Saturday, June 26, 2010

1 - Meaning of Nominee?

8 - Q1. What is the meaning of nominee?

A. Nominee is a person to receive the benefits under nomination and distribute the same to the legal heirs/beneficiaries under law. Nominee can also be one of the legal heirs to take the benefit. This preposition has been laid down by the Supreme Court in a case pertaining to LIC nomination.

Q2. I an a married man of 25 yrs. I have younger brother and a younger sister. I had a love marriage last year in the same caste. Now after one year of our marriage my parents are forcing me to leave the house and I don't want to do so(because it is ver spacious and have different floors.) Here is the brief history of our family: My grand father came to India in 1947 from Lahore, Pakistan and after the partition. In India he stared in new life and made a house and shop in prime locations of Delhi. In 1984 my parents got a WILL signed by my grand father that the whole property belongs to only and only my father. (My father is the only son with 4 sisters.) In 1991 my Grand Father died and again my parents took NOC from my aunts and executed the WILL. My Question is: 1. Do I have any right on the property even though my father does not want to give it to me? 2. Can they throw me out of the house force fully? 3. What should I do when they become physical on this issue? 4. They have locked the kitchen & bathrooms so that we should leave the house ourselves in frustration. What should we do in this case?

A 1. No, you have no right in the property. 2. No, they cannot throw you out of the house forcibly. Before they throw you out , they have to approach the Court of Law and get the orders. 3. If they get physical on the said issue then you should file is suit for injunction against them, asking the Court to restraining them to throw you out forcibly. 1. Break open the lock and inform the police and also file a compliant of trespassing.

Q3. Is there any limit (as per the law) tot he "Meher" (in Muslims i.e. is SHIA) that is to be paid by husband to his wife keeping in view the earning of the husband, or it has to be as per the amount that is written in nikahnama?

A. There is no limit to Mehar even under SHIA Law. The husband may settle any amount he likes by way of Meher upon his wife, though it may be beyond his means.

Q4. Does the amount of MEHER paid to the wife by her husband becomes half or nil after the birth of first child or still it has to be paid in full as per the amount written on nikahnama.

A. The amount of MEHER paid to the wife by her husband will have to be paid as per the amount written on nikahnama. It is a consideration of marriage and has no connection with the birth of first child.

Q5. Do husband possess any right do demand his wife salary in any case?

A. NO, there is no legal right to demand his wife salary. It can be done only through understanding and persuasion .

Q6. I got a problem. I got married 6 months ago. My was not able adjust in US. So she went back. Now her father asking me come back and settle there. I didn't agree for this. He tried black mailing me to come back to India or else I file a case. Now he did that saying I send her back India asking to bring money to here for business and he said he is going to report Embassy also. I don't know what to do. They filed cheating case everything. I don't know how to react from my side. Do I have to report INS or Employer. How I have to overcome this.

A. On filing of any case by your In- Laws/Wife you can contest the case through an advocate. At this stage it is difficult to assess as to what type of cases are likely to be filed by your wife. As a precaution you can inform your employer. So long as you are in US they will not be able to do much against you, but if your have family in India, they can be harassed by the girl on false charges. Please give details so that we can guide you better.

Q7. I have heard of Hindu undivided family law. What does that mean? Does it say that grandson has the right to the property(made by him) of the grandfather ? Even if he has written a will on his sons name.

A. Grand Son has no right in the property of his grand-father. Grandfather is competent to give the property to his son by writing a WILL, if the property is the self acquired property of the grand father. If the property is an ancestral property then no WILL can be made, and in such a case the grandson will only get a share out of the share of his father.

Q8. What should I do then. My parents are trying to throw me out of the house because of my brother. Is there any way my family and I be protected under certain law.

A. You should file a suit for permanent injunction against the family and seek stay of dispossession as interim relief. Contact advocate for detail and for filling the stay. You will have to show your right in the property by showing of as an ancestral property or otherwise.

Q9. It is not ancestral property. What should I do now ?

A. Even if it is not ancestral property, the person in possession of the property cannot be dispossessed by force. Your possession is legal and you are a licensee in the premises. You may file a suit for permanent injunction with an application for stay against your family with a direction from the Court that you should not be dispossessed from the possession of the premises under your occupation without due process of the law.

Q10. Ours is considered to be Joint Hindu Family . My grandfather has three sons and two daughters,. My aunts are married and their marriage expenditure has been borne by my grandfather. Thought my grandfather and all his sons reside at the same place but internally all three had partitioned. However, there has been no formal partitioned deed executed. My grandfather had executed the will in 1990 wherein he had distributed the property among his three sons. However, at the time of execution of the will my youngest uncle was not married. He got ,married in March 1994. They have got one daughter out of this marriage. Unfortunately his marriage has been unsuccessful. My youngest auntie has never stayed at my uncle's place for even seven days continuously since their marriage. She mostly remained at her parents place that is at Ulhanagar. Their relation was bitter and my uncle had to undergo lot of mental trauma. Finally , the result was such that my uncle lost his mental balance.(Unfortunately, we do not have any medical certificate or evidence to this effect. But we do have witnesses for his said condition). In such mentally imbalanced condition, my uncle is reported missing from his In-laws house from December, 31st 1995. The report of his missing is lodged at Ulhasnagar Police Station. He is still missing. Further problem is that, then my youngest auntie has filed the suit against my youngest uncle, my parents and my elder uncle and auntie under Section 498 (criminal offences for sake of dowry). The allegation made in case are for dowry and harassment. These allegations are totally false. The case is still running at the Ulhasnager Court . The case had been filed up in February, 1998. Looking at such situation, my grandfather terminated the previous will and executed the fresh will in June, 1999. In the new will, the property that was suppose to be of my youngest uncle as per the old will, my grandfather has distributed it among his grandsons(i.e. I, myself and my cousin-son of elder uncle). Now my grandfather has expired fortnight ago due to his old age and medical,etc. Now I shall be highly grateful to you if you can provide me opinion on the following points:- 1) How strong is the case of my auntie under section 498 specially when she has not stayed at her in laws place for continuous 7 days? Also, that her husband if reported missing from their i.e. his In-laws place? Further , partition already existed in the family before his marriage. 2) Now, that my grandfather executed new will in which there is no share for youngest uncle-Can she makes any claim in the property? Specifically in the context that the property has been distributed among the grandsons and she bears the daughter our to the marriage with my uncle. 3) Now that my grandfather has expired, how do we go about transferring the property as per the will grandfather? What are the legal proceedings fort he property transfer based on the will of deceased?

A. The success of the case under Section 498-A lies on the proof of facts in the Court and the strength of the case cannot be decided on the basis of the facts that you have disclosed. All these arguments that your aunt never resided in the family even for seven days have to be proved in the Court. The court shall still have to examine your aunt's allegations regarding dowry etc. The legal procedure will take its own course and matter would be decided on the basis of evidence produced by both the parties. 1. If the property was personally owned by your Grand Father, he has the right to execute the WILL in the manner he likes and your aunt cannot claim her share as a matter of right. It is not clear from the facts, how the property was distributed when your grand father cancelled the previous WILL and executed a fresh WILL. If you mean that the distribution by WILL, then the distribution has no meaning and succession of the property has to be as per WILL (I.e. the last WILL). 2. In order to give legal sanction to the WILL, you may file a petition for obtaining probate of the WILL in the Court and if the WILL is proved, the property will be distributed according to the WILL. If the WILL is disproved, then your uncle (who is missing) will have the right in the property and the minor daughter can claim the share of her father.

Q11. What are the legal duties & responsibilities of an unmarried financially independent daughter above 21 years of age towards her parents?

A. Section 20 of the Hindu Adoption & Maintenance Act, 1956 provides for maintenance of the children and aged parents. Under the provisions of the said section, Hindu is bound, during his or her life time, to maintain his or her legitimate or illegitimate children and his or her aged or infirm parents. However, a child may claim maintenance from his or her father or mother so long as the child is minor, i.e. a person who has not completed 18 years of age. When a Hindu male dies intestate his property devolves around his legal heirs. Section 10 of the Hindu Succession Act, 1956 gives in detail the list of Class I heirs who are go be given first preference while dividing the property of the deceased. Rule 1 of this Section provides for a share of property for the widow of the deceased. Rule 2 of this Section provides for a share each for the surviving sons and daughters and the mother of the deceased. In your case though it is not clear whether the deceased has a surviving widow and mother but in case there are only two surviving daughters and a son each one will get a share each i.e. 1/3 of the undivided share in the property. In case one of the sisters of your friend is willing to relinquish her share in favour of the other sister, she can do so by executing a relinquishment deed in her favour. However, in case your friends father has left a residential house, which is occupied by your friend and other members of the family, then under Section 23 of the Hindu Succession Act, 1956, his sisters can not claim partition of the said House till the son (i.e. your friend) chooses to divide the respective shares in the said house.


9 - Q1. Whether a show cause notice by the government is necessary for compulsory purchase under Section 269 of the Income-tax Act, 1961.

A. Yes, a show cause notice is compulsory in the case of a compulsory purchase by the government. The law requires to in our opportunity to be given to the concerned parties particularly the intending purchaser and the intending seller. Thus under Section 269 you would be intending purchaser and intending seller must be given the show cause notice against order for compulsory purchase .

Q2. In my Income Tax Return I claimed expenditure incurred of repairs and renovations of my business premises. The department disallowed my claim. Is the order of the department justified?

A. The provision of Section 30 (a) (ii) the Income-tax Act, 1961 require that for the amount to be allowed as a deduction the same must be spend for the purposes of carrying on current repairs . If the deduction sought by you comes with the definition of current repairs you will be entitled to claim deduction otherwise the department would be justified in disallowing the same.

Q3. I am a tenant in a premises and I incurred certain expenses for renovation of the premises . In the Income Tax Return I claimed deduction for the said expenses incurred as revenue expenditure. Is such deduction permissible ?

A. Yes, you will be entitled to the benefits of Section 37 of the Income tax Act, 1961 in case you have incurred expenses on the renovation of the tenanted premises. The tenant does not acquire any capital assets in doing the same because of the building does not belong to him and as such the expenditure can not be termed of a revenue nature. The expenditure has been incurred for the purposes of facilitating the assesses business operation or otherwise and the said amount should be allowable as Revenue Expenditure under Section 37 of the Income-tax Act.

