Evidence & Types of Evidence

Evidence & Types of Evidence

The term Evidence derived from the Latin terms ‘Evident’ or’ evidere’ means to show clearly, to discover, to ascertain or to prove. Evidence is a means of proof. Indian evidence Act provides the fact on which evidence can be produced before the court. It also provides admissibility and inadmissibility of evidence. Once the evidence is proved, then comes the question of the evidentiary value of the evidence produced before the Court. If the evidential value of the evidence against the accused is strong enough to prove the guilt of an accused beyond a reasonable doubt then only the court can convict the person. There are different types of Evidence that can be proved before the Court. Let’s understand the types of Evidence as follows:
1. Oral Evidence
2. Documentary Evidence
3. Primary Evidence
4. Secondary Evidence
5. Real Evidence
6. Hearsay Evidence
7. Direct Evidence
8. Indirect Evidence or Circumstantial Evidence
 
1. Oral Evidence
Oral Evidence means all statements which the court permits or requires to be made before it by witnesses, in relation to the matter of fact under inquiry. Section 59 of the Indian Evidence Act reads as ‘all facts, apart from the contents of a document or electronic records shall be considered as oral evidence’. When it comes to recording statements, most of the evidence is given orally hence everything in a way is oral evidence. Even if a witness cannot communicate orally whatever they say in writing or any other format to the court will still fall under the category of oral evidence. The oral evidence of a witness cannot be dismissed on the grounds of the non-production of medical evidence. For example, if the witness/victim is a person whose throat has been slit and she can point out to the accused, then her statement would still fall under the category of oral evidence.
 
Section 119 of Indian Evidence Act states that witness who is unable to speak may give his evidence in any other manner in which he can make it intelligible, as by writing or by signs; but such writing must be written and the signs made in open Court, evidence so given shall be deemed to be oral evidence. Section 119 is an extension of Oral Evidence.
 
Oral is a different form of the word Verbal in the case of Queen Empress Vs. Abdullah (27th February 1885) Hon’ble chief Justice of Allahabad W.C. Petheram discuss the difference between Verbal and Oral, Verbal means by the word, it is not necessary that the words should be spoken. If the term used in the section were oral, it might be that the statement must be confined to words spoken by the mouth. But the meaning of Verbal is something Wider
 
Section 60 of the Indian Evidence Act states that Oral evidence must, in all cases, whatever, be direct; that is to say:
• if it refers to a fact which could be seen, it must be the evidence of a witness who says he saw it;
• if it refers to a fact which could be heard, it must be the evidence of a witness who says he heard it;
• if it refers to a fact which could be perceived by any other sense or in any other manner, it must be the evidence of a witness who says he perceived it by that sense or in that manner;
• if it refers to an opinion or to the grounds on which that opinion is held, it must be the evidence of the person who holds that opinion on those grounds:
 
Provided that the opinions of experts expressed in any treatise commonly offered for sale, and the grounds on which such opinions are held, may be proved by the production of such treatises if the author is dead or cannot be found; or has become incapable of giving evidence, or cannot be called as a witness without an amount of delay or expense which the Court regards as unreasonable:
 
Provided also that, if oral evidence refers to the existence or condition of any material thing other than a document, the Court may, if it thinks fit, require the production of such material thing for its inspection.
It was held under the case of State Vs. Rajal Anand that section 60 of the Indian Evidence Act only includes the word “direct” and excludes hearsay. Any evidence given must be direct and the hearsay evidence does not hold any area under oral evidence as it is not direct. But the doctrine of Res-gestae has been observed as an exception to the rule of hearsay which explained that any person who has experienced any series of relevant facts, his testimony after the incident even if he has not seen the crime being committed will be accepted.
 
2. Documentary Evidence:
Vox Audita Perit, Littera Scripta Manet is an Ancient Roman Proverb which means “the Spoken word vanishes, the written word remains”. The law of evidence recognizes the superior credibility of documentary evidence as against oral evidence.
 
Section 3 of The Indian Evidence Act provides that documentary evidence means all documents including electronic records produced for the inspection of the Court; such documents are called documentary evidence. Documents are divided into two categories, Public Documents, and Private Documents. The production of Documents in Court is regulated by the Civil Procedure Code and the Criminal Procedure Code. The contents of documents must be proved either by the production of a document which is called Primary Evidence or Secondary Evidence.
 
The Contents of documents may be proved either
A. By primary evidence i.e. by producing the document itself
B. By Secondary Evidence
A document which is proved to be genuine and satisfied the requirement of law should be relied upon. In the case of Afzauddin Ansari Vs. State of Bengal, 1997 it was held that ‘A man may lie but a document will never lie’.
 
A. Primary Evidence
Section 62 of the Indian Evidence Act provides for the provision of primary evidence. Primary evidence means the documents itself produced for the inspection of the Court. Primary evidence is considered to be the superior class of evidence. Such evidence is an original document that needs to be submitted before the court for inspection. It is admissible without any prior notice. Such evidence must be presented before the court before the secondary evidence. Secondary evidence can be presented only in the absence of primary evidence by explaining the reason for the absence of such evidence. Primary evidence, more commonly known as best evidence, is the best available substantiation of the existence of an object because it is the actual item. It differs from secondary evidence, which is a copy of, or substitute for, the original. If primary evidence is available to a party, that person must offer it as evidence.
 
Elements of Primary Evidence
• The original document itself produced for the inspection of the court
• When the Document is executed in several parts, each part is the primary evidence of the document.
• When the Document is executed in Counterparts, each counter will be primary evidence against the parties executing it or signing it for example, in the case of cheque, the main cheque is signed by the drawer so that it is primary evidence against him and the counterfoil may be signed by the payee of the cheques so that it will be primary evidence against the payee.
 
• Where several documents are made by one uniform process, but they are copies of the common original, they are not primary evidence of the contents of the originals. Example, by printing, lithography, or photography.
 
In the matter of Prithvi Vs. State of H.P, it was held that the carbon copy was made by a uniform process of the certificate of a doctor (as to the condition of a rape victim) given in the performance of professional duty. It was held to be primary evidence within the meaning of the explanation to Section 62.
 
Section 276 of the succession Act, 1925 requires that an application for probate or letters of administration should be made with the “will” annexed. Since this does not necessarily mean “original will”, a copy certified by sub-registrar was allowed to be annexed.
 
In the matter of Murarka Properties Pvt. Ltd. Vs. Bihari Lal Murarka 1978 it was held by the supreme court that where there is documentary evidence available, the oral evidence must not be given much weight.
 
B. Secondary Evidence
Section 63 provides for Secondary Evidence means and includes:
• Certified copies
• Copies made from original by a mechanical process and copies compared with such copies
• Copies made from or compared with the original
• Counterparts of documents against the party who did not execute them
• Oral accounts of the contents of the document by a person who has seen it.
 
These are those evidence which is entertained by the court in the absence of the primary evidence. Therefore it is known as secondary evidence.
 
If the parties want to prove a fact by secondary evidence then they have to satisfy the conditions given in Section 65 of the Indian Evidence Act.
 
Section 64 of the Indian Evidence Act state that Document must be proved by primary evidence except in the cases hereinafter mentioned i.e. in Section 65.
 
In the matter of Malay Kumar Ganguly Vs. Sukumar Mukherjee, 2010 it was held that the document which is otherwise inadmissible cannot be taken in evidence only because no objection to the admissibility thereof was taken.
 
Section 65 exception to the rule laid down in Section 64
 
Section 65 of the Indian Evidence Act state that Secondary evidence may be given of the existence, condition, or contents of a document in the following cases:
 
a. When the Original Document is in possession of :
I. A person against whom it is to be proved, or
II. Any person out of the reach of, or not subject to the process of the court, or
III. Any person who is legally bound to produce it, does not produce it even due notice has been given.
 
b. When the existence, condition or contents of the original have been proved to be admitted in writing.
c
. When the original has been destroyed or lost.
 
d. When the original is of such a nature as not to be easily movable.
 
e. When the original is a public document within the meaning of section 74.
 
f. When the original is a document of which a certified copy is permissible.
 
g. When the originals consist of numerous accounts or other documents.
In cases (a), (c) and (d), any secondary evidence of the contents of the document is admissible.
In case (b), the written admission is admissible.
In case (e) or (f), a certified copy of the document, but no other kind of secondary evidence, is admissible.
In case (g), evidence may be given as to the general result of the documents by any person who has examined them, and who is skilled in the examination of such documents.
 
In the matter of Satyam Kumar Sah Vs. Narcotic Control Bureau, 2019 it was held that Section 65 does not contemplate the filing of any application or seeking prior permission of the court for leading secondary evidence.
 
A party producing secondary evidence before a court has to satisfy the condition mentioned in section 65 of the Indian evidence at and only when the condition of section 65, Indian Evidence Act are satisfied, secondary evidence would be admissible.
 
In the matter of Dhanpat Vs. Sheo Ram (Deceased) Through Lrs. & Ors on 19th March 2020, held that as per terms of Section 65(c) of the Evidence Act, there is no requirement to file an application during producing secondary evidence to put on record. Further, the Hon’ble Court observed that the court cannot deny considering the secondary evidence on the basis that the application for permission to lead the secondary evidence was not filed.
 
Admissibility of Electronic Evidence (Section 65B of Indian Evidence Act, 1872) :
Section 3 of the Evidence Act, 1872 defines evidence as under: “Evidence” – Evidence means and includes all documents including electronic records produced for the inspection of the court. Such documents are called documentary evidence.
 
Electronic Records: Section 2(t) of the Information Technology Act, 2000 “electronic record” means data, record or data generated, image or sound stored, received or sent in an electronic form or microfilm or computer generated microfiche.
 
Electronic Certificate: An electronic certificate is a set of data enabling identification of the holder of the certificate, secure exchange of information with other persons and institution, and electronic signing of data sent in such a way as to enable verification of its integrity and origin.
 
Section 65B of the Indian Evidence Act,1872 deals with the admissibility of the electronic records. In this section clause, 1 to 5 provide the information regarding which electronic records can be produced before the court, which electronic records treated as a deemed document, when the document will be admissible in the court, and which certificates required producing the Electronic document before the court.
 
Let’s understand the clauses 1 to 5 of Section 65B of Indian Evidence Act, 1872
 
Sec. 65B (1): Notwithstanding anything contained in this Act, any information contained in an electronic record:
 
• which is printed on a paper, stored, recorded or
• copied in optical or magnetic media
• produced by a computer
shall be deemed to be also a document, if the conditions mentioned in this section are satisfied
in relation to the information and computer in question and shall be admissible in any proceedings, without further proof or production of the original, as evidence of any contents of the original or of any fact stated therein of which direct evidence would be admissible.
In the matter of Abdul Rahaman Kunji Vs. The State of West Bengal, The Hon’ble High Court of Calcutta while deciding the admissibility of email held that an email downloaded and printed from the email account of the person can be proved by virtue of Section 65B r/w Section 88A of Evidence Act. The testimony of the witness to carry out such a procedure to download and print the same is sufficient to prove the electronic communication.
 
Sec. 65B (2): The conditions referred to in sub-section (1) of Section 65B in respect of a computer output shall be the following, namely:
 
• The computer from which the record is generated was regularly used
• Information was fed in computer in the ordinary course of the activities of the person having lawful control over the computer
• The computer was operating properly, and if not, was not such as to affect the electronic record or its accuracy Information reproduced is such as is fed into the computer in the ordinary course of activity.
 
Sec.65 B(3): The following computers shall constitute a single computer:
• by a combination of computers operating over that period; or
• by different computers operating in succession over that period; or
• by different combinations of computers operating in succession over that period; or
• in any other manner involving the successive operation over that period, in whatever order, of one or more computers and one or more combinations of computers,
 
Sec. 65B (4): Regarding the person who can issue the certificate and contents of the certificate, it provides the certificate doing any of the following things:
• identifying the electronic record containing the statement and describing the manner in which it was produced;
• giving the particulars of the device
• dealing with any of the matters to which the conditions mentioned in sub-section (2) relate
 
and purporting to be signed by a person occupying a responsible official position in relation to the operation of the relevant device or the management of the relevant activities (whichever is appropriate) shall be evidence of any matter stated in the certificate, and for the purposes of this subsection, it shall be sufficient for a matter to be stated to the best of the knowledge and belief of the person stating it.
In the matter of Anvar P.V. Vs. P.K. Basheer, (2014) 10 SCC 473 it was held that the certificate required under Section 65B (4) is a condition precedent to the admissibility of evidence by way of electronic records.
 
In the matter of Shafhi Mohammad Vs. State of H.P (2018) 2 SCC 801 the division bench had clarified that the requirement of a certificate under Section 64B(4), being procedural, can be relaxed by the Court whenever the interest of justice so justifies, and one circumstance in which the interest of justice so justifies would be where the electronic device is produced by a party who is not in possession of such device as a result of which such party would not be in a position to secure the requisite certificate.
 
Law on the admissibility of Electronic Evidence without Certificate under Section 65B of Evidence Act, 1872
 
The Supreme Court clarified that the required certificate under Section 65B(4) is unnecessary if the original document itself is produced. Let’s understand through the recent Judgment Passed by the Supreme Court in the matter of Arjun Panditrao Khotkar Vs Kailash Kushanrao Gorantyal, 2020 decided on 14.07.2020
 
The 3 Judge bench in the above case, holding the Shafhi Mohammad judgment to be incorrect said “the major premise of Shafhi Mohammad (Supra) that such certificate cannot be secure by a person who is not in possession of an electronic device is wholly incorrect. An application always is made to a judge for the production of such a certificate from the requisite person under Section 65B (4) in the case in which such a person refuses to give it.
 
The Court also clarified the confusion over the aforementioned sentence in the Anvar P.V. case which reads as “The clarification referred to above is that the required certificate under section 65B(4) is unnecessary if the original document itself is produced”. This can be done by the owner of a laptop computer, computer tablet, or even a mobile phone, by stepping into the witness box and proving that the concerned device, on which the original information is first stored, is owned and/or operated by him. In cases where the “computer” happens to be a part of a “computer system” or “computer network” and it becomes impossible to physically bring such system or network to the Court, then the only means of providing the information contained in such electronic record can be in accordance with Section 65B(1), together with the requisite certificate under Section 65B(4).”\
 
3. Real Evidence
Real Evidence Real evidence, often called physical evidence, consists of material items involved in a case, objects and things the Court can physically hold and inspect. Examples of real evidence include fingerprints, blood samples, DNA, a knife, a gun, and other physical objects. Real evidence is usually admitted because it tends to prove or disprove an issue of fact in a trial. Real evidence is usually involved in an event central to the case, such as a murder weapon, clothing of a victim, narcotics or fingerprints. In order to be used at trial, real evidence must be relevant, material, and authentic. The process whereby a lawyer establishes these basic prerequisites is called laying a foundation, accomplished by calling witnesses who establish the item’s chain of custody.

In the matter of Marada Venkateswara Rao Vs. Oleti Vana Laxmi AIR 2008 AP 195, the property in dispute was self-acquired property of the mother. The suit for partition was filed by the plaintiff (Daughter). The son was the defendant. He stated that the plaintiff and her brother were destitute and not born to his mother. As such, they had no right of inheritance. The Court said that the maternity of the parties was thus disputed. The Court directed both the parties to undergo a DNA test.
 
4. Hearsay Evidence
Hearsay Evidence means the statement o witness not based on his personal knowledge but on what he heard from others It is not direct evidence. Evidence that is not direct is what he heard from a third party who is not himself called as a witness. The evidence of such a witness is inadmissible to prove the truth of the fact stated.
 
In the matter of Subramaniam’s case (1956) MLJ 220, the Accused was charged with unlawful possession of ammunition. His defense was that he had been captured by terrorists and was acting under duress. The issue that arose whether the statement made by the terrorist to the appellant which he will be killed if he did not carry the ammunition amounted to hearsay?
 
The trial judge held that the evidence of his conversation with terrorists was inadmissible unless the terrorist testified. Subramaniam was convicted. He then filed an appeal.
 
The Privy Council allowed his appeal. The hearsay rule was not infringed because his evidence about what the terrorists had said to him was not adduced in order to show that what the terrorists had said was the truth but in order to show that threats had in fact been made.
 
The reasons why hearsay evidence is not received as relevant evidence are:
(a) The person giving such evidence does not feel any responsibility. The law requires all evidence to be given under personal responsibility, i.e., every witness must give his testimony, under such circumstances, as expose him to all the penalties of falsehood. If the person giving hearsay evidence is cornered, he has a line of escape by saying “I do not know, but so and so told me”,
(b) Truth is diluted and diminished with each repetition and
(c) If permitted, gives ample scope for playing fraud by saying “someone told me that………..”. It would be attaching importance to false rumor flying from one foul lip to another. Thus the statement of witnesses based on information received from others is inadmissible.
 
Exceptions to hearsay:
• Res gestae under Section 6 of Indian Evidence Act: The statement of a person may be proved through another person who appears as a witness if the statement is a part of the transaction issues.
 
The doctrine of Res gestae is portrayed under section 6 of the Indian Evidence Act, 1872 in the following words:
 
Facts which though not in issue are so connected with the facts in issue so as to form a part of the same transaction, are relevant, whether they occurred at the same time and place or at different times and places”
 
Res gestae originally was used by the Romans to mean acts are done or actus. The English and American writers described it as facts that form the same transaction. Res gestae are those facts which automatically or naturally form a part of the same transaction. They are the acts talking for themselves. These facts become relevant due to their association with the main transaction which itself is a relevant fact in the nature of fact in issue. Circumstantial facts are admitted as forming a part of res gestae i.e. it being a part of the original proof of what has taken place. Statements may also accompany physical happenings like gestures. Things said or acts done in course of transaction amounts to res gestae.
 
The statements made or acts done have to be spontaneous and simultaneous to the main transaction. They may be made or done before or after the main transaction, but the time gap has to be very little so as to render it to be a res gestae i.e. it has to be done or made immediately before, or during or immediately after the occurrence of the main transaction. Where the time gap is enough for fabrication or concoction, then a statement or act shall not fall under section 6.
 
According to Section 6, the facts forming a part of the same transaction may or may not occur at the same place or same time. For example in the case of Ratten V. Queen, the victim (wife) had called the police for help but before the operator could connect her to the police, her call was disconnected. Later the police found her dead body from her house from where the call was made and the time of death and the time of the phone call was almost the same. The call made to the police came under the purview of section 6 and thereby defeated the accused husband defense that he accidentally fired his wife.
 
• Statement in Public Document under Section 74 of Indian Evidence Act: The Statement in Public Document such as the Acts of the Parliament, official books, and registers can be proved by the production of document and it is not necessary to produce before the court the draftsman of the documents.
 
• Admission and Confession (under Section 17 – Section 23 and section 24 – Section 30)
 
• Dying Declaration: Section 32 (1) When it relates to cause of death.—When the statement is made by a person as to the cause of his death, or as to any of the circumstances of the transaction which resulted in his death, in cases in which the cause of that person’s death comes into question.
 
Such statements are relevant whether the person who made them was or was not, at the time when they were made, under the exception of death, and whatever may be the nature of the proceeding in which the cause of his death comes into question.
 
The Apex Court in its decision in P.V. Radhakrishna v. State of Karnataka held that ‘the principle on which a dying declaration is admitted in evidence is indicated in Latin maxim, Nemo morturus procsumitur mentri, a man will not meet his maker with a lie in his mouth. Information lodged by a person who died subsequently relating to the cause of his death is admissible in evidence under this clause.
 
• Evidence given in the former proceedings (Section 33): It is provided that evidence given by a witness in the proceeding can be used as evidence of the truth of the facts stated in any subsequent proceedings between the same parties, provided that the witness has died or is for some other reason not available.
 
Statement of experts in treaties (Section 60): provides that opinion are proved by production of such treaties if the author is dead or cannot be found or become incapable of giving evidence.
 
5. Direct Evidence
Direct evidence is evidence that will prove the point in fact without interpretation of circumstances.. It is any evidence that can show the court that something occurred without the need for the judge to make inferences or assumptions to reach a conclusion. An eyewitness who saw the accused shoot a victim would be able to provide direct evidence. Similarly, a security camera showing the accused committing a crime or a statement of confession from the accused admitting to the crime could also be considered direct evidence. Direct evidence should not be confused with the concept of direct examination, which is the initial examination and questioning of a witness at trial by the party who called that witness. And, although each witness who provides evidence could, in theory, be providing direct testimony of their own knowledge and experiences, that evidence is often not direct evidence of the offense itself.
 
6. Circumstantial Evidence or Indirect Evidence
Circumstantial evidence is an Evidence that relies on an inference to connect it to a conclusion of fact. such as a fingerprint at the scene of a crime.
 
Peter Murphy defines Circumstantial Evidence as “Evidence from which the desired conclusion may be drawn. Evidence requires the court not only to accept the evidence presented but also to draw an inference from it.
 
Supreme Court has given the guidelines for admissibility of the Circumstantial Evidence in the matter of Bodh Raj Vs. State of Jammu and Kashmir as follows :
• The Circumstance from where the conclusion of guild is to be drawn ought to be established. The circumstances involved “must” or “should” and not “maybe” established.
• The facts, therefore, established ought to be as per the hypothesis of the guild of the accused.
• Circumstances ought to be conclusive in nature and tendency.
• There should be a complete sequence of proof so as to not leave any affordable ground for the conclusion in line with the innocence of the defendant and should show that the offense must have been committed by the defendant.
 
Circumstantial Evidence is especially important in civil and criminal cases where direct evidence is lacking.
 
In the matter of Ramawati Devi Vs. State of Bihar, it was held that in a proper case, it may be permissible to convict a person only on the basis of a dying declaration in the light of the facts and circumstances.
 
In the matter of Ummed Bhai Vs. State of Gujarat, it was held that in the absence of direct evidence a person can be convicted on the basis of circumstantial evidence alone.
 
In the matter of Nalini Singh Vs. State of Tamilnadu and 25 others, it was held that the well-known rule governing circumstantial evidence is that each and every incriminating circumstance must be clearly established by reliable evidence. “The circumstance proved must form a chain of event” from which the only irresistible conclusion about the guilt of the accused can be safely drawn and no other hypothesis is possible

Brief about The Trade Union Act

Brief about The Trade Union Act

Introduction
Over the years, trade unions have emerged as an essential feature of industry in almost every country. In the early stages of industrialisation, there was lack of legal protection for workers which resulted in exploitation of workers by their employers, leading to social injustice. Often the employers had the upper hand in deciding the terms of employment of the workers which is benefitable to the employers and not the workers. This led the workers in forming groups or unions, in order to put forward their demands to their employers. The need for an organized trade union was first realized in 1875 by various philanthropists and social workers like Shri Sorabji Shapaji Bengali and Shri N.M. Lokhandey whose constant efforts resulted in the formation of trade unions like The Printers Union of Calcutta (1905), the Bombay Postal Union (1907).
 
The Trade Union Act, 1926 provides for the registration of Trade Unions in India and in certain respects to define the law relating to registered Trade Unions of India. The main objective of the Trade Unions Act is to provide recognition of trade union for facilitating collective bargaining for certain undertakings. The act helps the various trade unions to raise up their issues to the employer and thus also lists out their rights and obligations. If you are an employer, you must have conversed with the union leaders or representatives for various issues.
 
Applicability
This act extends to the whole of India. A trade union can only be registered under the Trade Unions Act, 1926, and cannot be registered under any other act including the Societies Registration Act or the Co-operative Societies Act or the Indian Companies Act. A Civil Servants’ Union cannot be registered under the Trade Unions Act, 1926. In the case of Tamil Nadu N.G.O Union vs. The Registrar of Trade Unions (AIR 1962, Mad. 2341), the Madras High Court dismissed the appeal on the ground that, to get the trade union registered under the Trade Unions Act, 1926, the members of the union must be workmen engaged in trade, business or industry and the appellants in this case are not in that capacity, as they are civil servants engaged in the tasks of the sovereign government.
 
Thus, this act empowers all employees/workmen employed in an establishment to form a union and get it registered under the act. It is to note that there are various stare amendments to this central act. For example, in Maharashtra, there is Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices (MRTU & PULP) act, 197. This act lists out the various process for recognition of a trade union originating in the state in Maharastra.
 
Importance for Pvt Companies etc.
The Trade Union Act plays an important role in an employer’s business or company or establishment. For every employer in order to keep his business in a running condition, he must consider the various requests from its workers or employees. Good relations between the employer and the workers boosts the productivity and quality of the business. While it is important for the employer to know about his workers demands and requests, the workers too shall be well aware of the employer’s ability to fulfil such demands or requests.
 
The act gives power to the employees to form a union and put forward their views regarding the terms of employment and other issues in front of the management of the company or establishment. Imagine you are an employer and have 50-60 employees working in your establishment. Majority of the employees have some or the other issues related to their term of employment and they come to you for a settlement. Being an employer, it would be a difficult task to pay attention to the same kind of issues which concerns the employees and thus, it’s always better to address those issues when the employees’ approach in group. An employer having a registered trade union in his establishment would result in less employer-employee conflicts. It would also enable the workers to enter the process of collective bargaining with the employer for resolving trade disputes in the establishment.
 
Thus, for any private limited company, generating profit is the most important objective. Employees or workers acts like the building blocks of the company and thus it is important for an employer to know about his employee’s interests.

New MSME Rules, Filing Obligations, “Quick Payment Of Invoice Vis A Vis No Recovery Issues”

New MSME Rules, Filing Obligations, “Quick Payment Of Invoice Vis A Vis No Recovery Issues”

The term “MSME” stands for Micro, Small, and Medium Enterprises and is governed under the provisions of Micro, Small, and Medium Enterprises Development (MSMED) Act in 2006. Vide Notification Dated 26.06.2020, the Ministry of MICRO, SMALL AND MEDIUM ENTERPRISES has published the revised definition about MSME which is as under:
 
Enterprise Category = Turnover
  • Micro Enterprises < or + Rs. 5 Crore
  • Small Enterprises  > Rs. 5 Crore, < Rs. 75 Crore
  • Medium Enterprises = > Rs. 75 Crore, < Rs. 250 Crore
 
Quick Review of Revised MSME Rules:
a) Any person who intends to establish a Micro, Small or Medium Enterprise may file for MSME Registration Certificate online in the MSME Portal purely based on self-declaration with no requirement to upload any documents
 
b) Upon Registration, such person/ enterprise will be assigned a permanent identity number to be known as “Udyam Registration Number” and Udyam Registration Certificate will be issued
 
A] New Rules of MSME states clearly that the composite criteria of investment and turnover for classification of enterprise will be taken into account and is as under:
a) Rules have cleared that a composite criterion of investment and turnover will be made applicable for classification of an enterprise as Micro, Small or Medium
 
b) If an enterprise crosses the ceiling limits specified for its present category in either of the two criteria of investment or turnover, it will cease to exist in that category and be placed in the next higher category but no enterprise shall be placed in the lower category unless it goes below the ceiling limits specified for its present category in both the criteria of investment as well as turnover
 
c) All units with Goods and Services Tax Identification Number (GSTIN) listed against the same Permanent Account Number (PAN) shall be collectively treated as one enterprise and the turnover and investment figures for all of such entities shall be seen together and only the aggregate values will be considered for deciding the category as micro, small or medium enterprise
 
B] Calculation of Investment in Plant and Machinery or Equipment
It is relevant to note that now for Calculation of investment in plant and machinery or equipment will be linked to the Income Tax Return (ITR) of the previous years filed under the Income Tax Act, 1961 and wherein case of new enterprise no prior ITR is available, the investment will be based on self-declaration of the promoter of the enterprise but this shall not be allowed after 31st March of the financial year as this makes duty-bound on such new enterprise to file ITR which in any case is mandatory as per Income Tax Laws and also Companies Act if enterprise falls under Companies Act or LLP. Further, if the enterprise is a new one without any ITR, the purchase (invoice) value of a plant and machinery or equipment irrespective of new or second hand shall be taken into account excluding Goods and Services Tax (GST) on self-disclosure basis. It is interesting to note that the term “plant and machinery or equipment” of the enterprise will have the meaning as meant under Income Tax Rules, 1962 and calculation be done subject to exclusion as stated under the Act and Rules of MSME
 
C] Calculation of Turnover:
Exports of Goods or Services or Both shall be excluded while calculating the turnover of any enterprise whether micro, small, or medium. This is to avoid any wrong entries of turnover and to avoid any kind of misinformation, the information which is being given to the MSME office will be linked to the Income Tax Act or the Central Goods and Services Act (CGST Act) and the GSTIN. Please note that from 01.04.2021, PAN and GSTIN will be mandatory for calculation of Turnover.
 
D] Penal Provisions for Incorrect Information
Any information was given by Enterprise either to get Certificate or raising the investment in Plant and Machinery or Equipment and or lowering the investment in Plant and Machinery or Equipment and or increase in turnover or decreasing and any false statement made shall be liable to such penalty as specified under section 27 of the MSMED Act.
 
Here, the Retailers shall be vigilant that they might have taken the MSME Certificate but now it will be easy for the Government to find out the incorrect information and if found so, action can be taken by the Government
 
E] Registration of Existing Enterprises 
Since there has been changed in the definition of MSME and also rules have been revised, the Rules makes it mandatory for existing enterprises to get register again on MSME Portal on or after the 1 st day of July 2020 or last by March 2021 with all correct information and if not, then they will be not taken as MSME and have to get new MSME Certificate
 
New Rules have made it mandatory for filing/updating your information and or transition period from one class to another class (classes here mean from small to medium, medium to micro, micro to medium, etc etc).
 
MSME Certificate Holder now mandatory has to update its information online in MSME Portal including the details of ITR and GST Return for the previous financial year and such other additional information as may be required, on self-declaration basis and it assumed that filing is done on correct information basis as any failure to update the relevant information within the period specified in the online MSME Portal will render the enterprise liable for suspension of its status and this will badly affect all your bill discounting facility and or recovery cases being filed at MSME Samadhan.
 
As informed that all and any information submitted with MSME office shall be correct as based on the information furnished or gathered from Government’s sources including ITR or GST return, the classification of the enterprise will be updated and whether the status is being upgraded or downgraded it will have its effect after one year or fresh financial year
 
F] MSME Bill Discounting Facility 
Micro, Small and Medium Enterprises (MSMEs), despite the important role played by them in the economic fabric of the country, continue to face constraints in obtaining adequate finance, particularly in terms of their ability to convert their trade receivables into liquid funds. In order to address this pan-India issue through setting up of an institutional mechanism for financing trade receivables, the Reserve Bank of India had published a concept paper on “Micro, Small & Medium Enterprises (MSME) Factoring-Trade Receivables Exchange” in March 2014.
 
The Reserve Bank of India (RBI) in 2017 instituted an online bill-discounting platform called The Trade Receivable Discounting System (TReDS) to give routinely cash-strapped MSMEs a way of raising funds by selling trade receivables from corporates. Three TReDS exchanges are licensed currently: Receivables Exchange of India (RXIL), a joint venture of the National Stock Exchange and SIDBI; Mynd Solution’s M1xchange; and A.TREDS, a joint venture of Axis Bank and mjunction services.
 
What exactly is TReDS?
The scheme for setting up and operating the institutional mechanism for facilitating the financing of trade receivables of MSMEs from corporate and other buyers, including Government Departments and Public Sector Undertakings (PSUs), through multiple financiers is known as Trade Receivables Discounting System (TReDS).
 
Following are the Salient Features of TReDS: 
• Unified platform for Sellers, Buyers and Financiers
• Eliminates Paper
• Easy Access to Funds
• Transact Online
• Competitive Discount Rates
• Seamless Data Flow
• Standardised Practices
 
TReDS platform ensures that MSMEs have access to a regular flow of funds at attractive interest rates and also preserves the working capital limits of a company as those are not included in the balance sheet. Most importantly, it ensures that the buyer pays the MSME supplier within 45 days, in compliance with the MSME Act.
 
How It Works
 Buyer sends a purchase order to MSME seller
 
 MSME seller delivers the goods along with an invoice. There may or may not be an accepted bill of exchange depending on the trade practice between the buyer and the seller.
 
 Thereafter, on the basis of either an invoice or a bill of exchange, the MSME seller creates a ‘factoring unit’ on TReDS. Subsequently, the buyer also logs on to TReDS and flags this factoring unit as ‘accepted’.
 
 The TReDS will standardize the time window available for corporate buyers to ‘accept’ the factoring units, which may vary based on the underlying document – an invoice or bill of exchange.
 
 Supporting documents evidencing movement of goods etc. may also be hosted by the MSME seller on the TReDS.
 
 The TReDS will have separate modules for transactions with invoices and transactions with Bills of Exchange.
 
 Factoring units may be created in each module as required. Each such unit will have the same sanctity and enforceability as allowed for physical instruments under the “Factoring Regulation Act, 2011” or under the “Negotiable Instruments Act, 1881”
 
 The standard format/features of the ‘factoring unit’ will be decided by the TReDS – it could be the entire bill/invoice amount or it could a pre-defined face value (say in multiples of 1,000 or 10,000 or 1,00,000). However, each factoring unit will represent a confirmed obligation of the buyer corporate and will carry the following relevant details – details of the seller and the buyer, issue date (could be the date of acceptance), due date, tenor (due date – issue date), balance tenor (due date – current date), amount due, unique identification number generated by TReDS, account details of the seller for financier’s reference (for credit at the time of financing), account details of the buyer for financier’s reference (for debit on the due date), the underlying commodity (or service if enabled).
 
 The TReDS should be able to facilitate the filtering of factoring units (by financiers or respective MSMEs / corporate buyers) accordingly to any of the above parameters. In view of the expected high volumes to be processed under TReDS, this would provide the necessary flexibility of operations to the stakeholders.
 
 The buyer’s bank and account details form an integral feature of the factoring unit. The creation of a factoring unit on TReDS shall result in the automatic generation of a notice/advice to the buyer’s bank informing them of such units. Similarly, financing by a financier should generate another notice/advice to the buyer’s bank to enable a Draft Guidelines for setting up and operating TReDS 7 direct debit to the buyer’s account on the due date in favor of the financier (based on the settlement obligations generated by the TReDS).
 
 These factoring units will be available for financing by any of the financiers registered on the system. The all-in-cost quoted by the financier will be available on the TReDS. This price can only be viewed by the MSME seller and not available for other financiers.
 
 There will be a window period provided for financiers to quote their bids against factoring units. Financiers will be free to determine the time-validity of their bid price. Once accepted by the MSME seller, there will be no option for financiers to revise their bids quoted online.
 
 The MSME seller is free to accept any of the bids and the financier will receive the necessary intimation. Financiers will finance the balance tenor on the factoring unit.
 
 Once a bid is accepted, the factoring unit will get tagged as “financed” and the funds will be credited to the seller’s account by the financier on T+2 basis (T being the date of bid acceptance). The actual settlement of such funds will be as outlined under the Settlement section.
 
 On the due date, the financier will have to receive funds from the corporate buyer. The TReDS will send due notifications to corporate buyers and their banks advising them of payments due. The actual settlement of such funds will be as outlined under the Settlement section.
 
 Non-payment by the buyer on the due date to their banker should tantamount to a default by the buyer and attract penal provisions and enable the banker to proceed against the corporate buyer. Any action initiated in this regard will be strictly nonrecourse with respect to the MSME sellers.
 
 Once financed, these instruments will be rated by the TReDS on the basis of an external rating of the buyer corporate, the nature of the underlying instrument (invoice or bill of exchange), previous instances of delays or defaults by the buyer corporate w.r.t. transactions on TReDS etc.
 
 The rated instruments may then be further transacted/discounted amongst the financiers in the secondary segment.
 
 Similar to the primary segment, any successful trade in the secondary segment will also automatically result in a direct debit authority being enabled by the buyer’s bank in favor of the financier (based on the settlement obligations generated by the TReDS). In parallel, it will also generate a ‘notice of assignment’ intimating the buyer to make the payment to the new financier (though the payment itself will be taken care of by virtue of the direct debit authority and settlement process of TReDS).
 
 In the event that a factoring unit remains unfinanced, the Buyer will pay the MSME seller outside of the TReDS
 
This TReDS will if used properly surely will resolve the Liquidity issues of Business Owners and this will only guide them towards more business, more orders, quick services, timely payment, good relations, and after all no Court expenses.

Be Aware of Reported Judgements vs Unreported Judgements

Be Aware of Reported Judgements vs Unreported Judgements

“Every decision is binding no matter whether it is reported in the regular series of Law Reports, or is unreported. Once you have the transcript, you can cite it as of equal authority to a reported decision. It behoves every counsel or solicitor to find, if he can, a case – reported or unreported – which will help him advise or win his case.” = Lord Denning
 
Before we can understand what exactly the term “Reported Judgements Vs Unreported Judgements” and why it is important to know about its relevance it is important to know the meaning of the term “Precedent” as “Precedent” gives rise to the differentiation of Reported Judgements Vs Unreported Judgements”
 
As every Litigation Lawyer knows, precedents matter. Let us understand how exactly the “Precedents matter” evolved in India. The doctrine of precedent depends entirely on the court being made aware of the earlier decision by which it is bound.
 
The Theory of binding force of precedent is firmly established in England. A judge is bound to follow the decision of any court recognized as competent to bind him, and it becomes his duty to administer the law as declared by such a court. The system of precedent has been a powerful factor in the development of the common law in England. In spite of some codification of law, it would be still correct to say that the English law is precedent-oriented* A similar theory has come to prevail in India since the advent of the British system of justice. As early as 1830, Dorin, who later became a judge of the Sadar Diwani Adalat at Calcutta, advocated the idea of giving statutory basis to the doctrine of precedent in India in these words “I think it should be enacted by a Regulation that from a given period, the judgments of the court shall be considered as precedents binding upon itself and upon the inferior courts in similar cases which may arise thereafter. This will have the effect of making the superior courts more cautious and of introducing something like a system for the other courts, the want of which is now very much felt…Hitherto it has not been the custom to refer to precedents and for aught the judges of the court may know, the same points may have been decided over and over again and perhaps not always the same way. It is obvious, that having something like a system established would tend to abridge the labour of civil courts”. In a number of cases, the High Courts declared the doctrine of precedent and laid down that subordinate courts were bound by the decisions of the High Court even if the lower courts did not agree with the correctness of a particular decision.* As the Law Commission, Law Comm., XIV Rep., I. 626, has observed. The decisions of the High Courts have not been invested with the authority of law by any enactment. But it is well settled that the courts subordinate to a High Court are bound by its decisions and it is not open to them to refuse to follow the law as interpreted by that High Court. The High Courts have made this clear in a number of decisions and have gone so far as to characterize refusal on the part of subordinate courts to follow their decisions as being tantamount to insubordination. To a limited extent, statutory recognition was given to the theory of precedent when Section 212 of the Government of India Act, 1935, laid down that the decisions of the Privy Council and the Federal Court would be binding upon the courts in India. Art. 141 of the present Constitution lays down that the law declared by the Supreme Court shall be binding on all courts within India. As regards the High Courts, however, the theory of precedent is still based on judicial declarations. It is thus clear that in India, the binding force of precedents is firmly established. The Judgements delivered by the superior courts are as much the law of the country as legislative enactments. The Law Commission has gone into the question whether or not the doctrine of precedent should operate in India. It has come to the conclusion that it should continue to operate and it has counted the following, among others, as its advantages. The doctrine makes for uniformity and certainty in the administration of law; it tends to promote convenience and avoid delays. If earlier decisions were not recognised as binding every court would have to decide the same question over and over again on principle, which would cause delay and increase the burden of the judges to the breaking point.
 
The theory of precedent brings in its wake the system of law reporting as its necessary concomitant. Publication of decisions is a condition precedent for the theory to operate; there must exists reliable reports of cases; if the cases are to be binding there must be precise records of what they do lay down and it is only then that the doctrine of stare decisis can function meaningfully. An attempt will therefore be made here to survey the efforts made in India to create a system of law reporting.
 
Source: Taken from Book Titled as “Theory of Precedent – LAW REPORTING IN INDIA by Mr. M.P. Jain. Sharing here to read and to understand about the evolution of Precedents in Indian Courts.
 
Now as we have understood the term “Precedents matter”, Let us understand what is “Reported Judgements and Unreported Judgements”?
 
This is one of the most important aspects to understand for Lawyers and also to the Professionals who deals in Litigation and also to Litigant as all Judgement does not work in equal manner. The Judgements are categorized in two ways, as under:
• Reported Judgements
• Unreported Judgements
 
Reported Judgements means the judgments which are published in Law Reports. Reported Judgements are those which deal with relevant points and matters and which are significant and has its impact and are considered to be valuable precedents and hence are included in Law Reports.
 
Unreported Judgements are those which are not considered that important for being getting report or may be the recent Judgement which not yet reported but may be reported later. Unreported judgments are decisions that have not been published in an official law report. Despite this, unreported judgments are useful as they may provide commentary by the Courts on unique issues that have not been discussed in reported judgments.
 
Which type of Judgement forms Part of Law System?
Unreported Judgments, like Reported Judgments, form part of the law system
 
What is non-reported Judgement?
In Dharamraj Bhanushankar Dave v. State of Gujarat, 2015, decided on 19-01-2017, the Court observed that there are no specific provisions pointed out by the petitioner which have been violated by publication of the impugned judgment and as prayed by petitioner, it would not be covered under the ambit of Article 21 of the Constitution. It was clarified by the Court that reportable or non-reportable is the classification made for the reporting of a judgment in law-reporter and not its publication anywhere else while taking into consideration the important fact that High Court was a court of record.
 
In brief, in our view, the following are the key for us to understand:
• Unreported Judgments are useful as it may contain decisions or commentary on issues that are not reflected in Reported Judgments and can use in the matters;
• There is no doubt that Court prefers Reported Judgments but nothing taking away from the Unreported Judgments;
• As Unreported Judgment is part of law system and in my view forms as precedent, you can rely on Unreported Judgment as it may add value to the current proceeding;
• Please note that before mentioning it shall fully disclose about the unreported judgment being relied upo

Arbitrators are Paid on Percentage on Sum in Dispute, let’s do the same for Lawyers and fix the Cap

Arbitrators are Paid on Percentage on Sum in Dispute, let’s do the same for Lawyers and fix the Cap

Vide Notification as on dated 23.04.2010 of Bombay High Court (Fee Payable to Arbitrators) Rules, 2018; the Fee for the Arbitrators has been fixed as stated at Rule 2. Rule 3 speaks of sharing of fees and states what to be paid in the event proceedings are terminated on account of mutual settlement of dispute by the parties. The fees stated in such event are the percentage which be paid to Arbitrators, which is as under:
1. 40% of the fees if the pleadings are complete.
2. 60% of the fees if the hearing has commenced.
3. 80% of the fees if the hearing is concluded but the award is yet to be passed
 
Schedule of Fees of Arbitral Tribunal
Sum in Dispute = Fees
• Claim Upto Rs. 5,00,000 = Rs. 45,000
• Claim Above Rs. 5,00,000 and upto Rs. 20,00,000 = Rs. 45,000 plus 3.5 percent of the claim amount over and above Rs. 5,00,000
• Claim Above Rs. 20,00,000 and above Rs. 1,00,00,000 = Rs. 97,500 plus 3 per cent of Claim amount over and above Rs. 20,00,000
• Claim above Rs. 1,00,00,000 and over and above Rs. 10,00,00,000 = Rs. 3,37,500 plus 1 per cent of the Claim amount over and above Rs. 1,00,00,000
• Claim above Rs. 10,00,00,000 and upto Rs. 20,00,00,000 = Rs. 12,37,500 plus 0.75 per cent of the claim amount over and above Rs. 10,00,00,000
• Claim above Rs. 20,00,00,000 = Rs. 19,87,500 plus 0.5 per cent of the Claim amount over and above Rs. 20,00,00,000 with a ceiling of Rs. 30,00,000
 
Note: In the event, the arbitral tribunal is a sole arbitrator; he shall be entitled to an additional amount of twenty-five percent on the fee as per the Table set out above.
 
The reading of the above shows that today the Arbitrators are being on percentage basis and the percentage if calculated come near to around 10% of the claim amount to be paid by each Party in equal ratio.
 
There is no doubt that Legal Profession has become too costly and in fact such is the fee charged that for MSME/ Start-ups/Individuals/Middle Class People/Poor People it is almost impossible to approach Court for any remedy and this is totally against the concept of legal services at least in India and hence there shall be a law to regular the Legal Fees and there has been a debate going around since a long time but yet is pending.
 
Why not Lawyer Fee be kept in the same manner as stated above?
In India, a Lawyer charging fee on percentage basis is illegal and infact the Supreme Court in Sunitha Vs State of Telangana & Anr made a scathing attack on high fees being charged by Legal Professionals and categorically held that Advocate’s fee based on a percentage of the result of the litigation was illegal (Dated: 05.12.2017).
 
The Supreme Court have further stated that it favours a law to check the growing commercialization of the legal profession and to “prescribe floor and ceiling in fees” to ensure the poor were not nudged out of the justice delivery system. Supreme Court has also called the Centre to regular Legal Profession and to Cap Legal Fees.
 
From the reading of the above paras, the conclusion be drawn that Supreme Court wants to cap Legal fees and if so, then why not in the manner similar to what has been done to Arbitrator (percentage and sum can be taken care by Centre). Infact, by allowing the Third Party Funding, indirectly the Supreme Court has allowed percentage fee basis legal fee. Third party Funding is nothing but Litigation Funding. Litigation funding, the term means the third party who will fund the case for Aggrieved Party and this is very much a common factor in foreign litigation. However, this term is not common in India, and in fact, there are certain sections who have started this funding but there are many criteria to understand the concept of Litigation Funding/Third Party Funding as executing any agreement without understanding will lead to disaster in terms of monetary understanding and sharing. Litigation funding is also called as Third-Party Funding. In 2015, the Supreme Court in “Bar Council of India v. AK Balaji”, clarified the legal permissibility of Third-Party Funding in litigation and observed that “There appears to be no restriction on third parties (non-lawyers) funding the litigation and getting repaid after the outcome of the litigation.”. As on date, there is no legislative instrument that regulates such funding. However, the (Indian) Code of Civil Procedure, 1908 as amended by a few Indian states including Maharashtra, Karnataka, Gujarat, and Madhya Pradesh, expressly acknowledges the role of the financier of litigation costs of a plaintiff and sets out the situations when such financier may be made a party to the proceedings. TPF has also received favorable reference in the report of the High-Level Committee to review the Institutionalization of Arbitration Mechanism in India (2017). The Bar Council of India Rules does not explicitly prohibit litigation funding by advocates. However, it has been noted in one of the cases that “a conjoint reading of Rule 18, Rule 20, Rule 21 and Rule 22 indicates that advocates in India cannot fund the litigation on behalf of their clients.
 
In my view, instead of opening a market for Litigation Funding which in any case will grow if not now then later but surely it will and making the percentage fee be paid by clients indirectly, let’s make the Lawyers Fee cap in the similar manner as being done for Arbitrators. There is nothing illegal in the same as this will ensure win-win situation to all Litigant Parties

Know The Code on Wages, 2019

Know The Code on Wages, 2019

The Code on Wages, 2019 (hereinafter called as “Code”), consolidating the laws relating to wages and bonuses has been passed by both houses of the Parliament, and it received the President’s assent on August 08, 2019. The Code repealed the following Acts:

  • The Payment of Wages Act, 1936
  • The Minimum Wages Act, 1948
  • The Payment of Bonus Act, 1965
  • The Equal Remuneration Act, 1976

This Code extends to the whole of India.

 

This Code is divided into 9 Chapters as follows:
1. Preliminary
2. Minimum Wages
3. Payment of Wages
4. Payment of Bonus
5. Advisory Board
6. Payment of Dues, Claims, and Audit
7. Inspector-Cum-Facilitator
8. Offenses and Penalties
9. Miscellaneous

 

APPLICABILITY
The Code has universalized the provision of minimum wages and timely payment of wages to all employees irrespective of the sector and wages ceiling. The Code extends:

To all establishment where any industry, trade, business, manufacturing or occupation is carried out which includes Government establishment

To all kinds of employees irrespective of wages limit (Wages limit of Rs. 24,000/- per month for applicability of payment of wages Act, 1936 has been removed) whether skilled, unskilled, manual, supervisory, managerial, administrative, technical or clerical cross all sectors whether organized or un-organized.

To all kinds of employers i.e. any person who employed one or more employees.

 

HIGHLIGHTS /KEY FEATURES OF THE CODE ON WAGES, 2019
Payment of Minimum Wages: the Code prohibits employers from paying wages less than the minimum wage. This will be based on time, or a number of pieces produced. The minimum wages will be revised and reviewed by the central or state governments at an interval of not more than five years.

 

Floor wages: The Code introduces the concept of floor wages, whereby the central government will fix floor wages taking into account the minimum living standards of a worker for different geographical areas. The minimum rates of wages fixed by the state governments will have to be not less than the floor wages fixed by the central government. The aim behind the introduction of floor wages is to provide a basic standard of living for the employee.

 

Mode of Payment of through Digital: The Code provides that the wages to employees may also be paid by cheque or through digital or electronic mode or by crediting it in the bank account of the employee.

 

No discrimination on the grounds of gender and sex: The Wage Code prohibits discrimination of employees on the grounds of gender in matters relating to wages, and prohibits discrimination on the ground of sex in matters of recruitment and conditions of employment, for the same work or work of similar nature.

 

Definition of employee and worker: The Code defines the terms ‘employees’ and ‘workers.’ The term ‘employee’ has been given an expansive meaning by including even persons employed in a managerial, administrative, and supervisory capacity.

 

The term ‘worker’ excludes managerial and supervisory employees and includes sales promotion employees and working journalists.

 

Payment of Bonus: The Payment of Bonus Act applies only to employees earning less than Rs. 21,000/-. While the Code stipulates that employees earning below the salary threshold to be notified by the state government, will be eligible for payment of bonus, All employees whose wages do not exceed a specific monthly amount, notified by the Central or state government, will be entitled to an annual bonus. The bonus will be at least: (i) 8.33% of his wages, or (ii) Rs 100, whichever is higher. In addition, the employer will distribute a part of the gross profits amongst the employees. This will be distributed in proportion to the annual wages of an employee. An employee can receive a maximum bonus of 20% of his annual wages.

 

Advisory boards: The central and state governments will constitute advisory boards. The Central Advisory Board will consist of: (i) employers, (ii) employees (in equal number as employers), (iii) independent persons, and (iv)five representatives of state governments. State Advisory Boards will consist of employers, employees, and independent persons. Further, one-third of the total members on both the central and state Boards will be women. The Boards will advise the respective governments on various issues including (i) fixation of minimum wages, and (ii) increasing employment opportunities for women.

 

Efficiency in Procedural compliances: With the consolidation of the Payment of Wages Act, Payment of Bonus Act, Minimum Wages Act, and the Equal Remuneration Act into the Wage Code, multiple filings, and maintaining multiple records and registers under each of the four legislations is reduced.

 

Inspector-Cum-Facilitators: The Inspector-cum-Facilitator may advise to employers and workers relating to compliance with the provisions of this Code, inspect the establishments as assigned to him by the appropriate Government, subject to the instructions or guidelines issued by the appropriate Government from time to time.

 

Many changes have been introduced in inspection regimes, including web-based randomized computerized inspection schemes, calling of information electronically for inspection, etc. these changes have been brought about to ensure enforcement of labor laws with transparency and accountability.

 

Offenses: The Code specifies penalties for offenses committed by an employer, such as (i) paying less than the due wages, or (ii) for contravening any provision of the Code. Penalties vary depending on the nature of the offence, with the maximum penalty being imprisonment for three months along with a fine of up to one lakh rupees.

 

Limitation Period for Claim: The period of limitation for filing of claims by an employee has been enhanced to 3 years as against existing time period varying from 6 months to 2 years, to provide more time to file their claims.

 

The Code is a well-intentioned piece of legislation which aims to balance the interests of the employer and the employee. The Code aims for enforcement of labor laws with transparency and accountability, and it is expected to reduce the cost of compliance for employers significantly. The Code is being a historic step towards labor reforms and ease of doing business in India without diluting any basic rights of employees.

Unsure of Various Business Entities, Come Let’s Understand

Unsure of Various Business Entities, Come Let's Understand

Most of the time people want advice in which type of business organisation they can register their business like in Proprietorship, Partnership Firm, Private Limited Company or Public Company or in joint Venture. Most of the people still don’t know about One Person Company and Limited Liability Company (LLP).
 
Before registration of business under particular form of business organisation, they have to consider their type of business, investment in the business, how many people will be involve in the business.
 
It is always advisable to the businessmen take advice from the experts or from the business law Practitioner at the time of taking decision of the registration of the organisation because once you registered without having any knowledge about its Pros and cons, then it will be very difficult to sustain the business in the future.
 
Following are the some types in which you can register your business:
1. Proprietorship
2. Partnership Firm
3. Limited Liability Partnership Firm
4. Private Limited
5. One Person Company
6. Public Limited
 
Sole Proprietorship Firm
If a single person want to start a small business like, Grocery Shop, Art Studio, Small travel Agency, Real Estate Agency, Fast Food shop. Even other small trader and Manufacturer can run their business as Sole Proprietor. This type of business is managed and owned by the single man called a Sole Proprietor and can be called as One –Man Business Organisation. In Sole Proprietorship business, the only one person enjoy the whole profit of the business and in case of loss, he is only one person liable for the loss of the business.
 
There is no such specific legal registration under any law to set up a Sole Proprietorship. But, one can apply for a few registrations or licenses under various laws to avoid any complicated scenario.
 
These are some of the registrations/licenses that may be opted by the Sole Proprietorship Firm:
a) Registration under the Shop and Establishment Act: It is required with certain exception by the Local Laws prevailing in the area where Sole Proprietorship is located
 
b) Registration under MSMED (Micro, Small and Medium Enterprises Development) Act: Any Micro, Small and Medium business organization who fulfill the criteria of registration under MSME Act 2005(As Amended), can registered their Business under MSME Act 2005.
 
c) Registration under GST (Goods and Service Tax): Registration under GST is compulsory to every business organisation who are fulfill the condition of Registration according to GST Act 2017
 
d) Trademark Registration: It is required in case you want to trade your products or services with an exclusive name or brand. It is beneficial where there is a threat of some misuse of the name used in your business.
 
e) Licenses or Certificates required according to the nature of business:
• Drug License
• Labour license
• Regional Transport Office(RTO) permit
• Food Safety and Standards Authority of India(FSSAI) license
• Mandi License Act
• And List goes on as per specific business
(d and e, is applicable to all types of Business Entities)
 
Advantages of Sole Proprietorship:
• Easiest form of business
• Easier to start
• Lesser investment
• No sharing of Profits earned
• Lesser legal compliances
• Lesser income tax
• Confidentiality in the Business
• Self-decision making
• No specific audit requirement
 
What if someone wish to convert from sole proprietorship to private limited company or partnership?
You can always choose to do so. The procedure is a little tedious, but it is possible. It is very common for sole proprietors to convert into partnerships and private limited companies at a later stage. Take an advice from the business law practitioner or from the expert who dealing in the matters related to business.
 
Unlimited Liability Partnership Firm
• When two or more person come together and want to start the business they can start their business as Partnership Firm/Business.
 
• Partnership is an agreement between two or more people to share the profits of a business. The business can be carried on together by all the partners or any one partner representing the others. A partnership can be for a fixed period of time or it may be limited to a specific project or it may be dissolved at will.
 
• Registering a firm under the Partnership Act, 1932 is not mandatory as in case of setting up an Organization but it is always advisable to get your firm registered before Registrar of the Firm in which the Partnership firm situated. You can face the following problems if you have not registered Partnership Firm.
 
• A partner of an unregistered firm cannot file a suit in any court against the firm or other partners for the enforcement of their any right arising from the partnership business. An unregistered firm or any of its partners cannot claim set-off or other proceedings in a dispute with a third party.
 
• Therefore, any partnership should be registered sooner or later.
 
Advantages of Partnership Firm
• Power to file case against Third Parties (if Partnership Firm Registered)
• Power to file case against Co-Partner (if Partnership Firm Registered)
• Ability to claim set-off if any third party file suit against the firm and partner. (if Partnership Firm Registered)
• Convert partnership firm into Private Limited Company or Limited Liability Partnership (LLP) (if Partnership Firm Registered)
• Sharing of risk (If any Losses)
• Capital for the business can be collect more than the proprietorship because number of partners involve in the business.
• Partnership firm cannot dissolve in case of any one partner leave the partnership firm. (It is only possible when there are more than two partners in the Partnership firm.)
 
Rights of Partner in Partnership Firm
• To take part in the business.
• To share the profit or loss of the business.
• To inspect and make copies of the books of the firm.
• To receive remuneration for taking part in the business if specified in the partnership deed.
• To receive interest on capital if specified in the partnership deed.
 
Duties as a Partner in a Firm:
• carry on the business
• Be just and faithful to each partner.
• Disclose true accounts of the firm.
• Furnish full information of all things affecting the firm.
 
Limitations on partner in the Partnership Firm: As a partner you cannot do the following without the consent of the other partners:
• Submit a dispute relating to the business to arbitration.
• Open a bank account on behalf of the firm in your own name.
• Compromise or relinquish any claim or portion of a claim of the firm.
• Withdraw a suit or proceeding filed on behalf of the firm.
• Enter into partnership with an outsider on behalf of the firm.
• Acquire or transfer immovable property belonging to the firm.
• Admit any liability in a suit or proceeding against the firm
 
Limited Liability Partnership
LLP is defined as partnership formed and registered under Limited Liability Partnership Act, 2008 is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership. The LLP can continue its existence irrespective of changes in partners. It is capable of entering into contracts and holding property in its own name. The LLP is a separate legal entity, is liable to the full extent of its assets but liability of the partners is limited to their agreed contribution in the LLP. Further, no partner is liable on account of the independent or un-authorized actions of other partners, thus individual partners are shielded from joint liability created by another partner’s wrongful business decisions or misconduct.
 
Feature of LLP
• The LLP and Partner are distinct from each other (Separate Legal Entity)
• Minimum two members required to form a Partnership firm. There is no limit on the maximum number of partners.
• Minimum contribution of Capital not required
• LLP can form by any type enterprises.
 
Advantages of Limited Liability Partnership
• Partner have limited liability in the LLP
• Partners are not liable for act of each other and can be held liable only for their own act
• Less compliance part than Private limited Company.
• The Partners are not liable to be sued for dues against LLP.
 
 
Conversion of firm, private company and unlisted company into LLP
A firm, private company or an unlisted public company is allowed to be converted into LLP in accordance with the provisions of the Act.
 
Winding up of LLP
The winding up of the LLP may be either voluntary or the Tribunal.
 
Circumstances in which the LLP may be wound up by Tribunal:
• If Partners want to wound up LLP through the Tribunal
• If for a period of more than six months, the number of partner reduce below two.
• If LLP unable to pay debts
• If LLP Act against the interest of sovereignty and interest of nation
• If LLP has made default in filling the annual returns and account statement with the registrar for any five consecutive financial year.
• If tribunal is of opinion that it is just and equitable that LLP be wound up.
The Indian Partnership Act, 1932 shall not be applicable to LLPs.
 
Requirements for Incorporation of LLP
First Obtain designated partner identification number (DPIN / DIN) for the designated partners and also obtain Digital Signature.
 
a) Reservation of LLP name (e-form 1)
• Address of Registered
• Office
• Description of proposed business activity
• Proposed monetary value of partner’s contribution (Minimum 1 Lac)
• Proposed name of the LLP (6 names in preference serial)
• Significance of the key or coined word(s), if any, in the proposed name(s) (in brief)
 
b) Incorporation Documents (e-form 2)
• Address of Registered Office
• Office Phone No.
• Email id of LLP
• Contribution of each partner
• Disclosure of partner towards:
 -Number of LLP(s) in which he is a partner
 -Number of company(s) in which he is a director
• Proof of Registered Office (Electricity Bill / Landline Bill etc.)
• Subscribers Sheet
 
 
c) Details to LLP Agreement (e-form 3)
 Profit sharing Ratio
 Form of Contribution
 Initial Agreement copy
 
 
d) Consent of Partners (e-form 4)
It contains information about appointment, cessation, change in name/ address/designation of a designated partner or partner and consent to become a partner/designated partner). Format of consent is given in Form -9 available.
 
Provided that in case of incorporation, the individual who has given his consent to act as Partner or designated Partner shall file consent in Form 2 along with fee.
 
After considering all difference between Partnership Firm and LLP you can take decision regarding in which form of organisation you are need to registered your business. Take an expert advice from the legal practitioners
 
Private Limited Company
Private Limited Company is a type of company which offers limited liability with restrictions on ownership. As per the definition, the minimum number of members to start the private limited company is 2 with a maximum of 200 members. A Company is considered a separate legal entity having perpetual succession, with the liability of shareholders limited to the capital being contributed by them.
 
Feature of Private Limited Company
 Name: The private limited company must use the word “PRIVATE LIMITED COMPANY” at the end.
 
 Members: To form a private limited company minimum of 2 members and a maximum of 200 members as per the provisions of Companies Act,2013.
 
 Limited Liability: The liability of the members is limited to the number of shares held by them. For example, if the company faces any losses under any circumstances the shareholders are liable only to the shares held by them. The personal assets owned by the shareholders are not at risk.
 
 Perpetual Succession: The Company exists in the eyes of the law even in case of death, insolvency or bankruptcy of any of its members. This means the life of the company keeps on existing forever.
 
 Register of Members: There is no compulsion for the private limited company to maintain the register of members as required by a public limited company.
 
 Directors Requirement: Required of Directors in the case of a Private Limited company is only 2. With a minimum of 2 directors, a company can carry on its operations.
 
 Paid-up Capital: A Private Limited Company must have a minimum capital of rupees one lakh or such higher amount prescribed as a time to time. However, as per the recent amendment in the year 2015, there is no such minimum capital requirement.
 
Advantages of Private Limited Company
 Limited Liability: the liability of each shareholder is limited to the contribution made by them.
 
 Easy Transferable Ownership: the share of private limited company is easily transferable to other. It is easier to subscribe or leave the membership of the Private limited company.
 
 Separate Property: Private limited company is separate legal entity hence, the company is capable to own fund and other property. Property of company is not a property of its shareholder.
 
 Raising Fund/Capital: The Private limited company can be involved more member or shareholder as than the partnership firm or proprietorship hence, they can raise more fund or capital.
 
 Capacity to Sue: As a legal entity, a Company can sue in its name and be sued by others.
 
 Perpetual Succession: An incorporated company never dies except its wound up as per law. Being a separate legal person is unaffected by death or departure of any member.
 
 Tax Advantages: The Private Limited companies pay corporation tax on their taxable profits and tend to be exempt from higher personal income tax rates.
 
One Person Company
From its name we come to know that in this type of company required one person to run the business. This type of company created when there is only one member or promoter to run the business. Earlier when one person wants to start the business, he had an option for the proprietorship and he was need to registered his business according to his type of business but after introduction of the One Person Company under the Companies Act 2013, Business man doesn’t need any other person to start the business and they can registered their business as one person company and can enjoy the benefit of the one person company.
 
Definition
Section 2(62) of Companies Act, 2013 defines a one-person company as a company that has only one person as to its member. Furthermore, members of a company are nothing but subscribers to its memorandum of association, or its shareholders. So, an OPC is effectively a company that has only one shareholder as its member.
 
Feature of One Person Company
 Eligibility to act as member of an OPC
 Only a natural person who is an Indian citizen and resident in India shall be eligible to act as a member and nominee of an OPC. A Person can be member in only one OPC.
 For the above purpose, the term “resident in India” means a person who has stayed in India for a period of not less than one hundred and eighty two days during the immediately preceding one financial year.
 An OPC can be formed under Company limited by guarantee or shares.
 
Name of the OCP: An OPC is required to give a legal identity by specifying a name under which the activities of the business could be carried on. The words ‘One Person Company’ should be mentioned below the name of the company, wherever the name is affixed, used or engraved.
 
Minimum Capital: An OPC can be started with a minimum authorized capital of Rs. 1 lakh. There is no mandatory requirement for a minimum paid up capital. Hence, person can start as an OPC with lowest capital contribution. However when the paid up capital exceeds Rs. 50 lakh, OPC must mandatorily convert to a private limited company. Also, when the average turnover for 3 consecutive years becomes Rs. 2 crore or more, there is a need to convert into a private limited company
 
Nominee:
 Only a natural person, who is an Indian citizen and resident in India, shall be a nominee in a One Person Company. By “Resident in India” mean that a person who has stayed in India for a period of not less than 182 days during the immediate preceding one year.
 
Advantages of One Person Company (OPC): The following are the most outstanding advantages associated with an OPC in India, over the private limited or public limited companies:
 To form an OPC, only one Director is needed.
 The Section 173 which dictates that a limited company should conduct at least four Board meetings every year is not applicable for OPCs.
 The provisions and regulations given in Section 98 and Sections from 100 to 111, which relate with general meetings, are also not applicable to OPCs.
 An OPC also enjoys relaxations and exceptions from many other legal, governance, ad regulatory compliances.
 The mandatory rotation of auditor after every five-year period, is also not applicable to an OPC. 
 
Public Limited Company
In simple terms, a public company is a company whose shares can be subscribed by members of the public. As per the Companies Act, 2013 a public company is:
 A company that is not a private company
 Has a minimum paid-up capital of five lacs, again there is no maximum limit. However, as per the recent amendment in the year 2015, there is no such minimum capital requirement.
 A private company that is a subsidiary of a public company will be considered a public company.
 
Feature of Public Limited Company
 Name: The Public Limited Company must use the word “LIMITED COMPANY” at the end.
 
 Members: To form a Public Limited Company minimum of 7 members and no maximum limit is mentioned in the Companies Act, 2013.
 
 Limited Liability: The liability of the members is limited to the number of shares held by them.
 
 Register of Members: There is no compulsion for the public limited company to maintain the register of members.
 
 Directors Requirement: In Public limited company minimum 3 Director required.
 
 Paid-up Capital: A Public Limited Company must have a minimum capital of rupees Five lakh or such higher amount prescribed as a time to time. However, as per the recent amendment in the year 2015, there is no such minimum capital requirement.
 
 Prospectus: A prospectus is a comprehensive statement of the affairs of the company issued by a public limited company for its public and there is a requirement under the Act for public limited companies to issue a prospectus.
 
Advantages of Public Limited Company: 
 Transferable shares: Share of Public limited Company are bought and sold in a stock exchange market. They are freely transferable between its member and people trading in stock exchange.
 
 Perpetual Succession: A Public Company is not affected by death of the one of its shareholder. Even in case of death of director of the company, the election held to replace the deceased director.
 
 Large Capital: In a Public limited company the company can raised the capital from the public and there is no limitation on raising the amount of capital from the public. hence public limited company enjoy an increased ability to raise capital since they can issue share to the public through stock market.
 
 Growth and expansion in business: Public limited Company issues shares to the public at large hence more chances in growth of the business. Public limited company also get the benefits from the government though the various schemes therefore expansion in business easily possible in the public limited company than other types of company. Also scope to launch new products and project in the market.
 
 Structuring Equity : Different shares issued to different shareholders helps to raise more fund for business. Public company can raise fund by issuing Equity Shares Preference shares, