could be payable as a result have been determined at £200 million or more. There was a frontier of liability in the contract to £30 million but both parties have accepted that such a frontier is not effective to limit liability for fraudulent misrepresentation.

Conclusion

Overall, by concluding the said factors we know that, administer a contract void or voidable based upon the specific circumstances of the case. If a contract is a void then it cannot be enforced by both of the parties, whereas if a contract is interpreted as voidable then although it is a valid contract it can be cancelled or revoked. Essentially, whilst a void contract cannot be performed, a voidable contract can depend upon either of the parties after they decide to cancel it. If there has been a misrepresentation or a mistake the contract may be declared void and therefore be abolished. If duress or undue influence has occurred, then the contract may be rendered voidable and thereby capable of being cancelled.

References

• http://www.mondaq.com/article.asp?article_id=686848&signup=true
• https://www.smartdraw.com/flowchart/flowchart-maker.htm
• https://uk.practicallaw.thomsonreuters.com/9-107-6848?transitionType=Default&contextData=(sc.Default)&firstPage=true&bhcp=1
• INDIAN CONTRACT ACT,1872 (Bare Act)

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This article is written by Mariya Paliwala of seventh semester, pursuing B.A.LL.B, at MohanLal Sukhadiya University College of Law, Udaipur, Rajasthan. This article consists of a detailed elaboration on the Citizenship (Amendment) Act, 2019 in the light of Indian Constitution, 1950.

Introduction 

India is perhaps the only nation which has included in its constitution the concept of citizenship under Part II (from Article 5 to 11).1 The prominent reason behind inserting citizenship into the constitution was overcome the problems of partition after the independence of India. 

Under Article 11 of the constitution the Parliament exercised its power and introduced a bill in both houses. Finally it got assent by the President of India on 12th December, 2019. Hence, this amendment was applicable on the principle Act i.e. the Citizenship Act, 1955. 

What is the Citizenship (Amendment) Act, 2019 (CAA)?

Amendment of Section 22

As per the amendment under Section 2, a proviso was added wherein the citizenship was granted on communal lines. It says that:

• Hindu,
• Jain,
• Parsi,
• Buddhist,
• Sikh,
• Christians.

The people of above mentioned communities have entered into India from the following neighbouring nations:

• Pakistan,
• Bangladesh,
• Afghanistan.

Before 31st December, 2014 will be given the Indian citizenship.

Constitutional Validity 

This amendment is unconstitutional on the basis of the following grounds:

• Against Secularism

The preamble of the constitution says that India is a Secular Nation. The word ‘secularism’ means that there is no state religion, the state does not promote or demote any group on the lines of religion. However, in this amendment the granting and non-granting of citizenship is based on religion, which is clearly evident from the absence of muslims in the proviso under Section 2 of the Amended Act. 

• Against the notion of Equality

Part III (Article 12 to 35) grants the fundamental rights and Article 14 and 15 as it talks about Equality Before the Law and prohibition of discrimination respectively. However, this Amendment Act is a result of the infringement of Article 14 and 153 where the government discriminated on the basis of religion thereby violating equality amongst Indians.

• Lack religious tolerance 

India is considered to be one of the religious tolerant nations of this world. It is the prominent example of ‘unity in diversity’. However, this law seems as if the law was enacted keeping in mind the politics on religious lines and enact discriminatory policies so as to promote extremist ideology. 

Impact on Assamese 

People in Assam are at mass protest and public demonstrations.They claim that this Citizenship (Amendment) Act, 2019 has violated the norms of Assam Accor. As per Clause 5(3) of Assam Accord, the date of deportation and detection of immigrants/ foreigners was after 24th March, 1971. 4However, now this amendment has new cut-off date i.e. 31st December, 2014, which is a matter of protest. Thus, the change in cut-off date and violation of Assam Accord is the basis of the protest.

Moreover, the Assamese are of the point of view that granting of citizenship to the Bangladeshi Hindus will not only adversely affect their linguistic and ethinic culture but also increase in the problem of unemployment in the state of Assam. 

Amendment in the III Schedule of the Principal Act

In the third schedule of the Citizenship Act, 1955, in clause (d) the aggregate period of residence and service of government faced changes wherein the phrase “not less than eleven years” was replaced with “not less than five years”. This amendment ment is applicable on Hindu, Parsi, Sikh, Bhuddhist, Jains and Christains. 

Constitutional Validity

This amendment is unconstitutional as it is a clear infringement of Article 16 which promotes equality in the matter of public employment.

However, under this Amendment Hindu, Parsi, Sikh, Bhuddhist, Jains and Christains will be eligible for service in government and residence after 5 years. But a Muslim has to wait for eleven years to get residence and sevice in goverment. Thus, this amendment is not uniformly applicable in whole of India.

Impact on Assamese

This change in the time period from eleven years to five years for the non-muslims for the purpose of residence and services in government will curb the original population of Assamese and may convert that population into minority thereby making the end of their culture. Not only this, the Assamese has to face humongous competition in front of them leading to rise in unemployment ultimately leading to the rise in poverty. Therefore, this amendment brings a new challenges in every sphere such as; 

• Social (in terms of society, distribution of resources, etc.);
• Political (in terms of contesting elections, voting rights and majority ideologies);
• Administrative; (in terms of rule making and policies regulating and governance); 
• Ethnic and culture (in terms of language, rituals,norms, heritage etc.); 
• Economic areas (equal distribution of resources, employment, eradication of poverty etc.) 

What is NRC?

National Register of Citizens (NRC) is an official record of those people who are the legal citizens of India. This record is based on the demographic information who fit in the criteria established by the Citizenship Act, 1955 were considered citizens of India. 

Why was NRC updated in Assam? 

This was the unique exercise done in the state of Assam so as to keep the identity of the local people intact and to oust all the illegal immigrants/ foreigners who influxed into Assam from the neighbouring countries like Bangladesh. In 2013, a writ petition was filed by Assam Sanmilita Mahasangha & Ors in the Supreme court stating the demand that the names of the illegal immigrants must be struck down from the voters list.

Addressing this issue the apex court ordered that there must be updation in NRC and NRC must be in accordance with Citizenship Rules 2003 and Citizenship Act, 1955. The implementation of this order started in 2015 and the final NRC was released on 31st August, 2015 wherein 1.9 million applicant names were missing in the list 5.

What is the scope of NRC and CAA together?

NRC coupled with CAA clearly discriminates on the basis of religion wherein the whole Indian society is divided into muslims and non-muslim. As per NRC a person will be asked to prove that he belonged to India as his ancestors were born and reside in India.

However, CAA provides citizenship to all the non-muslims. If in case a person is Muslim then he will not be entitled for the benifit under CAA. But if a person is muslim he has no choice but he has to prove that his ancestors were of Indian origin and if they failed to prove it they will be left with no rights.

Though, it must be taken into consideration that documents such as electricity bills or tac slips or birth certificate can be the eminent proof for any person to prove his/her nationality. However, under this Amendment Act no such proof is taken into consideration. Instead a person has to prove it by tracing the existences of his ancestors.

Legislature’s intent behind CAA

Most of the parliamentarians claims that CAA is not anti-muslims. However, they claim that by leaving out Muslims, the legislature dimension can be clearly derived. They claim that the idea is to provide protection to the religiously persecuted minorities in the muslim majority neighbouring countries like Bangladesh, Afghanistan and Pakistan. Moreover, it is assumed that Muslims can not bereligiously persecuted in muslim majority countries. 

It is also said that India is not only the home of Hindus but also Sikh, Jain, Christains, Buddhist and Parsi. 

Arguments against CAA

Violative of the Constitution of India

The Citizenship (Amendment) Act, 2019 is completely based on the idea of facism and extremism. Moreover, this amendment is clearly the infringement of Secularism and violation of Fundamental rights (Article 14 and 15).

Inefficiency of India in dealing with already existing problems

India is already facing the problems such as poverty, malnutrition, unemployment, overpopulation. India is the second largest in the world in terms of population. Moreover, it does not have enough resources and employment opportunities for its own citizens, how can it provide all these things to immigrants irrespective of any caste or religion.

It is politics based on religion 

Most people argue that the ideology of this government is based on Hindutva. And Citizenship (Amendment) 2019 is a step towards converting the secular nation into an extremist nation. 

Strain on the Indian Economy

The prominent argument is that this amendment proved to be a highly disruptive and can prove to be a strain on the economy in the long run. 

Disrupt the social structure

By giving citizenship to foreigners/ immigrants even though Hindu or Parsi or Buddhist or Jain or Christan will end up destroying the social status of Indians. Original inhabitants will become a minority in that area. This will not only lead to diminish their cultural, linguistic identity but also curb the opportunities in public employment, education leading to unemployment and poverty, which is now the situation in Assam.

Judiciary on the CAA

Due to prolonged protest against the Citizenship (Amendment) Act, 2019 lead to 21 people injured in the violence. To avoid these riots and violence the Supreme Court asked the centre to publicise the real information pertaining to the Citizenship (Amendment) Act, 2019 so as to curb the circulation of fake news. A betch headed by Chief Justice of India S.A. Bobde decided to analyse and examine constitutional validity of the CAA in the month of January. 

Student’s reaction to CAA

The student agitated against the Citizenship (Amendment) Act, 2019. Students considered the CAA to be an anachronism in itself.It can be said that there was nothing directly or indirectly adversely affecting the interests of the students in particular. The CAA is considered to be anti-Muslim, which perhaps is one of the significant reason for the students from Jamia Millia Islamia and Aligarh Muslim University to take the leadership of the agitation with the politically notorious JNU and Jadavpur Universities joining in. But this has also exposed the sectarian nature of the revolt. Now the issue is likely to be diverted as atrocities of the police on Jamia students. However, as a matter of fact it is actually the youth who are the future of this nation and their point of view must be given the utmost importance. 

Students in most of the universities raised their voice in solidarity against CAA. The prominent universities like Jamia, Aligarh Muslim University (AMU), Maulana Azad National Urdu University (MANUU) or Nadwa College. It also included unusual centres of political action like Jadavpur University or Jawaharlal Nehru University (JNU) or The Tata Institute of Social Sciences. This time there was a huge outrage amongst the students from the AIIMS, IITs, IIMs, Indian Institute of Science and even the private universities joined their counterparts in premiere public universities in Chennai, Pune, Chandigarh, Delhi, Kolkata, Lucknow and Bhopal, besides institutions in small-town India, to express solidarity with the students in Jamia.

Conclusion 

Therefore, it can be concluded by asking a few questions:

Firstly, shouldn’t such kinds of law be made for the Hindu refugees coming from Sri Lanka?

Secondly, if providing shelter and doing charity is the notion of the government then shouldn’t it must be equally applicable on all the refugees irrespective of the fact that from where they are coming from?

Thirdly, is it rationally correct to apply autocratic laws on people and then cut-off there internet connections so that their Freedom of Speech and Expression under Article 19 (Part III) is curbed in totality?

Wherefore, it can be said that government has empowered under Article 11 (Part II) of the Constitution of India to enact laws pertaining to citizenship as it thinks fit. However, Article 13 (Part III) restricts the parliamentarians to make laws which are in derogation with the fundamental rights of the Indians. And this Amendment is a violation of Part III of the constitution. 

For instance, genocide in Germany was not the result of gas chambers, however it was the result of ‘hate speech’ which was delivered by Adolf Hitler. Similarly, in India the arbitrary provisions pertaining to Citizenship (Amendment) Act, 2019 is a result of communal hatred and party politics on the line of religion. 

References

1. Know more about laws relating to citizenship in India; https://blog.ipleaders.in/law-related-to-citizenship-in-india/
2. http://egazette.nic.in/WriteReadData/2019/214646.pdf
3. https://blog.ipleaders.in/fundamental-right-right-to-equality/
4. Assam Accord; https://assam.gov.in/en/main/ASSAM%20ACCORD
5. How fate of 19 Lakh people hang in balance in Assam after the final NRC’s List, India Today; https://www.indiatoday.in/programme/in-depth/video/in-depth-how-fate-of-19-lakh-people-hangs-in-balance-in-assam-after-nrc-s-final-list-1595094-2019-09-03

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The article has been written by Ayush Verma, a 2nd year student of RMLNLU, Lucknow. The article discusses the ways for acquisition of citizenship under the Citizenship Act, 1955 and provides an analysis of the Citizenship (Amendment) Act, 2019.

The Parliament has passed the Citizenship Amendment Act, 2019 (CAA) on 11th December. In the amendment, persons belonging to minority communities of Hindus, Jains, Sikhs, Christians, Buddhists and Parsis from Afghanistan, Pakistan and Bangladesh, who have entered into India on or before 31st December 2014 have been excluded from the definition of “illegal immigrants”, given in Section 2(1)(b) of the Citizenship Act. It has also reduced the period of acquisition required for getting Citizenship through Naturalisation from eleven years to five years for these communities. The amendment is facing several backlashes across India, majority being from the North-eastern States. The main objection is regarding the religious inclement of the amendment, as violative of Article 14 of the Constitution which guarantees the right to equality. 

In Assam, the amendment has started a lot of violent protests as it is in conflict with the Assam Accord of 1985, which asks for identification and deportation of illegal immigrants who have come to Assam from Bangladesh, in order to protect their culture and tradition. Several petitions have been filed in the Supreme Court challenging the constitutional validity of the Citizenship (Amendment) Act, 2019.

What is the Citizenship Act, 1955?

The Citizenship Act, 1955 specifies the ways by which Citizenship of India can be acquired. It says that Citizenship in India can be acquired by five ways: by birth, by descent, registration, naturalisation (increased residence), and by the incorporation of a territory into India.

What are the ways for the acquisition of Citizenship under the Act?

Citizenship by birth – Section 3

Every person shall be a citizen of India by birth who is born in India:

• On or after 26th January 1950 but before 1st July 1987.
• On or after the 1st July 1987 but before the commencement of the Citizenship (Amendment) Act, 2003 where one of his parents is a citizen of India at the time of his birth.
• On or after the commencement of the Citizenship (Amendment) Act, 2003 where― 

(i) both of his parents are citizens of India; or

(ii) one of his parents is a citizen of India and the other is not an illegal migrant at the time of his birth.

A person shall not be a citizen by virtue of their birth where:

• His father or mother possesses such immunity from suits as is provided to an envoy of foreign sovereign power authorized to the President of India and is not a citizen of India; or
• His father or mother is an enemy alien and his birth happens in a territory occupied by the enemy.

Citizenship by Descent – Section 4

Every person shall be a citizen of India by descent who was born outside India:

• On or after 26th January 1950 but before 10th December 1992 if his father is an Indian Citizen at the time of his birth.
• On or after 10th December 1992 if either of his parents is an Indian citizen at the time of his birth.

However after the commencement of the Citizenship (Amendment) Act, 2003, a person shall not be considered a citizen of India if their birth is not registered at an Indian consulate within one year of his date of birth, or with the permission of the Central Government, after the expiry of the said period. The application of registration shall contain an undertaking from the parents declaring that their minor child does not hold a passport of another country.

Position of minor

A minor who is an Indian Citizen under this section and is also a citizen of some other country shall cease to be a citizen of India if he does not renounce the citizenship of that country within six months of attaining the full age.

Citizenship by Registration – Section 5

Any person may be registered by the Central Government as a citizen of India, on his application, if such person is not an illegal immigrant and belongs to the following categories:

1. Who is of Indian origin and is ordinarily resident of India for seven years before making an application under Section 5(a).
2. Who is of Indian origin and is ordinarily resident in any country or place outside undivided India.
3. Who is married to a citizen of India and is ordinarily resident in India for seven years before making the application.
4. Who is a minor and his parents are citizens of India.
5. Who is of full age and capacity and his parents are registered as citizens of India.
6. Who is of full age and capacity, and if he himself or either of his parents was an earlier citizen of Independent India, and has been residing in India for one year before making an application for registration.
7. Who is of full age and capacity and registered as an Overseas Citizen of India for five years and has been residing in India for one year before making an application.

For the purposes of clauses (1) and (3), a person is deemed to be ordinarily resident if he resided in Indian for twelve months immediately before making the application and for the six years in the aggregate in the eight years preceding twelve months.

Citizenship by Naturalisation – Section 6

A foreigner who is not an illegal immigrant and is ordinarily resident in India for twelve years (throughout the period of twelve months immediately preceding the date of application and for eleven years in aggregate in the fourteen years immediately preceding twelve months) can get Citizenship of India by Naturalisation subject to other qualifications as specified in the Third Schedule to the Act.

However, if in the opinion of the Central Government, the applicant has rendered some distinguished service to the cause of science, philosophy, art, literature, world peace or human progress generally, it may waive all or any of the conditions specified in the Third Schedule.

Citizenship by incorporation of territory – Section 7

Where a territory becomes a part of India, the Central Government may by its order specify the persons who shall become citizens of India because of their connection with that territory.

Who are Illegal Immigrants under the Citizenship Act, 1955?

According to Section 2(1)(b) of the Act, “illegal immigrant” means a foreigner who enters India:

1. Without a valid passport or other travel documents and such other document or authority as may be prescribed by or under any law in that behalf; or
2. With valid documents but stays in India beyond the permitted period of time.

Laws governing Illegal Immigrants

Illegal immigrants can be deported or imprisoned according to the Passport (Entry into India) Act, 1920 and Foreigners Act, 1946. These Acts provide for regulation regarding entry, exit and residence of foreigners by the Central Government.

Foreigners Act, 1946

Under Section 3(2)(c) of the Foreigners Act, the Central Government has the power to order the deportation of a foreign national. This power to deport or identify foreign nationals has also been given to State Governments, Union Territories and the Bureau of Immigration.

Passport (Entry into India) Act, 1920

Section 5 of this Act says that the Central Government has the power to directly remove any person who has entered into India illegally. It covers such a person who has entered without a Passport or has not complied with the conditions of the Passport.

What was the need for amending the Citizenship Amendment Act, 1955?

The need for amending the Act was to give an identity to a certain specific class of illegal immigrants. There are thousands of people who have faced religious persecution in the countries of Afghanistan, Pakistan and Bangladesh. As a result of which, they fled to India to get a safe haven. Before this Act, these immigrants were not allowed to apply for Indian Citizenship as they came to India illegally. Also, the previous Act did not allow people to get Citizenship by Naturalisation unless they are able to show that they have been residing in India for eleven years. So the Amended Act seeks to give these people Indian Citizenship who have come to India after facing persecution in the three countries.

There was also no provision to cancel the registration of an Overseas Citizen of India (OCI) where such a person has violated the provisions of the Act or any other law for the time being in force, and the opportunity of being heard was also not available to them. Therefore, the 1955 Act needed reforms.

What is Citizenship (Amendment) Bill, 2016?

The Citizenship (Amendment) Bill, 2016 was brought to change the definition of illegal immigrants. The Bill provided for citizenship to illegal migrants from Afghanistan, Bangladesh and Pakistan who belonged to these religions: Buddhist, Hindu, Jain, Sikh, Parsi or Christian. The Bill also reduced the number of continuous years of stay in India that is needed to get Citizenship by Naturalisation from eleven to six years. The Bill added one more ground for the cancellation of registration of Overseas Citizenship by the Central Government under Section 7D of the 1955 Act i.e if the OCI has violated any provisions of this Act or any other law for the time being in force.

Was the bill passed by Lok Sabha?

The bill was introduced in Lok Sabha on 19th July 2016. It was then referred to a Joint Parliamentary Committee, which submitted its report on 7th January 2019. The bill was subsequently passed by the Lok Sabha on 8th January. It was referred to Rajya Sabha but consequently, due to the dissolution of 16th Lok Sabha, the bill lapsed.

What is the Citizenship (Amendment) Act, 2019?

The Citizenship (Amendment) Act, 2019 seeks to amend the Citizenship Act, 1955 by giving citizenship rights to illegal immigrants, belonging to certain religious minorities who have entered into India on or before 31st december 2014, after facing persecution in the countries of Pakistan, Afghanistan and Bangladesh. It has also relaxed the time limit for getting Citizenship by Naturalisation from eleven years to five years for these communities. The amendment has also made new provisions regarding OCI cardholders.

Investigation Bureau, from his records, gave a count on 31,313 people who are going to be the immediate beneficiaries after this amendment, among whom Hindus constituted the largest chunk, 25,447, followed by Sikhs at 5,807, Christians at 56, and Buddhists and Parsis numbering only two each.

It was passed by the Lok Sabha on 10th December and by Rajya Sabha on 11th, and finally after receiving the assent of the President on 12th December has become an Act. However, it is yet to come into force subject to the notification of the government.

Who all are covered under the bill?

The amendment covers illegal immigrants belonging to six communities, who are Hindus, Sikhs, Jains, Parsis, Christians and Buddhists from Afghanistan, Pakistan and Bangladesh, and who have entered into India on or before 31st December 2014. Persons belonging to these communities who have entered into India illegally (i.e. without passport/other documents or have been staying beyond the permitted period) would be entitled to get Indian Citizenship. In 2015, changes were also done in the Foreigners Act and Passports Act to allow non-muslims refugees from these countries to stay back in India even if they entered without valid documents. The government has favoured these communities on the basis that these are persecuted minorities in the three Countries.

Who all are left out?

The amendment has left out illegal immigrants belonging to the Muslim Community of Afghanistan, Pakistan and Bangladesh. Although Muslims constitute the largest minority religion of India, they have not been given rights to acquire citizenship similar to the non-muslim communities. It has also not recognised Sri Lankan Tamils and Rohingya Muslims in Myanmar who face religious persecution in their countries. Also, it has no provision for Muslim sects such as Ahmadiya and Shia who also face persecution in Pakistan.

Which states are given exemptions?

Seven North-eastern states have been given exemptions from the amended provisions. The Act says “Nothing in this section shall apply to tribal areas of Assam, Meghalaya, Mizoram or Tripura as included in the Sixth Schedule to the Constitution and the area covered under the ‘Inner Line Permit’ (ILP) notified under the Bengal Eastern Frontier Regulation, 1873.” The tribal areas that are excluded include Karbi Anglong in Assam, Garo Hills in Meghalaya, Chakma district in Mizoram, and Tribal Areas district in Tripura. The areas that fall under the “Inner Line Permit” are Arunachal Pradesh, Mizoram and Nagaland. This means that to enter these areas or pass through them, the Indians from other states would have to get “Inner Line Permit. It is being feared that Manipur might get affected most due to the Amendment, therefore, Home Minister Amit Shah has announced to bring Manipur under the ILP. However, Chief Minister of Sikkim P S Tamang had written to Amit Shah asking for an exemption from the Amendment, underlining the Constitutional safeguard under Article 371(F) which governs the state of Sikkim and provides it special status.

What is the position of Overseas Citizens of India under the Act?

The Amendment has added that a foreigner may apply for registration as OCI if they are of Indian Origin (i.e former Citizen of India or their descendants) or the spouse of such a person is of Indian Origin. It also seeks to allow the cancellation of their OCI registration if there is a violation of any law as notified by the Central Government. However, the amendment does not provide any guidance on the nature of laws that may be notified by the Central Government for the applicability of the provision. Also, giving the Central Government power to notify such laws whose violation would lead to cancellation of OCI Card is a wide discretion that may amount to an excessive delegation by the legislature. The Supreme Court in the case of Humdard Dawakhana v Union of India has noted that a policy, standard or rule must be set by the legislature while delegating the power to the executing authority to give guidance, which is necessary to set limits on the authority’s powers and to avoid any arbitrariness in exercise of powers. A provision is also added to give the opportunity of being heard to the OCI cardholders before the cancellation.

Arguments supporting the Act

The Government has clarified that Pakistan, Afghanistan and Bangladesh are Islamic Republics and hence, the Muslims living in those countries cannot be said to be persecuted. It has further assured that application from any other community will be decided on a case to case basis.

Home Minister Amit Shah has referred to Nehru-Liaquat Pact that was signed between India and Pakistan in Delhi in 1950. The Pact provided for better treatment of minorities in both countries. Home Minister said that the Pact failed to achieve its objective in protecting minorities in Pakistan, and this flaw is being remedied by the Indian Government through the amendment.

The NDA Government has argued in the Statement of Objects and Reasons that: 

Millions of citizens of undivided India, after the partition between India and Pakistan on religious lines in 1947 were staying in Pakistan and Bangladesh (previously East Pakistan) from 1947. The Constitution of Pakistan, Afghanistan and Bangladesh provide for a specific State religion i.e Islam. As a result of which many persons belonging to Hindu, Jain, Sikh, Buddhist, Parsi and Christian communities have faced persecution on grounds of their religions in those countries. Some people from these communities in these countries have also fears about facing such persecution in their day-to-day life, where the right to practice, profess and propagate their religion has been obstructed. Many persons out of such fear have fled to India to seek shelter and continued to stay in India even after travel documents have expired or they have incomplete or no documents.

For reduction of period from 11 years to 5 years for the persecuted minorities in the three countries, the Government argued that imposing condition of 11 years residence to get citizenship by Naturalisation “denies them many opportunities and advantages that may accrue only to the citizens of India even though they are likely to stay in India permanently.”

Arguments opposing the Act

Is there a violation of Article 14?

Article 14 of the Constitution of India says that “State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India.” The phrase “within the territory of India” conveys that equality should be given to all persons residing in India which includes foreigners and citizens. In the case of Indira Gandhi v Raj Narain, the court also recognised the “Right to Equality” as one of the basic features of the Constitution. This rule is not absolute and permits classification between groups of people if there exists some rationale that serves a reasonable purpose, as was held in the case of State of West Bengal v Anwar Ali Sarkar. The act shall also pass the reasonable classification test as was given in the case of State of Madras v. V.G. Row, which underlined two principles for the test i.e firstly there should be a reasonable classification and secondly, there should be a nexus between the object sought to be achieved and legislation. Therefore, it needs to be checked whether there exists some reasonable rationale for the classification of illegal immigrants on the basis of 

• their country of origin,
• religion,
• date of entry into India, and
• place of residence in India.

Country of origin

The amendment has classified illegal immigrants on the basis of their country of origin. It has only allowed those immigrants who belong to Afghanistan, Bangladesh and Pakistan to get citizenship of India. It was stated in the Statement of Objects and Reasons that these Countries have a State religion as a result of which religious minorities in these nations have faced persecution. It stated that millions of citizens of undivided India were living in Pakistan and Bangladesh after the partition and hence they are given differential treatment but it has not specified the reasons for the inclusion of Afghanistan.

There is a history of persecution of Tamil Eelams, a linguistic minority in Sri Lanka, and Rohingya Muslims, a religious minority in Myanmar, who have also been facing persecution. And as a result of persecution in these countries, many people have fled to India as a refugee. Given that the objective of the amendment is to provide citizenship to migrants who are fleeing religious persecution, it is not clear why the amendment has excluded the minorities from these countries who are also facing persecution.

Religion

The amendment has included illegal immigrants from non-muslim communities of Afghanistan, Pakistan and Bangladesh to get citizenship of India. However, it has excluded the Muslims who might have also faced persecution. It also does not include Muslim sects of Ahmediya and Shia who also face persecution in Pakistan. It is not clear why the Act only allows only non-muslim communities to get citizenship.

Date of entry into India

The amendment only allows people who entered India before 31st December 2014 to apply for citizenship. The question arises why the differential treatment is given to migrants who have entered in India before and after that date.

Place of residence

The amendment gives differential treatment to migrants belonging from tribal areas of Assam, Meghalaya, Tripura and Mizoram as given in the sixth schedule. The sixth schedule in the Constitution of India was brought to aid in the development of tribal areas through autonomous councils while protecting the indigenous population in these areas from exploitation and preserving their distinct social customs. It has also exempted migrants belonging from “Inner Line Permit” areas. When an illegal immigrant belonging from these areas gets citizenship, he will be subjected to the same restrictions, as are applicable to other Indian citizens, in these areas. There is no clear reason given as to why the illegal immigrants residing in these areas have been excluded from the amendment.

Is the Act against Secularism?

Every legislation passed in India shall not violate basic structure doctrine. Therefore any legislation that fails the test of “basic structure” is unconstitutional. In the case of S.R. Bommai v. Union of India, it was held that Secularism is a part of the “basic structure”. Therefore, any Act passed by the Parliament must not be against secularism. However, the recent amendment has only provided for non-Muslims to get citizenship if they have come before 31st December 2014, which is inimical to the idea of Secularism.

Why the people of Assam are protesting against it?

A lot of protests have started in Assam after the Bill was passed by the Lok Sabha on 10th December 2019. The bill seeks to nullify the purpose of the National Register of Citizens (NRC) that was published this year. The NRC was passed to eliminate thousands of illegal Bangladeshis who were living in Assam. However, after the exercise, 19 lakh people found themselves excluded from NRC. These people included Hindus and Muslims. Now the recent amendment seeks to give citizenship to the non-muslims who have entered illegally in Assam. But it is silent when it comes to providing citizenship to the Muslims. The people of Assam are fearing that accommodating such migrants might pose a threat to their culture, tradition, language and ethnicity of the region, which has become the cause of their protests. Allowing illegal immigrants to live in Assam would also create an economic burden on the State and may decide the political future of Assam.

Clause 6 of the Assam Accord

Assam Accord was signed between the Union Government and leaders of the All Assam Students Union (AASU) in 1985, at the end of a six-year-long agitation demanding the expulsion of illegal immigrants from Bangladesh. Clause 6 of the accord talks about providing constitutional, legislative and administrative safeguards to protect, preserve and promote the cultural, social, linguistic identity and heritage of the Assamese people. However, the accord has not been implemented as the committee which was formed to give a roadmap for its implementation has not submitted its report yet. The Accord said that any person who cannot prove their ancestor’s presence before 24th March 1971 would be deemed as an illegal immigrant. The NRC was a promise made in the Assam Accord to identify and deport illegal immigrants but after the Citizenship (Amendment) Act, 2019, illegal immigrants belonging to non-muslim communities cannot be deported.

What is the difference between CAA and NRC?

There is a conflict between the CAA and NRC as the government has been trying to implement both. However, there are differences between the two:

• NRC is aimed at weeding out people who have entered into Assam from Bangladesh illegally after 24th March 1971 but CAA is aimed at giving citizenship to the six communities that came to India before 31st December 2014 after facing persecution in the countries of Afghanistan, Bangladesh and Pakistan.
• NRC is not based on religion but CAA is.
• The base year for NRC is 1971 but for CAA, it is 2014.
• The NRC is only applicable to Assam till now but CAA is applicable to India as a whole, except some areas as specified in the Act.

Conclusion

The major issue with the amendment is that it provides citizenship only to non-muslim immigrants who have live for five years from the the three countries. However, any foreigner can still apply for citizenship but can only be registered after they have lived in India for 11 years i.e by the normal process of naturalisation. Presently, the petition challenging the amendment has been pending in the Supreme Court which will decide its constitutional validity.

References

• https://www.insightsonindia.com/2019/12/10/rstv-the-big-picture-citizenship-amendment-bill/
• https://m.economictimes.com/news/et-explains/citizenship-amendment-bill-what-does-it-do-and-why-is-it-seen-as-a-problem/articleshow/72436995.cms
• https://indianexpress.com/article/explained/citizenship-amendment-bill-2019-parliament-winter-session-nrc-6122846/
• http://prsindia.org/billtrack/citizenship-amendment-bill-2019
• https://www.indiatoday.in/india/story/citizenship-amendment-bill-all-you-need-to-know-about-cab-1627516-2019-12-11

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 skill.

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This article is written by Avni Kaushik. Here she discusses “Concept of  Free Consent and Indian Contract Act”. 

Definition of Free Consent

In the Indian Contract Act, the definition of Consent is given in Section 14, which states that “it is when two or more persons agree upon the same thing and in the same sense”. 

Example

A agrees to sell his house to B, A owns three houses and wants to sell his house in Haridwar. B thinks he is buying his Delhi house. Here A and B have not agreed upon the same thing in the same sense. Therefore, there is no consent and no contract afterwards.

In the case of Raffles v. Wichelhaus, Two parties, A and B, entered into a contract for the sale of 125 cotton bales by a ship named “peerless” from Bombay. There were two ships with the same name, and while Party A was thinking of one ship, Party B was thinking of the other ship. The court held that there was no meeting of minds by both parties. Hence the contract was invalid.    

Vitiating factors and their effect

1. Coercion (Section 15)

Section 15 of the Indian Contract Act,1872 states that coercion is, committing, threatening to commit, any act forbidden by the Indian Penal Code (45 of 1860) or the unlawful detaining, or threatening to detain any property, to the prejudice of any person whatever, with the intention of causing any person to enter into an agreement. 

Coercion means forcing an individual to enter into a contract. When intimidation or threats are used under pressure to gain the party’s consent, i.e. it is not free consent.
Coercion may involve the actual infliction of physical and psychological harm in order to enhance the credibility of a threat. Then the threat of further harm can lead to the threatened person’s cooperation or obedience.

Example

went out for a walk, B approaches A with a stranger, pulls out his gun and asks A to give all his possessions. The consent of A is obtained by coercion here.

Effect

Coercion has the effect of making the contract voidable. It implies that at the discretion of the party whose consent was not free, the contract is voidable. The aggravated party will, therefore, determine whether to enforce the contract or to cancel the contract.

Techniques of causing coercion

• Threatening to commit any act which is prohibited by the Indian penal Code.
• Detaining not as per law or even threatening to detain any property, with the sole intention of compelling a person to enter into a contract.

Acts forbidden by IPC            

The word act prohibited by the Indian penal code makes it necessary in a civil action for the court to decide whether the alleged act of coercion is amount to an offence. A threat of bringing a false charm with the object of making another do a thing amount to blackmail or coercion. In the case of Ranganayakamma v Alwar Sett, where the widow was prohibited from removing the corpse of her husband until she consented for the adoption. The court said that her consent was not free and it was coerced. It is clear that coercion is committing or threatening to commit any act which is contrary to law.

Unlawful Detention of property

Consent can be said to be caused by coercion if it is induced because of illegal confining of a property, or a danger to do as such. With a specific goal of acknowledging the child’s due fine, the legislature annexed the property both of him and his father having a place, The instalment made by the father at that stage bearing in mind the ultimate goal of saving the property from being sold was kept to be made under coercion. Refusal by the government to discharge a temporary worker’s instalment unless he surrenders his demand for additional rates adds up to intimidation under the land detention class.

Burden of proof 

The burden of proof lies with the party defending the coercion. The burden of proof is heavier on him. This is because pure probability or fear is not a threat. In order to create coercion, a person must show that there was a risk that was prohibited by law and that forced him to enter into a contract that he would not otherwise have.

• Burden of proof- The burden of proof lies with the party defending the coercion. The burden of proof is heavier on him. This is because pure probability or fear is not a threat. In order to create coercion, a person must show that there was a risk that was prohibited by law and that forced him to enter into a contract that he would not otherwise have.

2. Undue Influence (Section 16)

According to Section 16 of the Indian Contract Act, 1872 an influence will be considered as Undue Influence when:

• One party to the contract is in a position of trust and controls the other   party wrongfully;
• Such a person uses his dominant position to gain an unfair advantage over the other.

There are two key elements of undue influence-

1. The relationship- trust, confidence, authority;
2. Unfair persuasion- careful examination of the terms of the contract.

Where one party is in a fiduciary relation with the other party

Fiduciary relationship means a relationship of trust and confidence. When a person imposes faith and confidence on the other, he expects not to be betrayed. If the other party betrays the confidence and trust reposed in him and gains an undue influence.

Examples of fiduciary relationship include-;

• Solicitor and client;
• Trustee and trust ;
• Spiritual adviser and devotee;
• Medical attendant and patient;
• Parent and child;
• Husband and wife;
• Master and servant;
• Guardian and ward.

In other words, we can say that Undue influence occurs when the decision of another party to the transaction can be influenced by one party.

Example

A sold his gold ring to her teacher B for Rs 200 after he had been offered good grades by his teacher. Here A’s permission is not given freely, he was influenced by his teacher.

Effect

The effect of undue influence makes an agreement voidable at the option of the party whose consent was caused. Any such contract can be set aside. Only a party to the contract can avoid or rescind the contract. This right does not lie in the hands of the third party.

Burden of Proof

If the plaintiff wants to bring an action to stop a contract entered into on the grounds of undue influence, two issues must be kept in mind. The law has been stated in the Indian Evidence Act, 1872 and Indian Contract Act, 1872. The law states that in order for a plaintiff to prove that he was under undue influence, two things must be established;

1. “Not only must the defendant has a dominant position but,
2. He must use it.”

It states that it’s not enough for the plaintiff to show the possibility of undue influence that may have been exercised by the dominant party. It must be certain that a person used his position to influence the plaintiff. A possibility of the same is not enough for the plaintiff to avoid a contract.

Difference between Coercion and Undue Influence

3.Fraud ( Section 17)

According to Section 17 of Indian Contract Act, Fraud includes any of the following acts committed by a contracting party or its connivance or its agent in order to deceive or induce a party or its agent to enter into the contract:

• The effective concealment of a fact by one who is aware of the fact;
• a promise made without any intention to carry it out;

• any other act fitted to deceive;
• any such act or omission as the law considers to be fraudulent.

Mere silence as to facts likely to affect a person’s willingness to enter into a contract is not fraud, unless the circumstances of the case are such that, having regard to them, it is the obligation of the silent person to speak or unless his or her silence is, in itself, equivalent to speech.

Example

A sells his horse to B by auction, which A knows to be unsound, A tells B nothing about the unsoundness of the horse. This is a fraud on the part of A.

Effect

• The contract arising from fraud is a null contract;
• The misled party has the right to withdraw from the contract;
• Due to the fraudulent agreement, the party is responsible for recovering the damages.

Evidence and Burden of proof 

In a large majority of cases, Fraud can not be proved by concrete and observable proof. It’s hidden in its movement by its definition. If the evidence given is such as lead to wrongdoing, it is therefore appropriate that fraud must have been committed. In most cases, the only tool for dealing with fraud issues is circumstantial evidence . If this were not allowed, the ends of justice would be constantly, if not invariably, defeated. Simultaneously, fraud involvement is only to be blamed on a deliberate wrongdoer. As a remedy for restitution, any real damages arising from fraud can be recovered, even if they could not have been reasonably foreseen; subject to the defrauded party’s mitigation law. Due to contributory negligence, the penalties would not be diminished.

4.Misrepresentation (Section 18) 

As per Section 18 of the Indian Contract:

• Misrepresentation means the truth is misrepresented;
• Misrepresentation is the release of deceiving details resulting in the presumption that the other party will enter into a deal and then lose. Nevertheless, the information provided by the guilty party is the result of a genuine belief in the matter. Misrepresentation is said to be committed. Firstly, when the deceiving person declares that no justified data is misleading a person is some way.

Secondly, There is a breach of obligation that has caused the bias of one or the other. Lastly,  a mistake was committed by a person because of the misrepresentation of the act or information.

Example

A told B that his radio is in good condition, because of the confidence he had in A, B bought the radio from him. The radio did not work properly after some time, B thought he was misled by A, but A believed his radio was in good condition and had no intention of deceiving him. So, here misrepresentation is in the part of A, because he did not know that the radio is not working properly.

Effect

If the party that has suffered as a result of the misrepresentation when entering into a contract may choose to terminate the contract, rescind the contract within a reasonable time under Specific Relief Act 1963.

Kinds of Misrepresentation

There are two types of misrepresentation:

Negligent Misrepresentation

• It is considered to be a negligent misrepresentation when the misrepresentation happens due to lack of any reasonable ground and carelessness;
• Negligent misrepresentation is only known when the representative owed a duty to representee to handle carefully;
• An individual would only be liable if, in particular, he had ignored the duty specified;
• Even when there is no fiduciary relationship, responsibility exists between the two parties.

Innocent misrepresentation

• If the portrayal is based on good reason to believe and there is no error and malicious motive, then it is said to be an innocent misrepresentation.
• When a person enters into a contract with an innocent misrepresentation, he or she has the right to withdraw from the contract, but is not entitled to damages.
• Unless there are reasonable grounds, a contract will not be void. It would be enough to prove innocence in misrepresentation to prove the fact.

Burden of Proof

The burden of proof is on the defendant to show that the misrepresentation was not rendered fraudulently by showing that “He had reasonable grounds to believe that the evidence portrayed were valid during the time when the contract was made.” The party making the misrepresentation carries a heavy burden of proof.

Distinction between fraud and misrepresentation 

4. Mistake(Section 20)

There are two forms of  mistake under Indian Contract Law:

1. Mistake of Fact;
2. Mistake of Law.

Mistake of Fact

• A mistake of fact arises when one or both of the contracting parties have misunderstood a term that is essential to the meaning of the contract;
• Such a mistake may be done due to confusion, negligence or omission, etc;
• A mistake is never intentional, it is an innocent overlooking;
• Such mistakes can be either unilateral or bilateral.

Bilateral Mistake (Section 21)

When both the parties to a contract are under a mistake of fact, essential to the agreement, such a mistake is known as bilateral mistake. Bilateral mistakes are also sometimes referred to as mutual or common mistakes. All the parties do not agree to the same thing and in the same way, which is the concept of consent. Since there is no consent, the contract is null and void.

Example

A, agrees to buy a cow from B, but it turns out that the cow was dead at the time of the deal, although the fact was not known to any party. The arrangement is considered invalid.

Unilateral Mistake (Section 22)

A unilateral mistake occurs when only one party to the contract                                                                           makes a mistake. The contract will not be void in such case. It is specific in Section 22 of the Act that the contract will not be void just because one party made the mistake. So if only one party has made a mistake the contract remains a valid contract.

Example

A enters into an agreement with B for the purchase of horse which he assumes to be a racing horse. A do not confirm from B. In actual a horse is not a racing horse. A cannot rescind the contract.

Mistake of law

The mistake may be related to the mistake of Indian laws, or it may be a mistake of foreign laws. If the mistake applies to Indian laws, the principle is that the  law’s ignorance is not a sufficiently good excuse. This means that either party cannot claim that it is not aware of the law.

The Contract Act states that, on the grounds of ignorance of Indian law, no party can claim any relief. This will also include an incorrect interpretation of any legal provisions.

However, a similar treatment is not given to ignorance of a foreign law. Ignorance of foreign law provides some leeway, the parties are not expected to know foreign law and its meaning. Therefore, under the Indian Contract Act, an error of foreign law is actually treated as a mistake of fact.

Conclusion

Free Consent is absolutely important to make an agreement a valid contract. The importance of free consent cannot be stressed enough. The Party’s consent must be free and voluntarily. It is necessary to give consent to the contract without any pressure or delusions. It is essential that the parties consent is free, as this may affect the contract’s validity. If the consent has been obtained or caused by coercion, undue influence, fraud, misrepresentation or mistake, then it has the power to void the agreement.

References

1. http://lawtimesjournal.in/coercion-undue-influence-difference-between-coercion-and-undue-influence/
2. https://www.legalbites.in/effect-of-coercion-undue-influence/
3. https://keydifferences.com/difference-between-coercion-and-undue-influence.html
4. https://keydifferences.com/difference-between-fraud-and-misrepresentation.html

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 skill.

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This article is written by Shivangi Tiwari, a second-year student pursuing B.A. LL.B. from Hidayatullah National Law University, Raipur. This is an exhaustive article dealing with review Procedures under Cr.P.C.

Introduction

The processes involved in the criminal justice system can have a drastic impact on the lives of people involved in it, especially the rights which are guaranteed to people under the constitution of India like Right to Life and Personal Liberty. It is a well known saying that “to err is human” and judiciary being one of the institutions created by humans is prone to committing errors. Therefore, in order to prevent the miscarriage of justice which defeats the very purpose of the judicial system the need for the creation of some system to be created to ensure that justice is fairly delivered is imperative and where there is a miscarriage of justice, some rectifying mechanism should come into play. Keeping in view this need in order to prevent the fallibility of the judicial system the Code of Criminal Procedure, 1973 has devised various provisions. Section 372 to Section 394 of the Code of Criminal Procedure deals with the provisions related to appeals.

However, in exceptional cases no right to appeal lies with the person. In order to prevent the situation in which the aggrieved party does not remain remedy less, The legislators have incorporated the concept of review under the Code of Criminal Procedure, which is called “Revision” which has been provided under the Code to uphold the ultimate goal of the entire judicial system which is deliverance of justice. Section 397 to Section 405 of the Code include the provisions with respect to the revisionary jurisdiction granted to the higher courts and the procedure by which the higher courts exercise this jurisdiction guaranteed to it. The powers granted to the high courts are very wide in nature and are completely discretionary in nature.

In practicality, the provision of an appeal is a legal right conferred to the parties, revisionary power conferred to the criminal courts is completely discretionary in nature and therefore no party can claim it as a matter of right. In criminal cases, at least one appeal is granted to an accused by the legislature, whereas there is no such right in instances of revision. The courts have time and again discussed the difference between appeal and revision.

In Hari Shankar vs Rao Ghari Chowdhury, the Supreme Court held that there is a difference between appeal and revision. The right of appeal also consists of right of rehearing as well unless the statute conferring the right of appeal limits the rehearing in some way. The power to hear a revision is generally given to a superior Court so that it may satisfy itself that a particular case has been decided according to law.

Object and scope

Chapter XXX of the Code of Criminal Procedure deals with two important jurisdictions, which are:

• Revision;
• Reference.

Under Section 395 reference jurisdiction can be invoked by any court of Metropolitan Magistrate. The Code makes it necessary that the reference jurisdiction can be made only on the question of law which may include the validity of any Act, provision which may arise during the hearing of any case.

The revisional jurisdiction on the other hand under Section 397 can be invoked either by:

• High Court; or
• Sessions judge.

Under revisional jurisdiction, any higher court can call for the record of the case from the court subordinate to it. According to Section 398 of the Code, the objective of revisional jurisdiction is to call for further enquiry in cases where the court finds that justice has not been meted out to the parties fairly. According to Section 401, in case of any proceedings of record by the High Court itself or otherwise comes to its knowledge, the High Court in its discretion has the authority to exercise any of the powers which are conferred upon the appellate court under Section 386, Section 389, Section 390 and Section 391 or the powers conferred on Sessions court under Section 307.

The authority which the High Courts have over the other Criminal courts in India is guaranteed to it not only by the Code of Criminal Procedure but also by the Constitution of India. Besides the appellate jurisdiction, the authority possessed by the High Courts over the other courts is the power of superintendence guaranteed to the High Courts by Article 227 of the Indian Constitution.

According to subsection 1 of Section 395, the reference jurisdiction is held only by the Court of sessions or Metropolitan Magistrate. A judicial Magistrate has the authority of making reference only under subsection 2 of Section 395. 

Reference of the high court

In its literal sense, the term ‘Reference’ means to put forward something in front of any person in order to obtain his opinion on the thing so forwarded to him. Section 395 of the Code of Criminal Procedure confers the right to the subordinate criminal courts to refer cases to the High Court. The Section provides that the subordinate courts may approach the High Court of the respective states where they are located and may refer a case to the High Court so approached in order to obtain its opinion in cases where the subordinate courts are satisfied that the particular case requires a judicial interpretation by the higher judiciary. The right of the subordinate courts can be exercised in two situations, which are as follows:

• When the validity of the Act, ordinance or any regulation is in question and the court thinks that the validity of such Act, ordinance or any regulation is doubtful;
• When in any case here is a question of law involved which the court thinks requires the interpretation of the High Court.

Prerequisites for reference under Section 395

• The case should be pending before the court: It is important that the case in which the validity of any law is in question should not be decided and must remain pending before any court of law. No specific stage of proceeding has been expressly mentioned under the provision and therefore as a general rule, the trial court can refer to the High Court at any stage of the proceedings whenever it deems fit. However, where the trial court has already decided a case then it can not refer the case to the High Court and only parties to the trial can approach the higher courts by way of revision.
• The case should necessarily involve a question of law: Normally the question before a trial court is whether the accused in the trial is guilty of the offence of which he is charged with. However, during the proceedings, the question of the validity of any law may arise before the court which the court could take up to the High Court for reference. For example in Mohammad Altaf Mohand And Anr. vs C.B.I And Ors., the validity of Armed Forces (Special Powers) Act, 1958 was challenged which gave the power of search and seizure to the military officers and in the present case the accused were the military officers who were charged with rape and murder and it was contended on behalf of the petitioners that the said Act gave unnecessary powers to the military officers.
• The law which is in question must be in the form of Act, ordinance or regulation: The provision does not specifically mandate that the law should essentially be a primary legislation and it can even be an ordinance or a delegated legislation which can be forwarded to the High Court for its reference. In Dashrath Rupsingh Rathod v. State of Maharashtra & Anr, the validity of Negotiable Instruments (Amendment) Act, 2015 was in question and the validity provided by the ordinance to the courts was challenged.
• The courts must believe that the law in question is invalid: The court which is hearing the matter should have a sufficient reason to believe that the law which is in question is invalid because of any reason which may be a violation of any of the provisions of the Constitution or it is arbitrary and violates the principles of natural justice.

Reference to high court and post reference procedure

Reference to High Court

• Provisions with respect to reference which can be made by the courts subordinate to High Courts are contained under Section 395(1) of the Code of Criminal Procedure and it empowers the courts subordinate to High Courts to refer any case pending before it to the higher courts which involves a substantial question of law regarding the validity of the Act, Ordinance, regulation or any provision which in the opinion of the court should be inoperative. The word ‘regulation’ is used in the sense in which the General Clauses Act of 1897 defines it;
• Subsection 2 of Section 395 provides that in any case before the subordinate court does not fall under subsection 1 of Section 395, then the subordinate courts shall refer to the judgements delivered by the higher courts earlier. The court makes a reference under subsection 2 of section 395;
• Subsection 3 of Section 395 provides that any court which makes a reference under subsection 1 and 2 of the Section shall in the meantime either commit the accused to jail, release him on bail and may call him when the court holding the proceedings may require. In Mahesh Chand v. State of Rajasthan, the court subordinate to High Court made reference to the High Court about a bail application which was by the time the reference was made was already disposed of and therefore, the High Court refused to entertain declined to make any reference since there was no matter pending before the court and therefore, no reference could be made for the matter which has already been disposed of.

Post reference procedure

Section 396 of the Code of Criminal Procedure talks about the post reference procedure i.e., the procedure which has to be followed by the subordinate court which referred any case to the High Court which involves a substantial question of law regarding the validity of the Act, Ordinance, regulation or any provision which in the opinion of the court should be inoperative because of the reason of it is invalid for certain reasons. The Section provides that, the High Court to which any case was referred to when passes the decision or the order as it deems fit then the copy of such decision or order passed by the High Court should be sent to the court which has referred to the High Court and the subordinate court after receiving the copy of the decision or judgement should dispose the matter in accordance with it.

Revisional jurisdiction

Dictionary meaning of “revision” is the act of revising or reviewing something in order to locate and rectify the mistakes if any, present in it. Section 399 and Section 401 of the Code of Criminal Procedure confers the revisionary jurisdiction to Sessions Court and High Court respectively. Section 399 of the Code states that the revisional jurisdiction is the same as that with the High Court under Section 401. Revisionary jurisdiction is the power of the higher courts to call for records from the lower courts of the cases which are already decided by the lower courts. The objective of revisionary jurisdiction are as follows:

• Higher courts can keep a check on whether the legal principles, procedures and jurisdiction are duly complied with or not by the subordinate court.
• To keep the lower court within the bounds of their authority and make them work in accordance with the rule of law.

Essentials for the exercise of revisional jurisdiction

The essentials required to exercise the revisional jurisdiction are as follows:

• Calling for records of the case: The most basic ingredient for the exercise of revisional jurisdiction is that the court should call for records of the cases which are already decided by any Court subordinate to it. The record of any case consists of the FIR, statements made by the witnesses under Section 161 of the Code of Criminal Procedure, any confessions recorded under Section 164 of the Code of Criminal Procedure, the sworn evidence given by the witness before the court, any other document which is brought to record and finally he certified copy of the judgement of the court over the judgement of which the revisionary jurisdiction is exercised;
• Unsatisfaction of parties on the court’s judgement: Just like appeal, the revision of the judgement can be brought by either of the parties to the suit which is aggrieved by the judgement and the findings of the court. However, the court exercising the revisional jurisdiction cannot revise the judgement on its merit and only revise the procedural aspect of the judgement.

The statement made to a metropolitan magistrate

Generally, the statements made in the court of law are recorded under Section 161 and 162 of the Code of Criminal Procedure. Section 161 Code of Criminal Procedure, 1973 (for short ‘Cr.P.C.’) titled “Examination of witnesses by police” provides for an oral examination of a person by any investigating officer when such person is supposed to be acquainted with the facts and circumstances of the case. The purpose for and the manner in which the police statement recorded under Section 161 Cr.P.C can be used at any trial are indicated in Section 162 Cr.P.C. The confessions of the accused and the witnesses are recorded under Section 164 of the Code. Subsection 1 of Section 164 of the Code mandates that a metropolitan magistrate can record the confession and statements made to him by the accused or witness in the course of the investigation. It is also provided that it is not essential that the magistrate who records the confession and statements has jurisdiction in the case. The judicial magistrate also has the authority to administer an oath to the person who makes such statements. Under Section 164(5) of the Code of Criminal Procedure can record the statements other than the confessions which in his opinion are appropriate to the circumstances of the case in question.

The term ‘Statement’ has nowhere been defined in the Code of Criminal Procedure. But the term ‘statement’ under the Code means those statements which are written by the witness himself or the statements made by the witness which are reduced to writing by any person other than the witness himself. The term ‘statement’ recorded under Section 164 of the Code refers to the previous statement made by the witness or the statements of the accused which is not a confession. The purpose of inclusion of the provision of recording the statement under Section 164 is two-fold, which are as follows:

• To prevent the witnesses from changing their statements subsequently;
• To overcome the immunity from prosecution with regard to the information furnished by the witnesses under Section 162 of the Code.

Power to order inquiry

Section 397 of the Code of Criminal Procedure authorizes the High Court or the Sessions judge to direct the Chief Judicial Magistrate to himself make an inquiry or direct any magistrate subordinate to him to make further inquiry into any complaint which has been dismissed under Section 203(if after the consideration of the statements on oath of the complainant and the witnesses the magistrate is of the opinion that the inquiry which was carried on under Section 202 of CrPC reveal that there is no sufficient ground for proceeding, he may dismiss the proceedings) or Section 204(4)(when there is a provision of payment of any process-fee under any law in force then the failure to pay such fee may result in the dismissal of complaint by the Magistrate) or any case in which the person accused of an offence has been discharged or acquitted. The Section further provides that the power conferred to the court under Section 397 of the Code can not be exercised by the courts to direct any person mentioned under the Section to inquire into any case of the person where the case has been discharges unless the person was provided with the opportunity of proving why the case should not be discharged.

Sessions judge’s powers of revision

Section 399 of Criminal Procedure Code confers revisionary jurisdiction upon the Session’s judge. The Section makes the revisional jurisdiction of High Court coextensive with that of Sessions Court. 

• Subsection 1 of Section 399 states that in cases where the record of proceedings have been called for by the Sessions judge. The Sessions Judge has similar powers to those exercised by the High Court which is conferred to it by Section 401 of the Code;
• Subsection 2 of Section 399 states that the provisions of sub-section 2, 3, 4 and 5 of Section 401 shall apply in cases where revision proceedings have commenced before the sessions judge and the references under the subsection which are made to the High Court shall be construed as references made to the Sessions judge;
• Subsection 3 of Section 399 limits the opportunity of an aggrieved party from going to the courts for filing revision petition by providing that where the revisional proceedings were going on before the Sessions Judge and the judgement has been delivered by him. Then the judgement delivered by the Judge shall be final and the person who filed the revision petition will lose his right to file a similar petition before the High Court or any other court in the country.

Powers of revision of additional sessions judge

Section 400 of the Code of Criminal Procedure provides that an additional sessions judge has revisional powers similar to those possessed by the sessions judge which are mentioned under the Code in the cases which may be transferred to him by the sessions judge under any general or special order of the sessions judge.

Statement of metropolitan judge

According to Section 397 of the Code of Criminal Procedure, when the record of any case is called for by the High Court from the metropolitan judge, the metropolitan judge should submit along with the record a statement stating the grounds on which the impugned order or decision was taken. The higher court shall take the reason for the decision so provided by the statement submitted by the metropolitan judge into consideration while delivering the judgement of setting aside or overruling the decision. 

High courts powers of revision

The right to appeal, according to the Code of Criminal Procedure is confined only to specific cases which have been mentioned under the Code. Even in those specified cases, only one appeal is permissible by the Code and the review of the decision given by the appellate court can in ordinary circumstances not be subjected to further appeal in the higher court. The Code in order to prevent the miscarriage of justice has devised the procedure of Revision. The provisions regarding the power of review with the higher courts and the procedure to regulate the power are contained under Section 397 to Section 405 of the Code of Criminal Procedure. The power of revision with the higher judiciary is very wide and is purely discretionary. Therefore no party can claim it as a matter of right to be heard before the court with revisional jurisdiction.

The revisional powers conferred by the Code are wide enough but the same cannot be exercised in exceptional circumstances. The exceptional circumstances are as follows:

• In cases where an appeal can lie but there is no appeal brought by the party. No revisional proceedings shall be entertained on behalf of the person who could have brought in a petition for appeal but did not do so;
• When interlocutory orders are passed in any appeal, enquiry or trial;
• The court which is exercising its revisional jurisdiction does not possess the power to convert a decision of acquittal into a decision of conviction;
• A person is entitled to file only one application for revision in either court of session or High court and once a person has filed an application for revision he can not file any other application in any court of law.

Section 397 to Section 401 of the Code of Criminal Procedure confers revisional jurisdiction upon the High court.

Power exercised by the High Court

Section 401 confers the revisionary powers to the High Courts in the territory of India. The revisionary power is the procedural mechanism to correct the errors committed in the dispensation of justice by the courts. The revisionary power of High Courts is very wide and can be exercised in exceptional cases where there is a complete miscarriage of justice.

Treatment of application of revision as a petition of appeal

Section 401 of the Code empowers the High courts to exercise the powers of an appellate court. The appellate jurisdiction of High Courts can be exercised only in exceptional cases in order to prevent the miscarriage of justice in exceptional circumstances. Section 386 of the Code of Criminal Procedure guarantees appellate power to the High Courts. In exercise of Appellate power under Section 386 Cr.P.C. the High Court has full power to reverse an order of acquittal and if the accused are found guilty they can be sentenced according to law. Section 386 of the Code makes it clear that the purpose of revisional jurisdiction is to satisfy the person that he is meted out with justice as to the legality, correctness and propriety of findings, sentence, order or judgement delivered by the court against which he files a revision petition before the higher court.

Power of high court to withdraw or transfer revision cases

In case of a joint trial, if one of the accused moves to the High Court while the other accused moves to the sessions court for filing the revision petition then the High Court will have the upper hand in deciding as to which court should entertain the matter. The court takes this decision keeping in mind the general convenience of the parties and also the gravity of the case which comes to the court. If the High Court decides to let the sessions judge decide the matter and the sessions judge so disposes of the court then the party which moved to the court with the revision petition would in accordance with the provisions of Section 397(3) of the Code loses the right to move to another court for filing the petition for the revision of the case in any other court.

High court’s order to be certified to lower court

According to Section 405 of the Code of Criminal Procedure, when a High Court or sessions judge decides on any revision petition. Then it has to certify the judgement or order delivered under the case, in accordance with the procedure mentioned under Section 388 of the Code, to the court which delivered the judgement which was appealed against.

Difference between reference and revision

The table below tries to explain the difference and the different nuances of reference and revision mentioned under Code of Criminal Procedure concisely:

Conclusion

The process of appeal gives a person the right of appearing before the court and getting any factual or legal error ratified by the court in order to attain justice. However, appeals against only those judgments, orders, or sentences passed by any criminal court can be brought before the court which has been specifically mentioned under the statutes. Thus, the right to appeal can only be exercised within the bounds of the Code of Criminal Procedure or any other law in force and hence, this is discretionary upon the court which has been approached and can not be claimed as a matter of right. In certain cases no appeal is not allowed at all, in fact, the judgment, or order, or sentence delivered by the criminal court will attain finality.

The revisionary jurisdiction guaranteed to the High Courts is quite extensive and the High Courts are given wide powers in this respect. It would not be superlative to say that no form of judicial injustice can permeate through this power. It has been held in various decisions that the High Court is allowed to exercise its inherent powers when dealing with cases of revision. These inherent powers apply to both substantive as well as procedural matters. However, it can deal only with the question of law and cannot re-examine any evidence.

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 skill.

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This article is written by Avni Kaushik. Here she discusses “Concept of  Free Consent and Indian Contract Act”. 

Definition of Free Consent

In the Indian Contract Act, the definition of consent is given in Section 14, which states that “it is when two or more persons agree upon the same thing and in the same sense”. 

Example

‘A’ agrees to sell his house to ‘B’. ‘A’ owns three houses and wants to sell his house in Haridwar. ‘B’ thinks he is buying his Delhi house. Here ‘A’ and ‘B’ have not agreed upon the same thing in the same sense. Therefore, there is no consent and no contract afterwards.

In the case of Raffles v. Wichelhaus, two parties, ‘A’ and ‘B’, entered into a contract for the sale of 125 cotton bales by a ship named “peerless” from Bombay. There were two ships with the same name, and while Party ‘A’ was thinking of one ship, Party ‘B’ was thinking of the other ship. The court held that there was no meeting of minds by both parties. Hence the contract was invalid.

Vitiating factors and their effect

1. Coercion (Section 15)

Section 15 of the Indian Contract Act,1872 states that coercion is committing or threatening to commit, any act is forbidden by the Indian Penal Code (45 of 1860) or the unlawful detaining or threatening to detain any property, to the prejudice of any person whatever, with the intention of causing any person to enter into an agreement. 

Coercion means forcing an individual to enter into a contract. When intimidation or threats are used under pressure to gain the party’s consent, i.e. it is not free consent.
Coercion may involve the actual infliction of physical and psychological harm in order to enhance the credibility of a threat. Then the threat of further harm can lead to the threatened person’s cooperation or obedience.

Example

‘A’ went out for a walk, ‘B’ approaches ‘A’ with a stranger, pulls out his gun and asks ‘A’ to give all his possessions. The consent of ‘A’ is obtained by coercion here.

Effect

Coercion has the effect of making the contract voidable. It implies that at the discretion of the party whose consent was not free, the contract is voidable. The aggravated party will, therefore, determine whether to enforce the contract or to cancel the contract.

Techniques for causing coercion

• Threatening to commit any act which is prohibited by the Indian penal Code.
• Detaining not as per law or even threatening to detain any property, with the sole intention of compelling a person to enter into a contract.

Acts forbidden by IPC            

The word act prohibited by the Indian penal code makes it necessary in a civil action for the court to decide whether the alleged act of coercion is amount to an offence. A threat of bringing a false charm with the object of making another do a thing amount to blackmail or coercion. In the case of Ranganayakamma v Alwar Sett, where the widow was prohibited from removing the corpse of her husband until she consented for the adoption. The court said that her consent was not free and it was coerced. It is clear that coercion is committing or threatening to commit any act which is contrary to law.

Unlawful Detention of property

Consent can be said to be caused by coercion if it is induced because of illegal confining of a property, or a danger to do as such. With a specific goal of acknowledging the child’s due fine, the legislature annexed the property both of him and his father having a place, the instalment made by the father at that stage bearing in mind the ultimate goal of saving the property from being sold was kept to be made under coercion. Refusal by the government to discharge a temporary worker’s instalment unless he surrenders his demand for additional rates adds up to intimidation under the land detention class.

Burden of proof 

The burden of proof lies with the party defending the coercion. The burden of proof is heavier on him. This is because pure probability or fear is not a threat. In order to create coercion, a person must show that there was a risk that was prohibited by law and that forced him to enter into a contract that he would not otherwise have.

Difference between Coercion and Duress

The term ‘duress’ corresponds to coercion in English law. However, Coercion under the Indian Contract law has a wider amplitude than duress under the English law.

2. Undue Influence (Section 16)

According to Section 16 of the Indian Contract Act, 1872 an influence will be considered as Undue Influence when:

• One party to the contract is in a position of trust and controls the other party wrongfully.
• Such a person uses his dominant position to gain an unfair advantage over the other.

There are two key elements of undue influence-

1. The relationship- trust, confidence, authority.
2. Unfair persuasion- careful examination of the terms of the contract.

Where one party is in a fiduciary relation to the other party

Fiduciary relationship means a relationship of trust and confidence. When a person imposes faith and confidence on the other, he expects not to be betrayed. If the other party betrays the confidence and trust reposed in him and gains an undue influence.

Examples of fiduciary relationship includes:

• Solicitor and client;
• Trustee and trust ;
• Spiritual adviser and devotee;
• Medical attendant and patient;
• Parent and child;
• Husband and wife;
• Master and servant;
• Guardian and ward.

In other words, we can say that Undue influence occurs when the decision of another party to the transaction can be influenced by one party.

Example

‘A’ sold his gold ring to his teacher ‘B’ for Rs 200 after he had been offered good grades by his teacher. Here, A’s permission is not given freely, he was influenced by his teacher.

Effect

The effect of undue influence makes an agreement voidable at the option of the party whose consent was caused. Any such contract can be set aside. Only a party to the contract can avoid or rescind the contract. This right does not lie in the hands of the third party.

Burden of Proof

If the plaintiff wants to bring an action to stop a contract entered into on the grounds of undue influence, two issues must be kept in mind. The law has been stated in the Indian Evidence Act, 1872 and Indian Contract Act, 1872. The law states that in order for a plaintiff to prove that he was under undue influence, two things must be established

1. Not only must the defendant has a dominant position but,
2. He must use it.

It states that it’s not enough for the plaintiff to show the possibility of undue influence that may have been exercised by the dominant party. It must be certain that a person used his position to influence the plaintiff. A possibility of the same is not enough for the plaintiff to avoid a contract.

Difference between Coercion and Undue Influence

3.Fraud (Section 17)

According to Section 17 of Indian Contract Act, Fraud includes any of the following acts committed by a contracting party or its connivance or its agent in order to deceive or induce a party or its agent to enter into the contract:

• The effective concealment of a fact by one who is aware of the fact;
• a promise made without any intention to carry it out;
• any other act fitted to deceive;
• any such act or omission as the law considers to be fraudulent.

Mere silence as to facts likely to affect a person’s willingness to enter into a contract is not fraud unless the circumstances of the case are such that, having regard to them, it is the obligation of the silent person to speak or unless his or her silence is, in itself, equivalent to speech.

Example

‘A’ sells his horse to ‘B’ by auction, which ‘A’ knows to be unsound, ‘A’ tells ‘B’ nothing about the unsoundness of the horse. This is a fraud on the part of ‘A’.

Effect

• The contract arising from fraud is a null contract.
• The misled party has the right to withdraw from the contract.
• Due to the fraudulent agreement, the party is responsible for recovering the damages.

Evidence and Burden of proof 

In a large majority of cases, fraud can not be proved by concrete and observable proof. It’s hidden in its movement by its definition. If the evidence given is such as lead to wrongdoing, it is, therefore, appropriate that fraud must have been committed. In most cases, the only tool for dealing with fraud issues is circumstantial evidence. If this were not allowed, the ends of justice would be constantly, if not invariably, defeated. Simultaneously, fraud involvement is only to be blamed on a deliberate wrongdoer. As a remedy for restitution, any real damages arising from fraud can be recovered, even if they could not have been reasonably foreseen subject to the defrauded party’s mitigation law. Due to contributory negligence, the penalties would not be diminished.

4. Misrepresentation (Section 18) 

As per Section 18 of the Indian Contract:

• Misrepresentation means the truth is misrepresented.
• Misrepresentation is the release of deceiving details resulting in the presumption that the other party will enter into a deal and then lose. Nevertheless, the information provided by the guilty party is the result of a genuine belief in the matter. Misrepresentation is said to be committed. 

Firstly, when the deceiving person declares that no justified data is misleading a person is some way.

Secondly, there is a breach of an obligation that has caused the bias of one or the other. Lastly,  a mistake was committed by a person because of the misrepresentation of the act or information.

Example

‘A’ told ‘B’ that his radio is in good condition, because of the confidence he had in ‘A’, ‘B’ bought the radio from him. The radio did not work properly after some time, ‘B’ thought he was misled by ‘A’, but ‘A’ believed his radio was in good condition and had no intention of deceiving him. So, here misrepresentation is in the part of ‘A’, because he did not know that the radio is not working properly.

Effect

If the party that has suffered as a result of the misrepresentation when entering into a contract may choose to terminate the contract, rescind the contract within a reasonable time under the Specific Relief Act 1963.

Kinds of Misrepresentation

There are two types of misrepresentation:

Negligent Misrepresentation

• It is considered to be a negligent misrepresentation when the misrepresentation happens due to lack of any reasonable ground and carelessness;
• Negligent misrepresentation is only known when the representative owed a duty to representee to handle carefully;
• An individual would only be liable if, in particular, he had ignored the duty specified;
• Even when there is no fiduciary relationship, responsibility exists between the two parties.

Innocent misrepresentation

• If the portrayal is based on a good reason to believe and there is no error and malicious motive, then it is said to be an innocent misrepresentation.
• When a person enters into a contract with an innocent misrepresentation, he or she has the right to withdraw from the contract but is not entitled to damages.
• Unless there are reasonable grounds, a contract will not be void. It would be enough to prove innocence in misrepresentation to prove the fact.

Burden of Proof

The burden of proof is on the defendant to show that the misrepresentation was not rendered fraudulently by showing that “He had reasonable grounds to believe that the evidence portrayed were valid during the time when the contract was made.” The party making the misrepresentation carries a heavy burden of proof.

The distinction between fraud and misrepresentation 

4. Mistake (Section 20)

There are two forms of  mistake under Indian Contract Law:

1. The mistake of Fact,
2. The Mistake of Law.

Mistake of Fact

• A mistake of fact arises when one or both of the contracting parties have misunderstood a term that is essential to the meaning of the contract;
• Such a mistake may be done due to confusion, negligence or omission, etc;
• A mistake is never intentional, it is an innocent overlooking.
• Such mistakes can be either unilateral or bilateral

Bilateral Mistake (Section 21)

When both the parties to a contract are under a mistake of fact, essential to the agreement, such a mistake is known as a bilateral mistake. Bilateral mistakes are also sometimes referred to as mutual or common mistakes. All the parties do not agree to the same thing and in the same way, which is the concept of consent. Since there is no consent, the contract is null and void.

Example

‘A’, agrees to buy a cow from ‘B’, but it turns out that the cow was dead at the time of the deal, although the fact was not known to any party. The arrangement is considered invalid.

Unilateral Mistake (Section 22)

A unilateral mistake occurs when only one party to the contract makes a mistake. The contract will not be void in such a case. It is specified in Section 22 of the Act that the contract will not be void just because one party made the mistake. So if only one party has made a mistake the contract remains a valid contract.

Example

‘A’ enters into an agreement with ‘B’ for the purchase of horse which he assumes to be a racing horse. ‘A’ do not confirm from ‘B’. In actual a horse is not a racing horse. ‘A’ cannot rescind the contract.

Mistake of law

The mistake may be related to the mistake of Indian laws, or it may be a mistake of foreign laws. If the mistake applies to Indian laws, the principle is that the  law’s ignorance is not a sufficiently good excuse. This means that either party cannot claim that it is not aware of the law.

The Contract Act states that, on the grounds of ignorance of Indian law, no party can claim any relief. This will also include an incorrect interpretation of any legal provisions.

However, similar treatment is not given to ignorance of foreign law. Ignorance of foreign law provides some leeway, the parties are not expected to know foreign law and its meaning. Therefore, under the Indian Contract Act, an error of foreign law is actually treated as a mistake of fact.

Conclusion

Free Consent is absolutely important to make an agreement with a valid contract. The importance of free consent cannot be stressed enough. The Party’s consent must be free and voluntarily. It is necessary to give consent to the contract without any pressure or delusions. It is essential that the parties consent is free, as this may affect the contract’s validity. If the consent has been obtained or caused by coercion, undue influence, fraud, misrepresentation or mistake, then the aggrieved person has the right to void the agreement.

References

1. http://lawtimesjournal.in/coercion-undue-influence-difference-between-coercion-and-undue-influence/
2. https://www.legalbites.in/effect-of-coercion-undue-influence/
3. https://keydifferences.com/difference-between-coercion-and-undue-influence.html
4. https://keydifferences.com/difference-between-fraud-and-misrepresentation.htm

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 skill.

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This article is written by Shruti Singh, 2nd year Law intern from Hidayatullah National Law University, Raipur pursuing B.A.LLB(Hons.) Course. This article concentrates around the Arms (Amendment) Act, 2019 its critical analysis and the changes brought by it.

Background of the Arms (Amendment) Act, 2019

The Arms (Amendment) Bill, 2019 was introduced in the Lok Sabha by Union Home Minister Amit Shah on November 29, 2019. This bill amends its principal act, the Arms Act, 1959. The bill was passed without any amendment from Lok Sabha on December 9th, 2019 and from Rajya Sabha on December 10, 2019. The opposition proposed several amendments to the bill, which were rejected.

Lok Sabha Debates

There were certain facts that came in front in the Lok sabha during the passing of Arms(Amendment) Bill, 2019. These are:

• Six-decade-old law contained many discrepancies as it made crime control difficult.
• By going as per our historical traditions, the ancient arms-bearing tradition of India continues to supply the manpower demand of the current national security establishments of India. Later on, a negative consequence of disarming the population by law was the growth of illegal country arms and smuggling of firearms. This is the major source of crime today and not legally licensed firearms.
• There are approximately six crore fourteen lakh illegal arms in our country which are the main one of the main reasons behind the serious crimes happening in our country. Easy availability of illegal arms has made the underworld effective in cities like Mumbai, Ahmedabad, Indore and U.P. The largest factory of illegal weapons is situated at Munger District of Bihar and Khargaon in Madhya Pradesh. Illegal weapons are smuggled into this country from other countries also. Underworld is getting arms through Nepal and Bangladesh route. One of the largest factories of the world is situated in Darrha-Adam Jail at Peshawar, Pakistan. In addition to that illegal arms and Naxal insurgency are posing a great threat to our country and the society, in general. UP, Jammu and Kashmir, Patna and Munger district of Bihar have become one of the largest hubs of manufacturing illegal arms.
• An illegal arms control cell should be set up in every state for regulations of illegal arms and anticipatory bail should not be granted to the accused booked under the Arms Act. Similarly, the licencing system should be made more transparent.
• Apart from that, the import policy of the year 1984 should be reintroduced. It would be better if the prices of various arms manufactured in ordnance factories should be kept affordable. This will prevent people from getting illegal arms from other sources and especially from other countries.
• With regards to the celebratory gunfire, the Government has made the provision of punishment of two years. It was proposed that seizure of licence, punishment for minimum six months, fine or something like that can be done for this purpose because punishment for two years is too much for an offence like celebratory gunfire.
• After the amendment, the Government has reduced to keep the number of weapons from three to two, at any time by a person. There is no place in police stations to keep these weapons. All seized weapons are lying in very pathetic condition there. As per record, there is a loss of Rs.90,000 crore due to this. It was suggested that in spite of reducing the number of weapons, law and order situation should be improved.
• It was seen from the cases that to issue licences to women is not considered to be appropriate. Rifle Clubs must be provided financial assistance to train women. It was further suggested to enact such legislation which protect us against the misuse of weapons.
• Laws should be enacted for such laws which provide a conducive environment for aspiring shooters. The Government should approve the clubs affiliated with the National Rifle Association to set up shooting ranges wherever such ranges do not exist. It was further suggested that Government should issue expedience licence if one person of a family proposes to give the weapon to another person of the same family.
• Permission to import arms should also be granted this will facilitate the availability of better quality weapons to people and revenue to the Government. Similarly, certain relaxation should be provided to aspiring sportsmen. Police firing ranges must be opened once in a week to facilitate practice session for them.
• A very crucial point that was put forward was that the Government has introduced the concept of organized crime syndicate by amending Section 9(6) of the Bill. This particular definition of ‘organized crime syndicate’ is exactly as is given in the Maharashtra Control of Organized Crime Act (MCOCA). The Maharashtra Assembly had enacted the MCOCA Act under the State List. The Union has no power to interfere in the States’ powers to investigate, prosecute and penalize the organized crime. Furthermore, the Government offers no explanation as to why it is necessary to incorporate organized crime syndicate under the Arms Act. It seems that this Government does not believe in federalism. They want to trample upon the State List. Inclusion of organized crime syndicate by amending Section 9(6) shows that they are completely encroaching upon the State List.

All these suggestions made by different ministers were rejected and the bill passed without much amendments from the Lok Sabha.

Changes Brought by the Amendment

Newly added Definition of Licence- Section 2

Before

Any definition on License was not present in the Act.

After

A new definition of licence was added- licence means a licence issued in accordance with the provisions of this act and the rules that are made thereafter and also includes licence issued in electronic form. [Clause (ea) has been added after Clause (e)]

Licence for acquisition and possession of firearms and ammunition (Number of weapons)- Section 3

Before

No person except for those mentioned in clause 3 shall acquire, have in his possession or carry more than three firearms, at any time.

Persons mentioned in Section 3(3) are firearms dealer or any member of a rifle club.

After

• In Section 3 of the principal act the words ”two arms” has been substituted against “three arms”. It means that now a person at a time cannot carry more than two firearms, previously three firearms were allowed.
• A proviso to Section 3 has also been inserted which says that if a person possesses more than two firearms at the commencement of the act, he shall keep any of the two arms with him and deposit the rest with the officer in charge of the nearest police station or with a licensed dealer within a period of one year. And where the person belongs to armed forces he shall deposit in the unit armoury and after which it shall be delicensed from the ninety days of the expiry of the said one year. And while granting arms licence on inheritance or heirloom basis, the limit of two firearms-, in any case, can be exceeded.

It is still not applicable to any dealer in firearms or to any member of a rifle club or rifle association licensed or recognised by the Central Government using a point 22 bore rifle or an air rifle for target practice. [Section 3(3)]

Scope of licence for manufacture, sale, etc. of arms and ammunition- Section 5

Before

In Section 5(1)-

1. No person shall manufacture, use, sell, transfer, convert, repair, test or prove, and 
2. Expose or offer for sale or transfer or have in his possession for sale, transfer, conversion, repair, test or proof, any firearm, or

Any other arms or ammunition of such class or description as may be prescribed unless he holds a valid licence in accordance with the provisions of the law.

After

In section 5(1)-

The word manufacture has been substituted by “manufacture, obtain, procure”. It means that no person has the right to manufacture, obtain and procure firearms as described under the act without a valid licence issued in accordance with the provisions of the Act.

Licence for the shortening of guns or conversion of imitation firearms into firearms- Section 6

Before

Section 6 stated that no person shall shorten the barrel of the firearm or convert an imitation(copy) firearm into a firearm unless he holds a valid licence issued on his behalf in accordance with the provisions of this Act and the rules made thereunder.

After

In section 6 of the principal Act, after the words “convert an imitation firearm into a firearm”, the words “or convert from any category of firearms mentioned in the Arms Rules, 2016 into any other category of firearms” shall be substituted. 

After the amendment, one more category where conversion is not allowed has been added as is mentioned in the Arms Rules, 2016. It now covers more items by widening its scope of application of this provision.

Prohibition of sale or transfer of firearms not bearing identification marks on it- Section 8

Before

Section 8(1): No person shall obliterate(destroy utterly), remove, alter or forge any name, number or other identification marks stamped or otherwise shown on a firearm. It prohibits any kind destruction of the number or identification marks stamped or shown on a firearm by any person.

After

In Section 8 of the principal Act, in sub-section (1), for the word “firearm”, the words “firearm or ammunition” shall be substituted. It has the effect of widening the scope of firearm and covering all lot more types of firearms and ammunition.

Grant of licences (Firearm for target practice)- Section 13

Before

In Section 13(3)(ii): It states that licensing authority shall grant licences in regard of a point 22-bore rifle or an air rifle to be used for target practice by a member of a rifle club or rifle association licensed or recognized by the Central Government.

After

In Section 13 of the principal Act, in clause (a) of sub-section(3), in sub-clause (ii), for the words and figures “point 22 bore rifle or an air rifle”, the word “firearm” shall be substituted.

It means that now the licensing authority can grant licence in regard to a firearm to be used for target practice by a member of a rifle club or rifle association licensed or recognized by the Central Government of India.

Section 15: Duration and Renewal of licence- Section 15

Before

Section 15(1): A licence under section 3 shall continue to be in force for a period of three years from the date on which it is granted if it is not revoked in between this period.

Provided that if the person so requires the licence can be granted for a shorter period only if the licencing authority considers that the reasons are such that it needs to be recorded. In this case, the licence will be granted for a shorter period on the desire of the person who requires a licence with the grant of licensing authority.

After

In sub-section(1) of Section 15 the words “five years” has been added in place of “three years.” 

It means that now a licence shall continue to be in force for a period of five years from the date on which it is granted if it is not revoked. A proviso has also been added which says that the licensee needs to produce the licence along with the arms and ammunition before the licensing authority after every five years from the date on which it was granted or renewed.

Punishment for certain kinds of offences (Enhancement of Punishment)- Section 25

Before

Section 25(1):

(a) those who are involved in manufacturing, selling, transferring, converting, repairing, testing or proving, or exposing or offering for the sale or transfer, or has in his possession for sale, transfer, conversion, repair, test or proof, any arms shall be punishable with imprisonment for a term which shall not be less than three years but which may extend to seven years and shall also be liable to fine.

After

• In Section 25

Sub-section (1):

• In clause (a), instead of the word “manufactures,”, the words “manufactures, obtains, procures,” shall be substituted.

It means that now whoever manufactures, sells, transfers, converts, repairs, tests or proves, or exposes or offers for the sale or transfer, or has in his possession for sale, transfer, conversion, repair, test or proof, any arms or ammunition in contravention of section 5.

• Clause (b)- After the words “convert an imitation firearm into a firearm”, the words “or convert from any category of firearms mentioned in the Arms Rules, 2016 into any other category of firearms” shall be inserted.
• Whoever shortens the barrel of a firearm or converts an imitation firearm into a firearm or convert from any category of firearms as under Schedule I of the Rules under this Act to another category, in contravention of section 6.
• Clause (d)- Whoever brings into, or takes out of, India, any arms or ammunition of any class or description in contravention of section 6.
• In the long line, for the words “three years but which may extend to seven years”, the words “seven years but which may extend to imprisonment for life” has been substituted.

Any person who practices anything mentioned in Clause (a), (b), (d) will be punishable with imprisonment for a term which shall not be less than seven years but which may extend to imprisonment for life and also a fine. The minimum punishment as per the current amendment in violation of said offence will be seven years as against three years that was present in principal act.

Sub-section (1A)- Enhancement of punishment for acquiring prohibited arms in contravention of section 7

Before

According to this provision, whoever acquires, has in his possession or carries any prohibited arms or ammunition in contravention of section 7 shall be punishable with imprisonment for a term which shall not be less than five years, but which may extend to ten years and shall also be liable to fine.

After

Instead of the words “five years but which may extend to ten years”, the words “seven years but which may extend to fourteen years” shall be substituted. The term of punishment for the said offence has been increased. The minimum punishment in such cases will be seven years instead of five years.

The following proviso shall be inserted, 

The new provision which will be added states that “Provided that the Court may, for any adequate and special reasons to be recorded in the judgment, impose a sentence of imprisonment for a term of less than seven years.”

After clause (1A) one additional clause (1AB) has been inserted:

According to this provision any person who by using force, takes the firearm from the police or armed forces shall be punishable with imprisonment for a term which shall not be less than ten years but which may extend to imprisonment for life and shall also be liable to fine.”

Enhancement of punishment for manufacturing/possession of prohibited arms in contravention of section 7- Subsection (1AA)

Before

Any person who indulges in manufacturing, selling, transferring, converting, repairing, testing or proving, or exposing or offering for sale or transfer or has in his possession for sale, transfer, conversion, repair, test or proof any prohibited arms or prohibited ammunition in contravention of section 7 shall be punished with imprisonment for a term which shall not be less than seven years but which may extend to imprisonment for life and shall also be liable to fine.

After

Instead of the words “seven years”, the words “ten years” shall be substituted.

Any person who manufactures, sells, transfers, converts, repairs, tests or proves, or exposes or offers for sale or transfer or has in his possession for sale, transfer, conversion, repair, test or proof any prohibited arms or prohibited ammunition in contravention of section 7 shall be punishable with imprisonment for a term which shall not be less than ten years but which may extend to imprisonment for life and shall also be liable to fine.

Sub-section(1B): Marking of arms for tracing

Before

A person who acquires, has in his possession or carries any firearm or ammunition in contravention to section 3, arms or ammunition or refuses to point out where the same are or is manufactured or kept shall be punished with imprisonment for a term which shall not be less than one year but which may extend to three years and shall also be liable to fine.

After

• The words “one year but which may extend to three years”, has been substituted with the words “two years but which may extend to five years and shall also be liable to fine”. 
• In the proviso, instead of the words “one year”, the words “two years” shall be substituted. It has increased the term for punishment.

After sub-section (5) new sub-sections (6), (7), (8) and (9) shall be inserted. It deals with organised crime and illicit trafficking and the punishments in such cases.

Before

There were no provisions for offences like organised crime syndicate, illicit trafficking and celebratory gunfire in the principal act.

After

Introduction of Organised Crime Syndicate(Added)- Sub-section (6)

If any member of organised crime syndicate on his own behalf possess or carry arms and ammunition without licence they will be punished with imprisonment for a term which shall not be less than ten years but which may extend to imprisonment for life and shall also be liable to fine.

Organised Crime Syndicate- Sub-section (7)

Whosoever acting on behalf of an organised crime syndicate will also be punished with imprisonment for a term which shall not be less than ten years, but which may extend to imprisonment for life and shall also be liable for fine. 

An explanation clause has also been added to Sub-section(6) and (7) which explains the words “organised crime”, “organised crime syndicate” and “continuing unlawful activity”.

Added new offence of Illicit trafficking- Sub-section (8)

Whoever is involved in or aids in the illicit trafficking of firearms and ammunition in contravention of sections 3, 5, 6, 7 and 11 shall be punishable with imprisonment for a term which shall not be less than ten years but which may extend to imprisonment for life and shall also be liable to fine. An explanation for “illicit trafficking” has also been added.

Rash and negligent use of firearms (Celebratory Gunfire)- Sub-section (9)

This sub-section prohibits firing in rash or negligent manner which has the tendency of endangering a person’s life and safety of others. The person shall be punishable with imprisonment for a term which may extend to two years, or with fine up to rupees one lakh, or with both.

Punishment for using arms (Enhancement of Punishment)- Section 27

Before

Any person who uses any prohibited arms or prohibited ammunition or does any act in contravention of section 7 and such use or act results in the death of any other person, they shall be punishable with death.

After

In Section 27 of the original Act, in sub-section (3), for the words “shall be punishable with death”, the words “shall be punishable with imprisonment for life, or death and shall also be liable to fine” has been substituted with. So now in case of use of prohibited arms or ammunition the punishment is imprisonment for life or death and shall be liable to fine.

Power to make rules- Section 44

Before

Section 44(2)(f): the manner in which the maker’s name, the manufacturer’s number or other identification mark of a firearm shall be stamped or otherwise or shown thereon.

After

In Section 44 of the original Act, in sub-section (2), in clause (f),

• For the words “firearm shall be stamped or otherwise shown thereon”, the words “firearm or ammunition shall be stamped or otherwise shown thereon for the purposes of tracing” shall be substituted.

Definition of Tracing added

An explanation for the term tracing has been provided which means a systematic tracking of firearms and ammunition from the manufacturer to purchaser for the purpose of detecting, investigating and analysing manufacturing and trafficking.

Critical Analysis of the new Amendment

Renewal Period of License Increased

The act has increased the period between which the licence can be renewed from three years to five years. This means that now a person can possess arms without much restriction and tension of renewal for a longer period.

Enhancement of Term of Punishment

The amendment largely talks about increasing the term of punishment under various offences, it does not cover any regulation to restrict illegal marketing and availability of guns in the market. Will increasing the punishments to an offence reduce the happening of an offence related to arms, This is an important question that needs to be addressed. We are a common law country, whose primary aim is providing justice to its citizens. But just by increasing the punishment will bring a change in the current crime scene in the country. For example, drugs are banned in India, still, we see that it is available so easily. Some states like Punjab are affected by it to a great extent. We also see students in colleges and universities consuming it on a daily basis. Has there been any difference to it? Likewise, for arms and ammunition, the availability of it should be strictly monitored.

Unrestricted use of licences

The State has over the years granted licences and also issued licences for firearms for crop protection to farmers as provided in the Arms Act. There is also a great cultural importance that citizens belonging to the martial communities take pride in retaining arms. These groups also need to be regulated and checked.

Availability of Illegal weapons

Then abundance of illegal weapons is the biggest problem in our country. The people who carry arms with licence anyways not pose much threat to the country. The people who do not have a valid licence or illegal weapons are the main reason behind the problem. From where the people get weapons who use them illegally? This is more important that what we are going to do with those weapons? The law-abiding people should not have any fear in their mind. I think there is no problem to issue licences to law abiding citizens.

Intention of the Bill

The intention of the bill is to punish those people who are indulging in an unlawful act which was meant for pecuniary benefits. Sometimes, the crime can be committed on the basis of the principle of antagonism against a person or a group. That type is not addressed in the Bill.

Grant of licences

One of the questions is, what should be the criteria to decide as to who will get the licence. It can be seen that private security agencies are seeking licences and they are providing firearms to private security guards. The question is, whether private security guards who are carrying those firearms are authorized to do so. Are they regulated by the government?

Effect on Private Market

The government allows 49 per cent FDI( Foreign Direct Investment) in small arms’ manufacture and then, want to limit it from possessing three arms to two.

Tension on Sports Community

There are a lot of worried people in the shooting sports community in India, and their anxiety and stress is that it limits the number of weapons that will hit new and emerging talent. Practising with weapons is part of their jobs and curbing this will have a huge impact on them.

History of the Arms(Amendment) Act, 2019

The Arms Act,1959 is the principal act which consolidates and amend the laws relating to arms and ammunition in the country to curb illegal weapons and violence stemmed from them. It replaced the Indian Arms Act, 1878 which was made by Britishers. The Indian Arms Act, 1878 was an act that regulated the manufacture, sale, possession and carrying of firearms. As before the Indian First War Of Independence in 1857, there were very few gun control laws in the country.

The Act is divided into 6 Chapters.

• Chapter I: Parliamentary;
  Provides a short title and definitions and interpretations of terms used in the act.
• Chapter II: Acquisition, Possession, Manufacture, Sale, Import, Export, and Transport of Arms and Ammunition;
  It provides for the rules and regulations around acquisition, possession, manufacture, sale, import, export and transport of arms and ammunition in India.
• Chapter III: Provisions relating to licences;
  Details how to procure a license, rules around grant, refusal, fees for licence.
• Chapter IV: Powers and Procedure;
  Provides details on the powers that the government officials have to enforce like seizure and detention, the deposit of arms and search of vessels, etc of this act.
• Chapter V: Offences and penalties;
  Explains punishments associated with breaking rules by individuals and companies that are related to this Act.
• Chapter VI: Miscellaneous;
  Deals with the other miscellaneous parts of the Act such as exemptions, delegation, arrest and searches.

Significance of this Amendment

The Arms (Amendment) Bill, 2019 has been introduced to control the use and possession of weapons in the country, to reduce their rash and illegal usage, which can endanger another human being in the country. It tries to impose more stringent punishments for production of arms and ammunition illegally and those possessing illegal arms. It also punishes those who indulge in a rash or negligent firing at a place of celebration and risk the life and safety of others.

Conclusion

This new amendment lacks to cover some important areas that were proposed by different ministers in the Lok Sabha debate. This amendment has majorly increased the term of punishment for various offences and also introduced some new category of offences. Something significant here is that, will this amendment bring a change in the society in terms of crimes that happen with arms and ammunition. The answer to this question largely comes in negative as still the availability of arms and ammunition has been overlooked or rather not dealt with.

References

• http://loksabhadocs.nic.in/Synop/17/Second/Syn-09-12-2019.pdf
• https://indiacode.nic.in/bitstream/123456789/10495/1/arms_and_ammunition_act_1959.pdf
• http://egazette.nic.in/WriteReadData/2019/214662.pdf

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 skill.

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This article is written by Gauraw Kumar, a 2nd-year student of BVP-New Law College, Pune. In this article, he covers concepts of “Mistake” and its essential in the Indian Contract Act, 1872.

Introduction

‘Mistake’ in general meaning is something that does not work out in search of a solution. Word ‘Mistake’ is used interchangeably with ‘error’. In law, misunderstanding or erroneous belief about a material fact may prevent the formation of a valid contract. According to Section 10 of the Indian Contract Act 1872, Free consent of parties is an essential element of any contract. Section 14 of the Indian Contract Act states that ‘Free consent means consent not caused by coercion, undue influence, fraud, misrepresentation and mistake’.

A mistake means ‘believe in those things which do not exist in reality’. Thus, the mistake is an erroneous belief. 

Definition of Mistake

‘Mistake’ is not defined in the Indian Contract Act. Section 20, 21 and 22 deals with the concept related to mistake. ‘Mistake’ can be defined as any action, decision or judgement that produced an unwanted and unintentional result. A Mistake is said to have occurred where parties intending to do one thing by error do something else. Phillips v. Brooks Ltd is an English contract law case concerning mistake. It was held in this case that a person is deemed to contract with the person in front of them unless they can substantially prove that they instead of them intended to deal with another person.