Q4. Is there any judgement holding that the provisions of Section 127 (2) of the Income-tax Act, is not ultra vires the Constitution of India?

A. Yes one the judgement in this regard is Sameer Leasing Company Limited Vs. Chairman C.B.D.T. reported in 40(1990) DLT page 37.

Q5. Can the Income tax officer retain sealed books of accounts and other documents for more than a particular period. What is the legal position in this regard?

A. Under Section 132 (8) of the Income-Tax Act, the Income tax officer has the power to retain the books of accounts and other documents seized by him for a period of 180 days. In case an extension of the said period is required an order is to be passed by Commissioner of the Income tax and if no such order is passed the Income tax officer is bound to release the books of account and other documents to the party.

Q6. In the case of acquisition of a property under Section 269 of the Income-tax Act, if the said property is occupied by tenant, What is the right of the said tenant in said property?

A. After the acquisition of the property under Section 269 of the Income-tax Act the tenant has no right to stay in the property. The tenant has no right to continue in possession and there is no safe guard provided to tenant in this regard.

Q7. Incomes as salaries to the employees in 100% subsidiary unit supported by US company in India is Taxable or not? As the unit in India is registered with STPI and enjoys 100 EOU status, please clarify on this and if taxable what will be the Tax to be the Tax to be paid ?

A. Salaries to the employees of a 100% subsidiary unit supported by a US company, even if the unit enjoys 100% status are taxable. The taxable status of the employees is determined by their residential status as determined by Section 6 of the Indian Income Tax Act. Tax on Income by the employees would be paid as per prevalent rates of the relevant assessment year, attracting all the deductions and exemptions as allowed by the Act for any salaried employee.

Q8. I have already invested Rs.6000 in the tax saving schemes. Can I invest more? If yes, how much and in which schemes?

A If your are talking of Sec 88, you can further invest in shares, debentures or units of infrastructure sector to the extend of Rs.10000/- to claim maximum rebate.

Q9. I have a house on which I took HDFC loan 6 years back. I am currently claiming only Rs.10000 as the max deductible under Section 88 (20% deduction form IT). A friend told me that it is possible to claim the full Emi payment made under a special section that exists (from the total taxable salary) (probably section 24 or something). Could you please tell me if this is true?

A. Your current claim of Rs.10,000/- is correct. Though in the current Finance Bill 2000, it is proposed to be increased to Rs.20,000/-. However you can claim deduction for interest on borrowed capital u/s 24 under Income from House Property. Any expenditure claimed u/s 24 will not qualify for purposes of Sec 88.

Q10. Does the NRI have to pay property tax if they buy property in India? Can a person fill a NRI in a income tax form if he has been out of India for six months though he is Indian citizen?

A. If an NRI buy a property in India, the house Tax levied by Municipal Authorities is payable by them. An individual is treated as a Non Resident during the previous year if he does not satisfy the basic conditions laid down in section 6(1) of the Income Tax Act i.e. :- He should not satisfy any of the following conditions:- a) He is in India in the previous year for a period of 182 days or more or b) He is in India for a period of 60 days or more during the previous year and 365 days or more during the four years immediately preceding the previous year. You haven't mentioned any thing about his stay in India in the previous year ( financial year) in number of days and in the years prior to the previous year ( financial year). we assume that he at least satisfies the condition (b) above and in this case he cannot be assessed as a Non Resident Indian.

2 - Dishonoured Cheque

6 - Q1. What can I do when a cheque is dishonoured for the reason of insufficient funds. What legal action I can take to get the amount cleared?

A. On the dishonour of a cheque, one can file a suit for recovery of the cheque amount along with the cost & interest under order XXXVII of Code of Civil Procedure 1908 ( which is a summary procedure and) can also file a Criminal Complaint u/s 138 of Negotiable Instrument Act for punishment to the signatory of the cheque for haring committed an offence. However, before filing the said complaint a statutory notice is liable to be given to the other party.

Q2. I have got my cheque dishonoured few months back. It was issued by a Company. What can I do now?

A. On the dishonour of cheque by the company you can file a suit for recovery of the amount under Order XXXVII of CPC. As you have stated that cheques were dishonoured few months back and you have issued no notice to the company bringing to their knowledge the dishonour of cheques and the life of the cheque is still valid which is usually six months from the date of issue. You please present the cheque again and on receipt of the information about the dishonour of the cheque you immediately issue notice within 30 days from the receipt of the information of dishonour of cheque to the company. If the company does not pay the amount within 30 days from the receipt of the notice, you can file complaint under Section 138 of the Negotiatble Instrument Act. The said complaint is to be filed within one month on the expiry of 30 days period of notice.

Q3. Our is the software distribution co. During course of our business we had supplied software worth Rs.3 lacs. But our client dishonoured the cheque. We have filed court case on him after that he paid us Rs. 1 lac and then he has run away. We do not have any idea about his where about. Court has issued proclaimed offender notice, but we do not now how to trace him. He has closed his account and bankers are not cooperating with information like his other address. Pleas advice?

A. Let the proceedings of declaration of proclaimed Offender be completed. The accused will be declared Proclaimed Offender and can be arrested at any time. At this stage, you can not do anything else. However, simultaneously you can file Suit for Recovery with the last known address of the accused.

Q4. I have a cheque dishonoured. I have informed the person in writing, but no response, what should be done to register a case of cheating, and which place it should be filed? The place of the bank, where the cheque was dishonoured or the place where the cheque was handed?

A. When you have informed the person about the dishonour of the cheque, in case the information is given within 30 days from the dishonour of the cheque, you can file a Complaint under Section 138 of Negotiable Instrument Act within one month after the expiry of notice period of 30 days. The Complaint for cheating is not maintainable legally. However, in certain cases the police have been registering cases of cheating against the accused.

Q5. I have blank cheques given to me by a partnership firm. Since they owe me some money which I had given to them as a loan. Besides the cheques and the statement of accounts. I do not have anything else. Suppose one day, I suddenly get to know that they have closed the partnership firm and dissolved it, Can I deposit the cheques now and legally raise a claim on them and how?

A. You should fill the cheques and present for encashment. The Partnership Firm as well as partners are personally liable and even after dissolution also the firm and partners are liable. Once the cheques are dishonoured you have to file a suit for recovery of the said amount under the summary procedure provided in Order 37 of Code of Civil Procedure, 1908. You should also file a complaint under Section 138 of the Negotiable Instruments Act. For this you will have to first give a notice, within 30 days of the dishonouring of the cheques. Then if payment is not made within 30 days of receipt of notice a complaint has to be filed within 30 days thereafter.


7- Q1. Is Bonus right of every employee. For calculating bonus does the interest earned by Company in FDRs is also to be counted.

A. Bonus is something given in addition to what is usual or strictly due; money or anything given in addition to an employee's usual pay or salary. The payment of Bonus Act 1965 provides for payment of bonus to persons employed in a factory and in every other establishment employing twenty or more persons. In calculating bonus, interest earned by a company on fixed deposits is to be excluded.

Q2. I am a Research Scientist working in University of Delhi. I have been working on various projects for a period of five years. Do I have a right to be regularized?

A. Being a Research Scientist though you don't have a right to be regularized but your association with the University should be given due consideration at the time of the appointment .You stand a better chance than any other candidate.

Q3. I am a Lecturer in a College, Delhi. A person has been appointed as a Lecturer of History in my college. The person who has been appointed as not even studied History as a specialized subject in his graduation. Can his appointment be challenged ?

A. Yes, you can challenge the appointment on the ground of lack of proper qualification by filing a Petition in this regard.

Q4. I am in Government Servant working in Ministry of Defence. A Departmental Enquiry was ordered against me. I was not convicted by the report of the enquiry. My senior had again ordered enquiry into the same charges. Can he do so?

A. Your senior has no power whatsoever to order another enquiry on the basis of the same facts and materials against you. But in case some new facts and materials come into light such enquiry can be ordered.

Q5. I had been working in Pvt. Ltd. Company for 2 and half years as a permanent employee. As per the company rules I was eligible for medical and LTC benefits. When I leave the job they suppose to give me the whole Medical and LTC benefits plus 15 days salary. I had served one month notice also. They promised me to pay after some time since the financial condition of the company was not good at that time. After repeated telephonic reminder and subsequent letters they kept quiet. It is almost 2 years since then, and I came to know that this company continue to do such things with other employees also. What I can do now? Can I still get money back?

A. Yes, you can claim all the benefits, which the company has not paid you after your resignation. You can file a civil suit against the company and claim those dues. In case you are a "workman" within the definition of Industrial Disputes Act, you can file a petition under Section 33 (c) (ii) of the said Act and claim your benefits.

Q6. I am working with a government enterprises company since last 7 years on a contract basis. They renewing my contract on every year. Relation are good with my employer, but if they are not continuing my job in any case what I will do. Is there any chance to see them?

A. From your query it is not clear in which category of employment are you working, Whether you are in the "Workman" category or you are in the "Management" Cadre and whether you are employed on contract basis or otherwise. In case you are in the Management category, then the Company has every right to enter into an agreement with you on a contractual basis and continue your job till the time they want. In case you are working in the office staff then in case the company does not renew your contract then you can approach the Labour Court under the provisions of Industrial Disputes Act and seek appropriate remedy. You can ask for regularization under the Industrial Disputes Act if you are a workman as defined under the said Act.

Q7. Can any employer send his employee on forced leave for not to initiate disciplinary proceeding but to legally punish him?

A. The employer can not send an employee on forced leave without initiating any disciplinary proceedings against an employee. Only after necessary show cause or charge sheet has been issued and after holding disciplinary inquiry or proceedings, the employer can legally punish you. If the employee fails to receive the payment from the employer after having entered into full and final settlement of the account, the employee can file a civil suit for recovery of office dues. In case gratuity has not been paid then the employee can proceed under the provisions of Payment of Gratuity Act and then in case Provident Fund has not been released after the employee leaving, then he can proceed under the provisions of the Provident Fund Act.

Q8. What does an employees do if his employer does not make his full and final settlement of Account, once the employee leave or is forced to leave the service in the private sector. How soon and with what documents the employees should fight the case?

A. If the employee fails to receive the payment from the employer after having entered into full and final settlement of the account, the employee can file a civil suit for recovery of office dues. In case gratuity has not been paid then the employee can proceed under the provisions of Payment of Gratuity Act and then in case Provident Fund has not been released after the employee leaving, then he can proceed under the provisions of the Provident Fund Act

Q9. How to get my passport back from my previous employer?

A. It is not clear from your question, in what capacity the previous employer is holding the passport. However, it is advisable to send a letter in writing to the previous employer for return of passport. If he still does not return the same, you can lodge a criminal complaint with local police station.

Q10. What are my rights if a contract has no mention of salary breakups and the employers PF is included as part of the Gross Salary?

A. There is nothing illegal if there is no mention of salary breakup and employers PF included as part of the Gross Salary. The PF can be deducted as a Contribution of employee from the Gross Salary. In addition the employer has to contribute his share of PF subject to maximum privilege prescribed in Section 6 of Act.

Q11. My company is not relieving me. I have got a job elsewhere and want to quit the notice period of one month expired one week ago. What can/should I do?

A. If one month notice period has expired as prescribed in the contract of employment, intimate to your employer in writing that as notice period has already expired you will stop coming to their office from ______ (specific date) and also write about settling your accounts.

Q12. Kindly give the citation of the latest ruling given by Supreme Court wherein promotion has been declared as the fundamental right. The Article was published in the newspaper but no reference to the citation is available.

A. The citation and the ratio of the case you have asked for is given hereunder : Ajit Singh II v. State of Punjab, (1999) 7SCC 209 : 1999 SCC (L&S) 1239 "The word "employment " being wider, there is no dispute that it takes within its fold, the aspect of promotions to posts above the stage of initial level of recruitment. Article 16(1) provides to every employee otherwise eligible for promotion or who comes within the zone of consideration, a fundamental right to be "considered" for promotion. Equal opportunity here means the right to be "considered " for promotion. If a person satisfies the eligibility and zone criteria but is not considered for promotion, then there will be a clear infraction of his fundamental right to be "considered" for promotion , which is his personal right." (para 22) "It is not possible to accept the view expressed in Ashok Kumar Gupta ,(1997) 5 SCC 201 and followed in Jagdish Lal, (1997) 6 SCC 538 and other cases, if it is intended to lay down that the right guaranteed to employees for being "considered" for promotion according to relevant rules or recruitment by promotion (i.e. whether on the basis of seniority or merit) is only a statutory right and not a fundamental right." (Para27)

Q13. Today if I get a job and leave then they will crib about it and would refuse to pay my severeance benefits, which to me is nothing unreasonable but the cost of closing down the office and leaving people to look out for a job and unsetting. In the current circumstances, badly hit as I am, how can I safeguard my interests and make sure that I do not loose my benefits if I have to leave early.

A. You have not disclosed about your term and condition of Employment. Anyhow if the company terminates your services and they have to pay the severeance benefit as the contract. If as per the terms and conditions of your contract or service if no severeance amount or benefit is payable on resignation then you can demand the same from the company if you resign from the service. However if the company has paid the severeance benefits to other employees who have resigned then in that case if you file a case in the court of law on the ground that other person or employees have been paid the severeance benefit after they have resigned and you are accordingly entitled then you must get this severeance benefit. It is advised that persons who have resigned and have been paid severeance benefits you can collect the documents from them to show that severeance benefits were paid to the employees who have resigned from the company .

Q14. I wish to know the consequences of breach of employment bond given by an employees: On the employee himself, On the company that employs him subsequently. If the bond states that the employees can be used for criminal breach of trust on breach of the bond, how enforceable is this clause?

A. As regard the breach of the employment bond given by an employee in this regard it is advised that if an employee has signed a bond after he get specialized training from the company then a civil case can be filed against him for recovery of the amount mentioned in the bond if there is any breach. As regard the company that employs him subsequently, there is no liability of the company, which employs him subsequently. Breach of bond is not criminal breach of trust it is of civil consequences and that also have to be proved in the Court of Law. In no manner it can be termed as criminal breach of trust.

Q15. A Writ Petition was duly filed and was admitted by Honorable High Court in Oct. 1994 against wrong and illegal dismissal orders of State Bank of India and for my reinstatement too. But nothing has been done so far inspite of my various request and reminders. In this regards, what immediate step I should take to get maintenance allowances or nurse my family smoothly as well as to meet highly legal expenses till disposal of the said writ?

A. When a writ petition is filed against the illegal dismissal on termination of service legally it is not possible by any court to grant any maintenance allowance or legal expenses till disposal of the writ petition. There is no precedent in this regard nor any court pays the maintenance allowance. The only remedy available to you is to file an application for early hearing and get the matter decided as early as possible.

Q16. A civil appeal against recovery orders in lying pending in Honorable High Court. At present, neither there is any movable/immovable property in my name nor I am in position to pay the amount of recovery as ordered by Single Judge Bench or likely to be ordered in futures. Under these circumstances, what maximum severe action can be taken by this Court, in case, my appeal is not decided in my favour onwards? What are the point & steps/measures in defense in that position?

A. You have not disclosed in your query as to what order has been passed by the Appellate Court. Whether any stay has been granted by the Appellate Court or not. If any stay has been granted then what conditions. Normally when any appeal is admitted or put for hearing the Appellate Court always passes an order for payment of decretal amount with a condition that the decree holder can withdraw the amount on furnishing some security. If any order has been passed in this regard by the Appellate Court then you have to deposit the amount. If you don't deposit the amount then normally the appeal is dismissed. If the decree passed is totally illegal then in that case you can tell the court that no amount is payable. And you also pray to the court that you are in very bad financial condition otherwise your appeal will be dismissed.

3 - Criminal Liability Cannot Be Imposed On Legal Heir

5 - Criminal liability cannot be imposed on Legal heir

Question My father had taken a loan from a financer and had issued post-dated cheques towards its payment. Due to paucity of sufficient balance in the bank account, the cheque was dishonoured. The financer issued a notice to my father claiming the amount of the cheque but my father expired in an accident and as such the notice was returned with the death report of my father. Now the financer has filed a complaint against me under Section 138 of the Negotiable Instruments Act, as I am the legal representative of my father. Please guide me whether in such circumstances can I be held legally liable? What remedy is available to avoid unnecessary harassment?


It is well settled that criminal liability cannot be fastened to the heirs and the legal representatives of a person, who is said to have been guilty of the offence in question. Moreover, it is specifically provided in Section 118 of the Negotiable Instrument Act that proceedings under the complaint alleging offence under Section 138 of the said Act cannot be filed against legal representatives of the person who had is sued the cheque. The complaint filed by the financer against you is nothing but abuse of the process of court. You may approach the High Court for quashing of the said complaint by filling a petition under Section 482 of the Code of Criminal Procedure by referring to a recent judgment of the Bombay High Court in the case of Savita H. Sorle and others Vs. Rajesh Damidar Sarode and another reported as 2006(3) R.C.R. (Crl) 216.

Q1. I have filed a civil case against someone relating to a matter. Can I also file a criminal case against the same men for what he had done?

A. Mere pendency of a civil proceeding concerning the matter involved is no bar to initiation of criminal proceeding provided the action complained amounts to a criminal offence.

Q2. My friend a twenty-year-old boy is in love with a 15-year-old girl. He wants to have sex with her. Can he land up in some legal problem if he does so?

A. In India having intercourse with a Female of less than 16 years of age is an offence. Your friend can land up in problem if he does so a criminal case can be filed against him if it comes to light.

Q3. We are students of 1st year of college. We got involved in a street brawl with another group. One of the members of the other group got his tooth broken in the brawl. They are threatening legal action. Can they do so? If so of what nature?

A. Section 320 of the Indian Penal Code defines Grievous hurt. Grievous hurt includes fracture or dislocation of bone or tooth. In your case it seems that tooth of one of the person was broken, the punishment for such a small looking thing is much grave. Section 325 provides for the punishment for voluntarily causing Grievous hurt which is imprisonment upto the maximum of seven years along with the fine.

Q4. I am a businessman dealing in supply of grocery items. Recently one of my clients during the transactions gave a 500 Rupee note, which later turned out to be fake. What should I do?

A. You should immediately contact the Local Police Station and lodge complaint against the person from whom you have received the note. This is important for you to prove your bonafide.

Q5. Can entrustment of goods in case of hypothecated goods attract criminal breach of trust in situation where these goods are mis-appropriated?

A. The entrustment shall not be taken as technically actual transfer of the property. Even if the owner is in possession of the property, he is holding the property as a trustee on behalf of the person from whom money is taken. The Supreme Court has rightly held that for the offence of breach of trust the property in question must belong to a person other than the person to whom property is entrusted, but in your case the property now belongs to the person from whom the money is taken and you are retaining the property on behalf of that person. In your case if you sell the property you are liable for criminal breach of trust. Now suppose if you have handed over the property to the person from whom you have taken the money and if that person has returned you the property as a trustee in that case you are liable for criminal breach of trust. For more specific answer we need the terms of hypothecation agreement. Please refer (1971) 1 SCJ 132 and AIR 1951 Punjab 103.

Q6. For past few months my telephone bills are highly inflated. I feel somebody is misusing my line. Can I file an FIR?

A. Any citizen can file an FIR of theft of the above said telephone wire whether it belongs to you or belongs to any other person. The said FIR will be lodged under Section 379 of Indian Penal Code.

Q7. My friend was arrested without warrant. Can police do so under law? Kindly enlighten me on situations where this can be done?

A. There are various situations in which a person can be arrested without warrant. The Code of Criminal Procedure 1973 provides for some of these situations. Under Section 41 of the said Act prescribes for many such situations which are discussed hereunder: i) a person who is concerned in any cognizable offence or against whom a reasonable complaint has been made or credible information has been received or reasonable suspicion exists of his having been so concerned. ii) if a person is found in possession of any implement of house braking without lawful excuse . iii) if a person is proclaimed offender . iv) if a person is found in possession of a property suspected to be stolen and there is reasonable suspicion of his committing the offence v) if a person obstructs a police officers in execution of his duty or has escaped or attempts to escape from lawful custody. vi) if a person is reasonably suspected of being a deserter from any Armed forces of the Union. vii) a person against whom a reasonable complaint has been made or credible information has been received or reasonable suspicion exists of having been concerned in any act committed outside India which would have been a punishable offence in committed in India and for which he is under any law relating to any extradition, or otherwise, liable to be apprehended or detained in custody in India. viii) a person who, being a released convict, commits a breach of any rule made under sub-section (5) of Section 365. xi) a person for whose arrest any requisition, whether written or oral, has been received from another police officer, provided that the requisition specifies the person to be arrested and the offence or other cause for which the arrest is to be made and it appears therefrom that the person might lawfully be arrested without a warrant by the officer who issued the requisition. Under Section 42 0f the said Act any person can be arrested who, in the presence of a police officer, has committed or has been accused of committing a non-cognizable offence refuses, on demand of such officer, to give his name and residence or gives a name or residence which such officer has reason to believe to be false, he may be arrested by such officer in order that his name or residence may be ascertained. But when the true name and residence of such person have been ascertained, he shall be released on his executing a bond, with or without sureties, or appear before a Magistrate is so required. Provided that, if such person is not resident in India, the bond shall be secured by a surety or sureties resident in India. But if the true name and residence of such person could not be ascertained within twenty-four hours from the time of arrest or if he fails to execute the bond, or, if so required, to furnish sufficient sureties, he shall forthwith be forwarded to the nearest Magistrate having jurisdiction. Under Section 43 of the said Act a person can also be arrested by a private person who in his presence commits a non- bailable and cognizable offence, or any proclaimed offender, and, without unnecessary delay, shall make over or cause to be made over any person so arrested to a police officer, or, in the absence of a police officer, take such person or cause him to be taken in custody to the nearest police station. If the police officer has a reason to believe that such person comes under the provisions of Section 41, a police officer shall re-arrest him. If there is reason to believe that he has committed a non-cognizable offence, and he refuses on the demand of a police officer to give his name and residence, or gives a name or residence which such officer has reason to believe to be false, he shall be dealt with under the provisions of Section 42; but if there is no sufficient reason to believe that he has committed any offence, he shall be at once released. Under Section 44 of the said Act when any offence is committed in the presence of a Magistrate, whether Executive or Judicial, within his local jurisdiction, he may himself arrest of order any person to arrest the offender, and may thereupon, subject to the provisions herein contained as to bail, commit the offender to custody. Any Magistrate, whether Executive or Judicial, may order arrest of a person in circumstances to issue a warrant. But in all these cases the person arrested has to be produced before the Magistrate or the officer in charge of the police station without unnecessary delay as per Section 56 of the said Act. Also a person cannot be detained in custody for more than 24 hours without the permission of the Magistrate as per Section 57 of this said Act. Police in all such cases has to report to the District Magistrate or the Sub-Divisional Magistrate about the arrest and also the status of bail as per Section 58 of this said Act. A person can also be arrested without warrant as per certain local laws as applicable from place to place. For example in Delhi as per the Delhi Police Act 1978, a person can be arrested without warrant if an offence u/s 11 of Prevention of Cruelty to Animals Act, 1960, is committed in presence of the Police Officer. Thus it also depends on the area of your residence or on the place where the alleged act in contravention of law is committed and the local law applicable there.

Q8. Does selling of hypothecated property amounts of offence under Criminal Breach of Trust? If no why?

A. Yes. It is an offense u/s 406 of Indian Penal Code because the language of the Section categorically provides that if a person with dishonest intention violates the legal contract which prescribes the mode in which the TRUST is to be discharged then it amounts to Criminal Breach of Trust.

Q9. One of friend is charged under Section 406 407 & 409 and in the charge sheet it is only written as he is the son of vehicle owner I want to know how is the section related to the statement and one more thing he has already applied for discharge from this case but the advocate says it is still in process this is going since six months. Please give your view and suggestion?

A. The provisions of Sections 406, 407 and 409 Indian Penal Code relate to the offence of a carrier / vehicle or an agent committing a Criminal Breach of Trust. In the event of any property having been entrusted to a carrier / vehicle or an agent and the same having been misappropriated or converted to its own use, the person concerned is liable for punishment under the said provisions. If there is no allegation in the FIR or the Charge sheet against your friend of having been entrusted with any property and if he is being accused only on account of his being the son of the Vehicle owner, your friend is liable to be discharged from the case. Keeping in view the delays in the Indian Courts, it take sometime before such a decision can be taken and as such there is no need to be alarmed in the matter.

Q10. In case of hypothecation of property, the goods remain in possession of the owner and for the money lent, an interest is created in that property of the person lending the money. Now, one of the main ingredients of Section 405 of the Indian Penal Code, is entrustment of property. In case of hypothecation is there any entrustment of property because for entrustment there must be transfer of property. Secondly in umpteen no. of cases the Hon'ble Supreme Court has held that for the offence of breach of trust the property in question must belong to a person other than the person to whom property is ensured. In light of above discussion, does selling of hypothecated property amounts to breach of trust?

A. The entrustment shall not be taken as technically actual transfer of the property. Even if the owner is in possession of the property, he is holding the property as a trustee on behalf of the person from whom money is taken. The Supreme Court has rightly held that for the offence of breach of trust the property in question must belong to a person other than the person to whom property is entrusted, but in your case the property now belongs to the person from whom the money is taken and you are retaining the property on behalf of that person. In your case if you sell the property you are liable for criminal breach of trust. Now suppose if you have handed over the property to the person from whom you have taken the money and if that person has returned you the property as a trustee in that case you are liable for criminal breach of trust. For more specific answer we need the terms of hypothecation agreement. Please refer (1971) 1 SCJ 132 and AIR 1951 Punjab 103.

Q11. What are the legal consequences against a person who has stolen telephone lines from neighbors or directly from under road line?

A. Any citizen can file an FIR of theft of the above said telephone wire whether it belongs to you or belongs to any other person. The said FIR will be lodged under Section 379 of Indian Penal Code.

Q12. My query is whether these offence be committed with respect to immovable property or not? I have precedents which say these offences can be committed with respect to only movable properties. Is there any precedent that these offences can be committed with respect to immovable property?

A. Offenses of the cheating and criminal breach of Trust can be committed in respect of immovable properties. Please read section 420, 405 and 406 of Indian Penal Code which squarely covers the offenses in respect of immovable property.

Q13. Is there any recent decision of Hon'ble Supreme Court which provide relief to the people, who are accused in criminal-civil cases more than ten years or there cases have been closed now? If so, kindly let me know in detail, giving there reference & supplying photocopies thereof at my home address?

A. In cases of offenses of minor nature Supreme Court decision in the case "Common Cause Vs Union of India & Ors" reported in AIR 1996 Supreme Court 1619 certain provisions have been made where if the cases are pending for long duration, the court has the power to close the case. Kindly specify the nature of your case or see the above state judgement. In other cases not covered under the said judgment, you can only file the mercy petition under Article 136 of Constitution as SLP for reduction of sentence.

Q14. A criminal appeal against severe punishment & heavy fine is still lying pending to decide before Additional Distt. & Session Judge Mandi (H.P.) since September 1994, inspite of my various requests and many dates fixed so for? What steps I should take to get justice at an early date?

A. You can file the petition under Art. 227 of Constitution of India before the Hon'ble High Court for direction to Session judge for early disposal of the case.

Q15. What can I do if a police officer at the police station refuses to register my FIR?

A. Under the provisions of Criminal Procedure Code on the refusal of a Police Officer to register the complaint you can send the complaint by Registered Post to the Deputy Commissioner of Police of that District under whose jurisdiction that Police Station falls. This is provided under Section 154 (III) of Criminal Procedure Code. Said DCP is under duty to register the FIR if it discloses the offence. In the event of failure on the past of either to register the complaint, you can then file the complaint before the Metropolitan Magistrate under Section 190 of the Code of Criminal Procedure.

Q16. What is the punishment for a man who tortures a woman mentally, physically or verbally?

A. It is an offence punishable under section 498A of the Indian Penal Code, 1860, which is imprisonment for a term which may extend to three years and shall also be liable to fine.

4- Consumer Protection

4- Consumer Protection -Q1. I have instituted a complaint before the Consumer Court against a Medical Practitioner. My complaint has been challenge on the ground that a Medical Practitioner cannot be sued under the Consumer Act. What does law provide?

A. Yes, a medical practitioner can be sued under the Consumer Protection Act 1986 for his or her professional negligence resulting in damage to patient. Section 2 (d) in defining a consumer in Clause (ii) uses the expression 'hires and avails of". The word "hire" means employ of wages or fees". Secondly the words "any service" in s. 2 (d) (ii) in Consumer Protection Act. A eloquent to bring the delinquent medical practitioners within the ambit of Consumer Protection Act. Thirdly, s. 2 (o), Consumer Protection Act which defines service exempts only two types of services, one "service free of charge" and another "contract of personal service" postulates a relationship of master and servant. A medical man whose service is requisitioned for a patient answers the clause " contract of service" but never "a contract of personal service". So, a negligent medical professional can be proceeded under the Consumer Protection Act 1986.

Q2. I had purchased seeds from a party. The seeds did not germinate. The other party took the plea that I was not a consumer. Whether purchase of seeds for the purpose of agriculture is purchase for commercial purpose?

A. Purchase made for agriculture is not for commercial purpose. Therefore, the complainant is a consumer and entitled to seek redressal of his grievance in a Consumer Court against the party which supplied defective seed to him.

Q3. I had got a confirmed ticket on Sahara Airways. The flight was later cancelled on account of technical snag. Is it a deficiency in service?

A. Cancellation of flight on account of technical snag is not deficiency in service as it is due to unavoidable circumstances. However, you ought to be allowed refund of the fare but no compensation can be granted on account of any loss suffered by you (if any) because of the said cancellation.

Q4. I was allotted a Maruti Car. There was a delay in delivery of the car. Subsequently, the dealer called upon me to make further payment as the price of the car had gone up. Am I liable to bear the price increase on account of delay caused by the dealer?

A. You are not liable to pay any price increase in the above mentioned circumstances since the increase in price is totally on account of the delay on the part of the dealer for which a consumer cannot be made to suffer.

Q5. Does rejection of application for grant of loan by a Bank constitute deficiency in service for which I can approach the Consumer Court?

A. The Bank has a wide discretion in the matter of granting loans and advances and continuing disbursement of loans sanctioned .The Consumer Courts cannot sit in judgement over the discretion exercised by the Bank and as such you will not succeed in any such action, if taken by you.

Q6. The transformer, which was supplying electricity to me, got burned and was replaced by the department after about two months. However, However I was billed with consumption charges. Am I liable to pay any such charges when there was no consumption of electricity by me?

A. When the electricity was not supplied and the electricity bills produced by you showed that there was no consumption of electricity by you and admittedly the reason for that was burning of the transformer, you are not liable to pay any minimum charges.

Q7. I had applied for electricity connection. However, power supply was not provided to me. Can I seek redressal of my grievance in Consumer Court?

A. Your grievances is that you application for electricity connection was not granted. Electricity may be a service but the hiring of the service is not complete till the Electricity Board sanctions service. Hence, you can't approach a Consumer Court for redressal of your said grievance. Your remedy is to file a civil suit in the Court of law against the Electricity Board.

Q8. Can Consumer Forums adjudicate disputes involving scale of pay?

A. No, Consumer Forums do adjudicate dispute-involving scale of pay.

Q9. I had applied for subscription in Rajlakshmi scheme of UTI. The essence of the scheme was that the sum of money deposited with the UTI would grow 21 times in 28 years. However subsequently, the UTI extended the maturity date by two years. Can I approach a Consumer Court?

A. Unilateral alteration of terms of payment by the UTI in their above scheme is "Deficiency in Service" for which you can seek relief in a consumer court.

Q10. My car met with an accident. The insurance claim was rejected on the ground that my driver was not holding valid driving license. Should I approach a Consumer Court for seeking the Insurance claim?

A. The Consumer Court will not be able to grant you any relief since the driver employed by you did not have a driving license. You were bound under law to check the ability of the person employed by you and the failure in holding a license for driving well debar you from claiming the Insurance Claims.

Q11. I had purchased a fridge, which suffered from several defects, and those defects could not be removed or repaired by the Company. Can I seek redressal of my grievance?

A. You can certainly seek redressal before the Consumer Forum. In a similar case as yours, the Forum appointed a Local Commissioner who corroborated the version of the complainant. It was held by the Forum that the fridge was found to be defective within the period of warranty. The opposite party was directed to replace the unit with a new one.

Q12. I filed a complaint before the State Commission regarding payment of policy amount in death claim, which was allowed to me by the State Commission. I wish to file another complaint claiming the Double Accident Benefit. Can I do so?

A. It is well-settled principal of law that one can not educate the same cause of action before a court of law or before another adjudicating Forum after it had already been adjudicating upon earlier. This is the basis for the relevant provisions under the Code of Civil Procedure, 1908 (CPC) which embody a sound principal of law to obviate multiplicity of litigation. Even though Consumer Forums are not governed by the CPC yet the sound principles of law and procedure embody in that CPC are followed by the Forums. Consequently, second complaint filed on the same cause of action would not be maintainable.

Q13. I had applied for allotment for a plot and paid Rs.100 as registration fees. At the time of draw my name was not included. I lodged a complaint before the Consumer Forum, wherein the Housing Board argued that I was not a "Consumer" since no allotment had taken place. What is the correct position in law?

A. Where the complainant had paid for the cost of application form as well as the registration fee, he is the potential user and the nature of transaction is covered by the expression "service of any description". As such the complaint is maintainable. The Housing Board is deemed to have undertaken to include your name in the draw of lots for allotment of a plot. However, your application has not been considered because your name was not included in the draw. The only inference that can be drawn is that the person who prepared the list was negligent in discharge of his duty. You can proceed on this ground.

Q14. My grievance is that I had registered with the M.I.G. scheme of the Haryana Housing Board and the board had escalated the price of the flats three times within a period of two years. Does my case lie within the jurisdiction of Consumer Forums?

A. It has been laid down that under Consumer Protection Act the pricing policy of flats cannot be adjudicated upon by Consumer Forums. The question of pricing of the flat by Housing Board is not a Consumer dispute. If any amount has been illegally charged from you by Housing Board , you can recover the same through a civil court.

Q15. A Complainant filed a case against our company who's grievance related to transactions dating back to years 1994-95 while the complaint was filed in the year 1999. Is the complaint within time?

A. Session 24 A of the Consumer Protection Act, 1986 provides a limitation period of two years within which the complaint is required to be filed . In the light of the above, the complaint is time barred and hence not maintainable.

Q16. My grievance is that I am not getting regular supply of water. What can I do against the concerned Government Authority before a Consumer Forum?

A. The Government supplying water is performing a statutory functions which can not termed to be rendering of service. Hence the Consumer Forums have no jurisdictions to entertain such a complaint.

Q17. My grievance is that a Hospital where I was treated declined to give me the medical records pertaining to my treatment and operation for Ulcer. Can it be termed a deficiency is service on the part of the hospital?

A. There is no negligence on the part of the hospital by reason of such failure to supply the said papers unless there was a legal duty cast on the hospital to furnish such documents to the patients, which has to be seen from their Rules and Regulations.

Q18. A registered letter sent to me was not delivered. What is the liability of an employee of the Post Office in this matter?

A. Section 6 of the Indian Post Office Act 1878 provides that the Government shall not incur any liability by reasons of the loss, mis-delivery or delay or damage to any postal article in course of transmission by post except in so far as such liability is made in express terms to be undertaken by the Government and no Officer the Post Office shall incur any liability by reason of such loss, mis-delivery , delay or damage unless he had caused the same fraudulently or by his willful act or default. In view of the said Section 6, your complaint is not maintainable unless there is allegation an of fraud or willful act of negligence of any postal employee.

Q19. A Superfast Train in which I was travelling was delayed for long hours without any reason. Can this be a ground for filing a complaint against the Railways?

A. Additional charges are taken by the Railways from the passengers travelling by a Superfast Train. If the trains are delayed for long hours and the delay has not been properly explained it amounts to deficiency in service and therefore the Railway is bound to refund the excess charges.

Q20. I am a shareholder of HLL. Despite having made all the payments, the share certificates were delivered very late. I have claimed the loss in terms of the escalation in the market price of the share. Is my claim valid?

A. Share market is a speculative market and there is bound to be fluctuation in value of shares of the company depending on market condition. Merely because the value of the share went up you are not entitled to get compensation at the increased rate, as damages are remote damages.

Q21. I had paid the telephone bill but inspite of that the telephone department disconnect my telephone without any notice. Can the department disconnect the telephone without notice to the subscriber?

A. Disconnection cannot be effected without notice to the subscriber. The Department is bound by law to give such a notice. You can seek compensation for the same alongwith restoration of the connection.

Q22. I had bought a scooter in last May, after some months it is creating problem to me. When I complained to Service center they serviced it and say the problem was removed. But last week it is creating the same problem again. When I complained them they return me the Scooter next day and they say again that the problem was removed. But today it is creating the same problem to me. Can I go to file a case in consumer forum.

A. You can definitely file a case before the Consumer Forum but the ideal remedy at this stage would be to complain to the company i.e. Bajaj Scooters Ltd. against the service center and wait for their response. In case nothing is done even after this, then it will be prudent to file a case in the Consumer Forum.

Q23. We have been buying Parag milk packet 500 ml from a retailer. The packet though gives only 400ml. What action can we take against the company.

A. There is clear case of cheating and you can file a criminal complaint under Section 421 of the Indian Penal Court. Besides filing a Criminal complaint, you can also approach a Consumer Court for this purpose. You must collect adequate evidence before doing the same, i.e.; retain a sealed packet of Parag Milk which indicates the quantity of 500ml but actually weighs 400ml.

Q24. I had deposited a booking amount with Pal-Peugeot, letter the same was cancelled but no refund has come so far, for the last two years. The matter was referred to Delhi Consumer forum who referred to than (Maharashtra) consumer forum. Documents were sent to them but of no avail, again it was sent by us to Delhi as the deposit was made to Premnath Motors Delhi but Delhi Consumer forum has again written to follow than.

A. You should file an appeal before the State Commission against the order of the Consumer Forum. Since the cause of action arose at Delhi, i.e.; the Distributor was located at Delhi and money also seems to have been paid at Delhi the Delhi Consumer Forum had the jurisdiction in case the distributors (who work at Delhi) have been made parties to the said petition. You should file an appeal against both the manufacturers as well as the distributors, i.e.; Prem Nath Motors against the order.

Q25. I purchased on 1.1.2000 from a shop in Panjim, Goa a bottle of Scotch Whiskey. I find that it is not original in that it tastes too sweat. It appears to be spurious. I have written letters to the MD, Goa Tourism but there is no reply. What remedy is available to me to the relief.

A. You can certainly file a complaint before the Consumer Forum against supply of Spurious Whisky supplied to you as well as also lodge a Criminal Complaint in this regard. However, the difficulty (which is a major one) is that since the bottle of Whisky has been open, it will be virtually impossible to prove that the contents of the Whisky are the same as they were when the bottle was sealed. Since, the legal system is totally based on evidence / proof, it would not be a worthwhile exercise to institute any legal proceedings in the facts and circumstances of the present case.

Q26. I understand that under the Consumer Protection Act, a complain has to be made within 2 years from the date on which the cause of action arose. What happens in a case where the 2 year period has elapsed because the I spent the time writing(and replying to) to the manufacturer in the hope that he would replace the good? What argument can I give to the Forum in response to the plea of 2 years which I know will be taken by the manufacturer?

A. It is correct that the Consumer Protection Act, provides for a limitation period of two years for filing a complaint and the said period starts from the date when the cause of action arose. The same is provided under Section 24-A of the Consumer Protection Act, 1986. However, the Consumer Forum has the power to entertain a complaint even after the said period in case it is convinced that the complaint could not be filed within the said period on account of certain sufficient cause. Thus you would have to give a good explanation in order to have the delay condoned from the Consumer Forum. In case the only ground pleaded by you is that you were corresponding with the Manufacturer and hoping to get the goods replaced, the same would not be construed as sufficient reasons for condoning the delay.

Q27. Can I claim for replacement. If they do not replace the vehicle can I move to consumer forum. Who should I make a party i.e. the dealer, or the LML company or both of them. The dealer is in Karol Bagh the company office in Greater Kailash and factory's regd. office in Kanpur in which Jurisdiction/Zone should I file the complaint. Or any other detail which you feel Justified to provide me.

A. You should again inform the Company about all the facts and steps taken by them for removing the defect in writing and further pursue the matter with the Company and try to get the defect rectified. In case your efforts fail you can file the complaint with Consumer Forum at Delhi by making both the Company and the Dealer as parties to the complaint. Replacement is allowed by Forum if the defect is such that it is not possible to rectify the same. Give the Delhi address of the company and file the complaint at Delhi.

Q28. I injured my knee in a game of football on 31st December 1997. It was diagnosed as ACL TEAR. For that I was operated upon in the knee on 2nd March 1998. After the operation my knee developed stiffness, which is unusual in such cases even after undergoing physiotherapy for two months I was unable to bend or straighten my knee. So after two months of operation my knee was manipulated under anesthesia to relieve stiffness. A plaster was put on the knee for one month. I was told to start walking . I used to walk with a limp. For about 8 months I continued to walk with a limp but then my condition deteriorated & in March-99 I had to start using crutches to move around. To find out the cause of this pain I underwent investigative arthoscopy in June-99 which revealed the following 1. ACL Laxity 2. meniscus tear 3. patellofemoral osteoarthritis . I was advised by the doctor to do physiotherapy, and take painkillers for the pain, I am still doing physiotherapy, but neither the pain has reduced nor am I able to walk without crutches, this whole experience has affected my life badly. Can I sue the doctors for negligence / inefficiency. My both operations were carried out in military hospitals, and they were done free of cost since I am serving in army. So I can not go to Consumer protection court. Please advise?.

A. You can file a writ petition in the High Court of judicature against the hospital, making doctors responsible for your condition a party. You can also seek damages alongwith the appropriate action against the doctors and the management in the writ petition .


CONTRACT DISPUTES - Q1. I run a public carrier company in our business on some occasions the goods given to us are lost. We also execute Agreements with our customers providing that we will not be liable for loss of damage. If our customer files a case against us for loss of goods, what is our liability?

A. A common carrier in India is not merely a bailee as we understand and his liability against the loss or damage is more than what Sections 151, 152 and 161 of the Indian Contract Act 1872 provide. He is an insurer of the goods so to speak and in the absence of a special contract under Section 6 his liability is absolute. By entering into a special contract under Section 6 of the Act, the common carriers' liability may either be governed by the Indian Contract Act 1872 or by the English Common Law.

Q2. I had dispatch certain articles on a passport company which were to be delivered to one of the customers who had paid the amount for the same. The Transport Company lost goods and it never reached our customers. After receiving amount from customer can I as owner sue the Transport Company? Can our customer also file a case and on what basis?

A. The consignor is entitled to sue for the carrier either on the basis of title, if the property in the goods has got passed from him or on the basis of the privity of contract between himself and the carrier for the carriage of goods. If the true owner of the goods has failed to bring an action against the carrier for the loss of or damages to the goods, the consignee is not without remedy. Courts have power to circumnavigate technical hurdles to prevent miscarriage of justice. The consignor, though without title, had privity of contract with the carrier for carriage of goods and so is allowed to sue on it.

Q3. We run a transport company and in our bills it is printed that we shall not be liable for any loss or damage to the articles during transit. If somebody still sue us for such a lost what is our liability?

A. Condition printed on the consignment note to the effect that the carrier company would stand discharged from all liability for any loss or damage, does not result in absolving the carrier company of the liability in absence of special contract signed by owner of goods.

Q4. I sent certain coolers through a transporters who seems to have sold them and did not make delivery as we desired. What is my remedy against such a transporters and what do I have to prove in such a case?

A. If a suit is brought against a common carrier for loss, damage or non-delivery of the goods entrusted to it, it is not for the plaintiff to prove that the loss, damage or non-delivery was due to the negligence of the carrier, his servants or agents. Negligence is presumed from loss of or injury to goods.

Q5. I want to file a case against a party, which signed a contract with me for not following the terms of that contract. The contract was signed in Bombay but I made the offer in Delhi. Can I file the case in Delhi?

A. Suit on breach of contract may be filed at the place where it was made or at the place where it should have been performed and the breach occurred. Mere making an offer does not constitute cause of action in a suit for damages for breach of contract. But when it was accepted, suit may be filed at the place of acceptance.

Q6. Can two parties orally agreed that a particular court will only the able to here any case a filed by one of them?

A. Parties to a contract can orally select a court for the purpose of jurisdiction when more than one courts have concurrent jurisdiction. Such a contract neither is opposed to public policy nor barred by Section 20 of Indian Contract Act.

Q7. I had made an offer to the other party. The other party accepted my offer. However, before the acceptance, which was sent by post, could reached me, I sent a letter to the other party revoking the said offer. The other party challenged my revocation of the offer, saying that the contract was completed. What is the correct legal position?

A. As soon as the acceptance is posted, the acceptance is completed and contract stand concluded in terms of section 4 of the Indian Contact Act.

Q8. The government issued a tender notice. In response, I made an offer to the same. Later, before communication of the offer, I desired to withdraw my offer. The government rejected the same, on the ground that the tender notice contain a clause to the contrary. Am I not entitled to withdraw or modify my offer?

A. You can withdraw or modify your offer before its communication. Merely because the government has put a clause to the contrary in a tender notice, your right to offer cannot be taken away.

Q9. I entered into an agreement with a company. All the proposals made by me were accepted though a formal contract is not yet concluded. Now the other party wants to change certain terms. Can they do so?

A. No the other party cannot change the term of the contract as the proposals made by you had been accepted. As such, the contract is completed even though the formal agreement has not been concluded. Any unilateral change in the agreement without your prior consent, amounts to breach of the terms of contract.

Q10. We have contracted with a foreign company to make computers. After the formal contract was executed we came to know about their previous offer to the other Company. Can the company be now sued for fraud because of concealment of information?

A. You cannot sue the Company as no fraud has been committed by the Company on account of non-disclosure of information relating to previous offer or any past transaction. The Company is not obliged to disclose such information relating to previous offer to any other company.

Q11. I want to enter into an agreement with a Firm whereby that Firm will not bid for a public auction of the govt. Am I legally permissible to do so?

A. Section 27 of the contract Act, provides that any agreement in restrain of trade is void. In view of this provision, you cannot legally enter into an agreement with a Firm whereby that Firm will not bid for a public auction of the Govt.

Q12. I entered into an agreement to buy a Flat. The seller did not give the possession of the Flat after the contract was concluded and earnest money paid. Am I now entitled to the money paid by me to the seller?

A. You are entitle to the refund of money paid by you to the seller on account of his failure to perform his part of the contract. In case the seller fails to refund the said amount, you can file a suit for damages cause by breach of contract by the seller. You can also file a suit for specific performance of the contract, if you want to take the flat.

Q13. My boy friend promised to marry me but he resiled from it. Is it breach of contract?

A. When there was promise to marry but the man resiled from it, it is a breach of promise and this breach is actionable. You are entitled to award of damages.

Q14. I am a Banker working with the Bank I want to know what reasonable care should be taken by a Banker while accepting a Customer. Is there any law relating to the same effect ?

A. As a general rule a banker before accepting a customer, must take reasonable care to satisfy himself that the person in question is of good reputation; and if he fails to do so he will run the risk of forfeiting the protection given by S.131 of the Negotiable Instrument Act but 'reasonable care' will depend on the facts and circumstances of the case. The courts have tended to accept the practices and procedures which bankers lay down for themselves, but that can by no means be decisive.

Q15. I had taken certain loan from my Bank and I defaulted in making payment of a couple of installments. The Bank thereafter to refuse to give me services of their Bank on that ground. Can the Bank stop operation of my current account or interfere in my day to day business transaction ?

A. Subject to Bank's right to sue for arrears the customer concerned the bank is to allow the operation of one current account, which will be free from the incidence of banker's lien so as to enable the party to carry on its normal day to day business transactions, to obtain letters of credit at full margin and to enable payment on several heads.

Q16. I instituted a divorce proceedings against my wife which is pending in the court. We had a locker, which could be operated by both of us. During the continuance of the case my wife withdrew all the contents of the locker. Is her action justified in law and what should I do ?

A. When a joint locker is operatable by both the spouses, removal of contents of locker by one spouse during the pendency of a matrimonial proceeding between the parties is improper.

Q17. My father had pledged certain Gold ornaments with the State Bank against sudden loan taken by him. My father has since died and I approach the Bank for release of the ornaments and offered them to pay the amount. The Bank is however refusing to do the same what should I do ?

A. Gold ornaments pledged with a Bank as security for loan obtained do not fall within the term "security" or "debt" and as such, bank cannot insist on a succession certificate when on the death of pledgor his successor approaches the bank for release of ornaments on payment of all dues.

Q18. What are the duties of a Bank in payment of the amount where a confirmed letter of credit is open with the Bank.

A. The opening of a confirmed letter of credit constitutes a bargain between the banker and the vendor of goods which imposes on the banker an absolute obligation to pay. Duties of a bank under a letter of credit are created by the document itself, but in any case it has the power and is subject to the limitation which are given or imposed by it, in the absence of appropriate provisions in the letter of credit. The banker owes a duty to the buyer to ensure that the documents tendered by the sellers under a credit are complied with.

Q19. I paid to a lawyer by cheque to process my papers for Canadian immigration in 1996. As of today he has not done anything, he does not reply to my registered letters, but tells me that he will repay the amount very soon, when I called him numerous times from my residence in America where I am staying for past two years. What is my remedy?

A. You can file suit for recovery and damages against the said Lawyer at Calcutta only. You can also approach the Consumer Court at Calcutta for the recovery of the amount. The limitation for recovery suit is three years from the date of payment. However, in Consumer Court, limitation is one year from the last correspondence of refusal. That apart, you can also lodge a complaint with the Bar Council of Calcutta against the said lawyer for his conduct and seek cancellation of his license.

Q20. We had got one car financed in the year 1996 for two years 1997-1988 -1999. The cost of vehicle at the time of finance was Rs.10. We paid the Margin money of Rs. 5 to ABC by Bank cheque and got the balance amount of Rs. 5 financed from the said ABC company. The monthly installment we paid was Rs. 1. According to the cheques issued and the statement of records we received from the finance company we came to know they have financed us Rs. 6 and the Margin money they have received is 4. We informed the company the margin money we have paid is Rs. 5 and not 4 but they did not listen to us and kept on sending cheques for clearance in the bank. We have never got any cheque dishonored or even never got any cheque delayed for clearance. We had been sending reminders to the finance company to refund us Rs. 1, which they have financed us in excess. But till today we have not received any reply from the finance co. Now even the case is cleared almost 9 months have passed. We have been demanding for the money and also the clearance certificate but they are not bothered at all and do not intent to send the clearance certificate. Please give us an opinion as to what should we do?

A. You should file a complaint with Consumer Forum for recovery of the amount and amount and damages for breach of contract and harassment. From the facts stated by you, if can be easily proved that the company is trying to cheat you.

Q21. The bank has towed away a vehicle on account of default of 2 installments. The concerned party has offered to pay the defaulted installment but the bankers have refused to return the vehicle and have issued a letter saying that the vehicle has already being sold & are demanding payment of the entire loan amount . Kindly advice the legal options available to the owner of the vehicle hypothecated to the bank?

A. You can file the suit for recovery of car or in the alternative for damages you have suffered. The bank has no right to sell the car without giving notice to you.



2 - Question of the Day : If a Subsidiary Company increases its Authorised and Paidup Share Capital without Knowledge of Holding Company just to dilute the sharholding percentage. Kindly inform what are the precautions in legal terms to be taken by a Holding Company to Control the increase or decrease the Paid up as well as Authorise Share Capital in its Subsidiary Companies.

Answer : Under the Company Law, the authorised capital of the company can be increased at the EGM of the shareholders by passing a ordinary as well as special resolution. Under the circumstances, a subsidiary company can not increase the authorised capital on its own or without the consent of Holding company. However in case of increase of paid up capital by the subsidiary company within the limit of authorised capital, the holding company can take the precaution by having control over the composition of board of directors of the subsidiary company.

Q1. Section 391 to 394 of the Companies Act, 1956 provide provide interalia for amalgamation of companies through order of the court. In understand that once the transferor company merge with the transferee company, existence of transferor company is lost by virtue of court order. In the light of above my question are :

1. Is my understanding correct ?

2. What is the difference between loss of existence of company by way of liquadation and winding up.

Q2. In connection with amalgamation u/s.395 i.e. by takeover of shares by the acquiring company, my questions are as follows :

1. This section contemplates amalgamation of companies without reference to court ; does it means that after complying with all the formalities amalgamation in real sense i.e. vesting of all the assets and liabilities of the transferor company is affected?

2. Is existence of the transfer of company is lost by virtue of this provision.

A. With respect to your query on Section 391 to 394 of the Companies Act, it is correct that once amalgamation take place under Section 391 to 394 of the Companies Act, the existence of transferor company is lost by virtue of court order. With respect to your query no. 2 of this very subject, the company is liquidated by winding-up procedures and accordingly it loses its existence once it is wound up. Regarding your query of amalgamation under Section 395, i.e.; by take over of shares by the acquiring company, it is submitted that this section contemplates another form of arrangement and not amalgamation and does not require any application to the court under Section 391 for carrying out the scheme. In this case also the usual mode is for the acquire company, i.e.; transferee company to make an offer to the shareholders of transfer of company to purchase their shares in the transferor company at a stated price which is usually higher or more attractive than the prevailing marketing price and to fix a time within which the offer is to be accepted with a condition usually added to the effect that if a specified percentage of the shareholders do not accept the offer the offer is to be void. The offer is to buy the Transferor Company's share either for cash or in exchange for the shares of the said company. If the offer is accepted by all the transferor company shareholders, there is no problem. If the specified percentage of the transferor company's shareholders accept the offer, the Transferee Company will then purchase their shares and would acquire the shares in the manner provided by the said Section. The merit of this scheme is that without resort to tedious court procedures take over is effected. Only in the cases where the dissenting shareholders interest, the procedure describe by the section will have to be followed. It provides machinery for adequately safeguarding the rights of the dissenting shareholders also. It may also be noted that the approval by the 9/10th in value of the shareholders need not necessarily be given at the meeting of the shareholders nor is the court direction necessary for holding the meeting nor the same is required to be held under the courts supervision. The consent of the members given in any other manner such as subscribing one's signature to the scheme will be sufficient. Section 395 applies only where there is a scheme and in there is not scheme or contract involving transfer of shares the section will not apply. Furthermore, for the section there must be a transfer company and transferee company. The Transferee Company must be a company registered under the Act. With respect to your query no.2, the existence of the transferor company will not be lost as it only an arrangement and rather than a hostile take over it is a normal take over where all the shareholders have agreed such other persons in the transferring company to buy the shares. It will depend on the scheme of the contract as to what will happen to the Transferor Company.

Q3. I have not yet registered company with the registrar of companies. Please tell me as to how should I pay the taxes concerned on the revenues earned through it.

A. If you have not got the company registered with the Registrar of Companies then you would be taxed as association of persons or if you are the sole controller then as proprietorship.

Q4. Can a NRI be a director of an Indian Company.

A. Yes NRI can be a director of an Indian Company.

Q5. I have noticed that some companies are registering themselves as export oriented company in Software Parks set up by the Government, to get the full benefit of various schemes as per the recent budget. But they carry no such activity, instead they have no such export businesses as stated by them in the legal document. This registration is taking place with customs department with full excise inspection. I request you to tell me certain foolproof methods to bring the culprit to book of law. Whom should I approach for justice.

A. The course available for you would be to file a public interest litigation, by way of a writ petition in the High Court, giving details of the companies which are indulging in such illegal activities ( with documentary proof, if possible/available ) and highlighting the callousness and inaction on the part of the Government Department in checking such illegalities. You should make the Finance Ministry, Ministry of Industries, the Custom Authorities and Excise Authorities alongwith the companies indulging in the said illegal activities as party to the said writ petition.

Q6. We propose to merge two companies with the other, all three being in the same line of business. The purpose of the same is present consolidated picture and to bring in synergy. We have proposed following modes of bringing this companies together. (a) By amalgamation u/s.391-395 of the Companies Act, 1956. (b) By transferring all the assets and liabilities to the surviving company and winding up the other two companies. The only problem in following first option is the time taken by the Court for completing formalities of amalgamation. With reference to second option, I have the following questions : 1. Is it possible to transfer all assets and liabilities of two companies and then take these company into Members Voluntary Winding-Up as per the provisions of sections 49 onwards of the Companies Act for dissolution of the company ? As per my view there should not be any difficulty for the same. 2. Can we rather than taking two companies into Members Voluntary Winding-up apply to Registrar of Companies u/s. 560 of the Act to strike off the name of the two companies as defunct company ? My view for the above is that conditions to Section 560 states that "company is not carrying in any business". Therefor can we say immediately after transfer of all assets and liabilities of these two companies, it ceased to carry on business and it also does not intend to carry on any business (which is fact). Can on above ground ROC proceed to strike off the name ?

A. You propose to merge two companies with the third company in respect of which you have proposed the following two options:- 1. By amalgamation under Section 391-395 of the Companies Act. 2. By transferring all the assets and liabilities of the transferor companies to the surviving transferee company and winding up the other two companies voluntarily under Section 494 of the Companies Act. With respect to the second option of transferring the assets and liabilities of the company to another company while winding up voluntarily the transferor company, we would draw your attention to section 494 of the Companies Act, which provides that where the transferor company is proposed to be, or is in the course of being wound up voluntarily, and the whole or any part of its business or property is proposed to be transferred or sold to the transferee company, the liquidator of the transferor company, may, with the sanction of a special resolution of the company, do the following :- (a) Receive, by way of compensation for the transfer or sale of the property of the transferor company, shares policies or other like interests in the transferee company, for distribution among the members of the transferor company. or (b) Enter into any other arrangement, whereby the members of the transferor company may in lieu of receiving cash shares etc, participate in the profits of the transferee company. This section gives the liquidator the power to sell the property of the company for money or shares, debentures or other interests, where the transferor company is proposed to be wound or is in the course of being wound up voluntarily, and it is also proposed that the company's property may be transferred or sold to another company. Such a sale or arrangement shall be binding on the members of the transferor company. The dissentient members who did not vote in favour of the special resolution giving sanction to the sale or arrangement , may give note of their dissent to the liquidator within seven days from the date of passing of the resolution. Where the dissentient shareholder and the liquidator do not come to any agreement as to the value of his interest, the value has to be decided by arbitration under the provisions of the Arbitration and Conciliation Act, 1996. For winding up the company voluntarily as a members' voluntarily winding up , you shall have to follow the procedures laid down under Sections 484-488 of the Companies Act, 1956. In view of the above, the procedure for transferring the property of the transferor companies to the transferee company shall take place where the transferor company is proposed to be wound up or is in the course of winding up voluntarily. With respect to your query no.2, where you propose to get the name of the transferor companies struck off as a defunct company after transferring all the assets and liabilities of the two companies, I would remind you that there are only two ways whereby you can transfer the assets and liabilities of the transferor company to the transferee company, which are as follows :- 1. By amalgamation under Section 391-395 of the Companies Act. 2. By sale or transfer of property of the transferor Company under Section 494 of the Act. In case you opt for amalgamation, the transferor companies are automatically dissolved without going through the procedures of winding up. However, you shall have to go through the court procedures as laid down under the provisions of section 391-394 of the Companies Act. If you opt for the second option, that is under Section 494 of the Companies Act, then you can transfer the property of the transferor companies to the transferee companies only where the transferor company is proposed to be wound up voluntarily, or is in the course of being wound up voluntarily. Hence, in both in the above two options, whereby you transfer the property of the transferor companies to the transferee company, there is no applicability of section 560 of the Companies Act, which provides for striking off the name of defunct company.

Q7. I want to register a Pvt. Ltd. company. I want to know the procedure - exactly whom to go to and what to do ( I am based in Delhi) What will the whole procedure cost ? I also want to know what are the minimum capital requirements. Can I capitalize a company with sweat equity.

A. The procedure for registering a Private Limited Company is given below :-

1. For registering a Private Limited Company 2 or more persons are required who would be the subscribers to the Company's Memorandum.

2. Select a few suitable names in order of p[reference, which should indicate the main object of the proposed Company. An application in Form No. IA is prescribed in this regard by the Companies (Central Government's) General Rules and Forms, 1956, and a fee of Rs.500/- is payable with each application.

3. See that one of the promoters is kept as the subscriber to the memorandum and articles of association of the proposed company.

4. The Registrar of Companies will ordinarily inform within a period of seven days from the submission of your application whether any of the names applied for is available.

5. If the name is not available, you will have to apply again selecting fresh names.

6. Get the Memorandum and Articles of Association drafted suitably for a private limited company:- (a) For contents of form of Memorandum, refer to Sections 13 and 14. (c) Both the Memorandum and Articles of Association be printed and divided (d) into paragraphs numbered consecutively (Section 15 & 30) There is no form given in the Act for the Memorandum and the Articles of Association of a private company limited by shares. (Section 29).

7. Before finally printing the Memorandum and Articles of Association, get them vetted by the concerned Registrar of Companies, so that at the time of their registration there are less corrections and alternations.

8. Keep in mind that computer printed Memorandum and Articles of Association will be accepted and taken on record by all the Registrar of Companies from now on.

9. Get both the Memorandum and Articles of Association stamped as per the Indian Stamp Act or the relevant State Act and the notifications thereunder in force in your State.

10. Get both the Memorandum and Articles of Association signed by at least two subscribers, each of whom will also write in his own hand, his father's name, occupation, address and the number of shares subscribed for.

11. There will be at least one witness to these signatures as mentioned above who will sign and write in his own hand, his father's name, occupation and address.

12. The aforesaid two documents may be signed on behalf of the subscribers by their agents duly authorised by power of attorney.

13. In case of an illiterate subscriber ensure that he gives his thumb impression or mark which is described as such by the person writing for him.

14. Both the documents will then be dated.

15. See that the date given on these documents is any date after the date of stamping of them and not before that date.

16. Get the following forms duly filed up and signed :- (i) Declaration of compliance in Form No.1 by an advocate of the Supreme Court of a High Court, an attorney or a pleader entitled to appear before a High Court or a Secretary or a Chartered Accountant, in whole-time practice in India who is engaged in the formation of a company, or by a person named in the Articles as a director, manager or secretary of the company that all the requirements of the Companies Act, 1956 and the rules thereunder have been complied with in respect of registration and matters precedent and incidental thereto. (Section 33(2))' (ii) Notice of the situation of the registered office of the company in Form No.18 (Section 146). (iii) Particulars in favour of one of the subscribers to the memorandum of association or any other person authorising him to file the documents and papers for registration and to make necessary corrections, if any. This should be executed on non-judicial stamp paper of the requisite value. (Forms stated in sub-items (ii) and (iii) though required to be filed within 30 days of the incorporation of the company, are generally filed together with the Memorandum and Articles of Association.)

17. File the following with the Registrar of Companies within 3 months from the date of availability of name with necessary registration and filing fees. (i) The stamped and signed copy of the Memorandum and Articles of Association (Section 33). (ii) The forms mentioned above; (iii) Any other agreement, if referred to in the Memorandum and Articles of Association, as in that case, it will form a part of the Memorandum and Articles; (iv) Any agreement which the company to be incorporated proposes to enter into with any individual for appointment as its managing or whole-time director or manager. (Section 33(I)(c) (v) Original true copy of the Registrar of Companies' letter intimating about the availability of name.

18. Pay the registration and filing fee by way of cash or demand draft or treasury challan for registration of memorandum of Association and for filing of

19. The Registrar of Companies will then scrutinize the documents and papers filed for registration and, if necessary, on intimation, the authorized person will make necessary correction in them under his initials.

20. The Registrar of Companies will then register the company and issue the certificate of incorporation. (Sections 33 & 34).

21. The date given by the Registrar of Companies on the certificate of incorporation will be the date of incorporation of the company and on that date, the company will come into being as a separate legal entity. The cost for registering the Company will vary, depending particularly upon the Capital Structure of the Company. Registration Fees is prescribed under Schedule X of the Companies Act, which shall depend upon the Authorised Capital of the Company. The minimum Capital with which a Private Limited Company can be registered is Rs. 1 Lac. The provisions for issue of Sweat Equity as contained in S 79A of the Companies Act is as under : A company may issue sweat equity shares of a class of shares already issued if the following conditions are fulfilled , namely : (a) the issue of sweat equity shares in authorized by a special resolution passed by the company in the general meeting. (b) The resolution specifies the number of shares, current market price, consideration, if any, and the class or classes of directors or employees to whom such equity shares are to be issued. (c) not less than one year has, at the issue elapsed since the date on which the company was entitled to commence business. (d) The sweat equity shares of a company whose equity shares are listed on a recognized stock exchange are issued in accordance with the regulations made by the Securities and Exchange Board of India in this behalf. (e) In view of the above provisions, you can't issue Sweat Equity at the time of incorporation of your Company as one year has not elapsed since the date on which the company was entitled to commence business. Consequently, you can issue sweat equity shares only after the period of one year since incorporation.

Q8. Can we draw a Scheme of Amalgamation u/s. 395 (not u/s.391-394) for transferring all the Assets and Liabilities to Transferee Company and to acquire all shares (this is proposed in view that we can have amalgamation w.e.f. 01.04.2000, which is important date). Note : Both, the Transferor and Transferee companies are controlled by same management, therefore theoretically we do not have any problem in acquiring shares, assets and liabilities. If we answer to above question in affirmative sense, than we can proceed to wind up the Company Voluntarily (Members Winding-up). Liquidator can be one of the Directors of the Company who can wind up the company and finally official Liquidator can submit the report to the Court for liquidation. Is above proposal correct ? If we follow transfer of assets and liabilities as per Members Voluntary Winding-up, then we will not be able give effect to the same from 01.04.2000 (this date is important for us) since certain forms and other formalities are required to be followed i.e. intimation to ROC, Solvency declaration etc., which now is not possible so as to be effective from 01.04.2000.

A. We reiterate that there are only two ways whereby you can transfer the Assets and Liabilities of the Transferor company to the Transferee company which where explained to you vide our earlier reply dated 12.04.2000. You cannot draw a scheme of amalgamation under Section 395 of the Companies Act, 1956, for transferring the assets and liabilities of the Transferor Company to the Transferee Company. Section 395 provides for taking over a company without going to the court by acquiring the shares of that company. This section provides a mode for the acquiring company to make an offer to the shareholders of the Transferor Company to purchase the share at a stated price. It also provides a machinery for safeguarding the rights of the dissentient shareholders. Section 395 does not provide for any mechanism for transfer of assets and liabilities of the Transferor company to the Transferee company. So far as members' voluntary winding up is concerned, the voluntary winding up shall be deemed to commence at the time when the resolution for voluntary winding up is passed. As soon as affairs of the company are fully wound up, the liquidator shall call the General Meeting of the Company for the purpose of laying the account of the winding up before it. Within one week after the meeting, the liquidator shall send to the Registrar and the Official Liquidator, a copy of account and shall make a return to each of them. If the Official Liquidator makes a report to the Court that the affairs of the company have not been conducted in a manner prejudicial to the company or to public interest, then, from the date of submission of the report, the company shall be deem to be dissolved. The declaration of solvency under Section 488 of the Companies Act, must be made within five weeks before the passing of the resolution for winding up. The declaration must be registered with Registrar before the date of the resolution.

Q9. How does a director resign from the board in a Pvt. Ltd., firm if the Board fails to accepts his resignation ?

A. There is no provisions in the Companies Act, relating to the resignation of his office by a director of a company. If there is any provision in the articles of the company giving the right to a direction to resign at any time, the resignation will take affect without any need for its acceptance by the Board. Where a director is elected or has contracted to act for a fix period, his resignation before the expiration of the period may make him liable for damages, unless the articles permits such resignation. In the absence of a provision in respect of resignation under the Act or under the articles of the company, the resignation tendered by a director unequivocally in writing shall take effect from the time when such resignation is tendered. It is advisable that the resignation should be in writing and also indicate the time when it is to take effect. The Directors cannot refuse the resignation of a co-director unless such a provision is there in the Articles of Association of Company.

Q10. I took the connection of internet from XYZ ISP Company. I choose Freedom plan. In that I paid lump sum amount and was told that I would be getting 1 hour daily free internet time extra time will be charged at Rs.10 per hour. I clarified and was told that whole of my use/age time will be added and on that I will be charged extra. However, when the bill came I was shocked to see the bill made in such a way that if I have used internet for about 70 minutes then they have charged it for one hour by running next ten minutes to one hour. If I have used it for two hour five minutes I am supposed to pay for two hours because extra one hour and five minutes is taken as two hour. Services are also horrible and their claim that they provide fast service is also false. I will like to mention here that when MTNL offered their service they openly claimed that their service is slow but they will improve it. The response of the company is bad and they are bent upon cheating people.

A. In the query raised by you, what is important to be seen is as to what were the terms of the freedom plan in this regard. Whether the same mentioned specifically about the fact that if the user is even for 5 minutes, the same would be construe as one hour usage. If such a term is there, then the fact that you orally clarified from the company and were informed that your entire usage time would be added, would be meaningless, since the same will not stand to reasoning and would be against a written contract. If the terms were not there in this regard then you can very well approach a Consumer Court and can also complaint about the deficiency of service before the said court. You can also file a petition before the MRTP Commission for unfair Trade Practice on the part of the company.