Disqualified directors of debarred companies may approach courts

The government’s move to debar directors of companies who have not filled annual returns for three successive years is likely to be challenged in courts citing retrospective application of Companies Act, 2013. As a general rule, law is always applicable prospectively, unless any prior date is mentioned specifically says Sumit Naib. 

According to corporate law experts, Section 164 (2) (a) of the Companies Act, 2013, which pertains to disqualification of directors due to non-filing of financials and annual returns for three years is applicable to all types of companies including private ones with effect from April 1, 2014.
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An effective and efficient insolvency regime is the foundation of a strong economy. Though there are several laws and forums in India deals with financial breakdown and insolvency of companies, it failed to find effective solutions and timely recovery of defaulted payments and credits. To improve Business environment in India and to gain confidence of domestic and foreign investors the GOI specially constituted ‘Bankruptcy Law Reforms Committee’ (BLRC) under Ministry of Finance. 

                               The Committee introduced the Insolvency and Bankruptcy Code Bill in November 2015, replacing the existing framework of insolvency proceedings and focusing creditor driven insolvency resolution. The IBC offers a standardized, comprehensive financial condition legislation encompassing all corporations, partnerships and Sole Proprietorship. One in every of the elemental options of the Code is that it permits creditors to assess the viability of the debtors and encourage reconciliation for its revival or a speedy liquidation. 
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Lawyers in Chennai | Have you got your contracts right?

Have you got your contracts right?
Bad contracts could be detrimental to any business. Not to mention “enforcing contracts” in India is an uphill fruitless endeavor. It’s even getting worse for the small startups in the growth phase have little resources to fight legal cases when the contract goes wrong. Considering the current legal scenario which takes it own phase in delivering the justice, the start-ups can at least do is to create and govern contracts in a more deterministic manner.

What would go wrong?
Any error in a contract could undermine its legality and affect the abilities of parties while enforcing it before the Court of Law or before Arbitration. The affected party by such mistake will have not option but seeks to repeal or cancel the contract. In all parts, you may end up in facing ordeal and consequently facing business delays and waste of resources.
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How to get divorce in 30 days

How to get divorce in 30 days?

Yes! you heard it right… How to get divorce in 30 days? This is the most frequently asked question by most of the client clients to their lawyers practicing Family Law. The question is pretty much like “Sir, whatever it takes I want my divorce forthwith… Can you do it?”

So what the lawyers can say?

I will get back onto this later but let’s just have a glimpse on the divorce law in India. Divorce cases are one of Family law proceedings based on a personal law which takes into considerations of the customs, beliefs and tenets of the religion of the parties. Though the procedures of divorce varies religion to religion, the courts in India keep the litigants on the same queue no matter of their religion.
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Muslim Women's Right to Maintenance

Muslim Women's Right to Maintenance

divorced woman means a Muslim woman who was married according to Muslim law, and has been divorced by, or obtained divorce from her husband in accordance with Muslim law. - 
Iddat period means in the case of a divorced woman -
  1. three menstrual courses after the date of divorce, if she is subject to menstruation; and
  2. three lunar months after her divorce, if she is not subject to menstruation; and
  3. if she is pregnant at the time of her divorce, the period between the divorce and delivery of her child or the termination of her pregnancy whichever is earlier.

A Muslim woman at the time of divorce is entitled to the following
  1. A reasonable and fair provision and maintenance to be made and paid to her within the iddatperiod by her former husband;
  2. Where she herself maintains the children born to her before or after her divorce, reasonable and fair provision and maintenance to be made and paid by her former husband for a period of two years from the respective dates of birth of such children;
  3. An amount equal to the sum of mahr or dower agreed to be paid to her at her time of her marriage or at any time thereafter according to Muslim law; and
  4. All the properties given to her before or at the time of marriage or after the marriage by her relatives or friends or the husband or any relatives of the husband or his friends.
  5. An amount equal to the sum of mahr or dower agreed to be paid to her at her time of her marriage or at any time thereafter according to Muslim law; and
  6. All the properties given to her before or at the time of marriage or after the marriage by her relatives or friends or the husband or any relatives of the husband or his friends.

  • A reasonable and fair provision and maintenance or the amount of mahr or dower due has not been made or paid or
  • The properties referred to above have not been delivered to a divorced woman on her divorce,
She or any one duly authorized by her may, on her behalf, make an application to a Magistrate for an order for payment of such provision and maintenance, mahr or dower or the delivery of properties, as the case may be.
Where an application has been made by a divorced woman and the Magistrate is satisfied that-
  1. her husband having sufficient means, has failed or neglected to make or pay her within theiddat period a reasonable and fair provision and maintenance for her and the children; or
  2. the amount equal to the sum of mahr or dower has not been paid; or
  3. that the properties have not been delivered to her,
He may make an order, within one month of the date of the filing of the application, directing her former husband to:
  • Pay such reasonable and fair provision and maintenance to the divorced woman as he may determine as fit and proper having regard to the needs of the divorced woman, the standard of life enjoyed by her during her marriage and the means of her former husband or, as the case may be
  • Make an order for the payment of such mahr or dower or
  • The delivery of such properties as referred to above to the divorced woman

Failure to Pay
If any person against whom an order has been made fails without sufficient cause to comply with the order, the Magistrate may
  1. Issue a warrant for levying the amount of maintenance or mahr or dower due in the manner provided for levying fines under the Code of Criminal Procedure and
  2. May sentence such person, for the whole or part of any amount remaining unpaid after the execution of the warrant, to imprisonment for a term which may extend to one year or until payment if sooner made, subject to such person being heard in defence and the said sentence being imposed according to the provisions of the said Code.

Failure to Maintain Herself After Iddat Period
Where the Magistrate is satisfied that
  • A divorced woman has not re-married and
  • Is not able to maintain herself after the iddat period,
He may make an order directing such of her relatives who would be entitled to inherit her property on her death according to Muslim law to pay such reasonable and fair maintenance to her as he may determine fit and proper, having regard to the needs of the divorced woman, the standard of life enjoyed by her during her marriage and the means of such relatives and such maintenance shall be payable by such relatives in the proportions in which they would inherit her property and at such periods as he may specify in his order.

Where Parents are Unable to Pay
If any of the parents is unable to pay his or her share of the maintenance ordered by the Magistrate on the ground of his or her not having the means to pay the same, the Magistrate may, on proof of such inability being furnished to him, order that the share of such relatives in the maintenance ordered by him, be paid by such of the other relatives as may appear to the Magistrate to have the means of paying the same in such proportions as the Magistrate may think fit to order.

Where Divorced Woman has no Relatives
Where a divorced woman is unable to maintain herself and she has no relatives as mentioned above or any one of them have not enough means to pay the maintenance ordered by the Magistrate, the Magistrate may, by order direct the State Wakf Board, functioning in the area in which the woman resides,
  • To pay such maintenance as determined by him or,
As the case may be, to pay the shares of such of the relatives who are unable to pay, at such periods as be may specify in his order.

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Registration of A Society

Registration of A Society
Minimum 7 or more persons, eligible to enter into a contract can form society for various bona fide purposes. Under the Jammu and Kashmir Act, and Telengana Area Act, only 5 persons can form a society.
Besides individual, following persons are eligible to form a society by subscribing to the memorandum of a society:
  • Foreigners
  • Partnership firm
  • Limited company
  • Registered society
  • Minors not eligible
Purposes for Which A Society Can be Formed
A society can be formed for the promotion of literature, science or the fine arts or the diffusion of useful knowledge/political education or for charitable purposes. Section 20 of the principal Act specifies the following purposes for which societies may be registered under the Act:
  • Grant of charitable assistance
  • Creation of Military orphan funds
  • Societies established at the General Presidencies of India
  • Promotion of
  • Science,
  • Literature,
  • Fine Arts,
  • Instructions or diffusion of useful knowledge,
  • Diffusion of political education,
  • Foundation or maintenance of libraries or reading rooms,
  • Public museum and galleries of paintings,
  • Works of Act,
  • Collections of natural history,
  • Mechanical and philosophical inventions,
  • Instruments,
  • Designs
Formation for Profit Motive Prohibited
For a society registered under Societies Registration Act, 1860 or under the Section 25 of Companies Act, profit motive for personal use is disentitled. Whatever profit is made through the working of such a society, is accountable for, and is necessary to put back the profit in the working of such a society. The Companies Act under section 25 also prohibits any payment of any dividends of its members as part of profit earned.

Registration of Society
Place of registration
The registration of a society is to be done under the act wherever obtaining and not in the state where the benefit is claimed.
Once the persons proposing to form a society have decided upon the name of the society and have prepared a draft of the memorandum and rules and regulations the society the following procedures would have to be adopted for getting the society registered:
Signing of Memorandum of Association
All subscribers (minimum 7) should sign each page of the memorandum and the signature should be witnessed by an Oath Commissioner, Notary Public, Gazetted Officer, Advocate, Chartered Accountant, Magistrate First Class with their rubber/official stamp and complete address.
Documents required to be filed with the registrar of the society
  • Covering letter requesting for registration stating in the body of letter various documents annexed to it.
  • Memorandum of Association in duplicate along with a certified copy.
  • Rules and regulations
  • Where there is a reference to any particular existing places of worship like temple, masjid,gurdwara etc. sufficient documentary proof establishing legal competents and control of applicant society over such places should be filed.
  • Affidavit of non-judicial stamp paper of appropriate value by President or Secretary of the office.
  • Documentary proof house tax receipt, rent receipt in respect premises shown as registered office of a society or ‘No Objection Certificate’ from the owner of the society.

Effect of Registration / Non-Registration of A Society
The Societies Registration Act, 1860 lays down procedure for registration of societies for variousbonafide purposes.
The registration gives the society a legal status and is essential
  • for opening bank accounts,
  • obtaining registration and approvals under Income Tax Act,
  • lawful vesting properties of societies, and
  • gives recognition to the society at all forums and before all authorities.
When the society is registered, it and its members become bound to the same extent, as if each member had signed the memorandum.
A society, registered under this Act, must confine its activities to the sphere embraced by its objects.
A tax imposed on a society is one imposed on the society and not on its members.
A society registered under the Act enjoys the status of a legal entity apart from the members constituting it. A society so registered is a legal person just as an individual but with no physical existence. As such it can acquire and hold property and can sue and be sued.
The society should be registered under the Act to acquire the status of juridical person.

In the absence of registration, all the trustees in charge of the fund have alone a legal status and the society has no legal status, and, therefore, it cannot sue and be sued. A non-registered society may exist in fact but not in law. It is immaterial under the Act whether the society is registered but where the benefit is claimed, the registration of society under the Act us required. An unregistered society cannot claim benefits under the Income-tax act.
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The Arbitration and Conciliation Act, 1996 came into force with effect from 22.8.1996. It consolidates and amends the law relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards.
It applies to the whole of India. It applies to the State of Jammu and Kashmir to the extent of the provisions relating to enforcement of foreign awards, which apply in full, other provisions apply insofar as they relate to international commercial arbitration or conciliation.
The Act is based on the conciliation rules adopted by the United Nations Commission on International Trade (UNCITRAL)

What is arbitration?
Arbitration is a process of dispute resolution in which a neutral third party (called the arbitrator) renders a decision after a hearing at which both parties have an opportunity to be heard. It is the means by which parties to a dispute get the same settled through the intervention of a third person, but without having recourse to court of law.

What is an arbitration agreement?
  1. Arbitration agreement means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship whether contractual or not.
  1. The parties make an agreement that instead of going to the court, they shall refer the dispute to arbitration.
  1. The arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. Where an arbitration clause is included in a contract and the contract is avoided due to misrepresentation or fraud, the arbitration clause may still continue to be binding.
  1. Where, however, there was no contract at all between the parties or contract was void ab initio, the arbitration clause cannot be enforced.
  1. An arbitration agreement/clause must be in writing. Although no formal document is prescribed, however, it must be clear from the document that the parties had agreed to the settlement of dispute through arbitration.
  1. Where the arbitration agreement or clause is contained in a document, the parties must sign the document. Besides, the arbitration agreement may be established by-
  1. an exchange of letters, telex, telegram or other means of telecommunication; or
  1. an exchange of statement.

Appointment of an Arbitrator
Who May be Appointed
A person of any nationality may be an arbitrator, unless otherwise agreed by the parties. In case of an international commercial arbitration, where the parties belong to different nationalities, the Chief Justice of India may appoint an arbitrator of a nationality other than that of the parties.

Number of Arbitrators
The reference may be made either to a single arbitrator or a panel of odd number (i.e. 3, 5,7, etc.) of arbitrators. The parties are free to fix the number of arbitrators by agreement. If there is no agreement, the reference shall be made to a sole arbitrator.

Grounds for Challenging Appointment
The appointment of an arbitrator may be challenged if
  1. circumstances exist that give rise to justifiable doubts as to his independence or impartiality or
  2. he does not posses the qualifications agreed to by the parties.

Place of Arbitration
The parties are free to agree on the place of arbitration and failing an agreement to do so the place shall be determined by the arbitral tribunal having regard to the circumstances of the case and convenience of the parties.

Who May Refer to Arbitration?
An arbitration agreement is a contract and thus, any party to such an agreement must have the capacity to contract.

What Disputes May be Referred?
The parties to an arbitration agreement may refer to arbitration, a dispute which has arisen or which may arise between them, in respect of a defined legal relationship, whether contracted or not.
Thus, all matters of civil nature whether they relate to present or future disputes may form the subject matter of reference. The dispute, however, must be the consequence of legal relationship arising out of an obligation, the performance of which is a duty under the law and for its breach a remedy is provided.
Bar to Suit
When the parties have entered into an arbitration agreement, they cannot file a suit in a court of law in respect of any matter covered by the agreement; otherwise the very purpose of arbitration will be frustrated. The court will normally not intervene except where so provided by the Act.

What Disputes Cannot be Referred For Arbitration
The following disputes cannot be referred to arbitration:
  1. Insolvency proceedings.
  2. Lunacy proceedings.
  3. Proceedings for appointment of a guardian to a minor.
  4. Question of genuineness or otherwise of a will or matter relating to issue of a probate.
  5. Matters of criminal nature.
  6. Matters concerning Public Charitable Trusts.
  7. Disputes arising from and founded on an illegal contract
Interim Orders by Court
A party may, before or during arbitral proceedings or at any time after the making of the arbitral award but before its enforcement, apply to the court for any of the following matters-
  1. appointment of guardian for a minor or a person of unsound mind for the purposes of arbitral proceedings;
  2. preservation, interim custody or sale of any goods which are the subject matter of the arbitration agreement;
  3. securing the amount in dispute in the arbitration;
  4. detention, preservation or inspection of any property or thing which is the subject matter of the dispute, or to authorize for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party, or authorizing any samples to be taken or any observation to be made, or experiment to be tried, which may be necessary or expedient for obtaining full information or evidence;
  5. interim injunction or the appointment of a receiver; or
  6. such other interim measure of protection as may appear to the court to be just and convenient.
A court has jurisdiction to pass interim orders even before arbitral proceedings commence and before an arbitrator is appointed.

Setting aside an Award

An application for setting aside an arbitral award may be made before the court, by a party within three months of receipt of the award by him. The court may set aside an award on the following grounds:
  1. a party was under some incapacity;
  2. the arbitration agreement is not valid under the law;
  3. the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case;
  4. the award deals with a dispute not contemplated by or beyond the scope of the submission to arbitration;
  5. the composition of the arbitral tribunal or the arbitral proceedings was not in accordance with the agreement or with the law;
  6. the subject-matter of the dispute is not capable of settlement by arbitration under the law; or
  7. the arbitral award is in conflict with the public policy of India.


An appeal shall lie before the court, against the following orders-
  1. granting or refusing to grant any interim measure
  2. setting aside or refusing to set aside an arbitral award and
  3. granting or refusing to grant an interim measure of protection.

No second appeal shall lie against the appellate order of the court, except, however, that an appeal may be made to the Supreme Court.
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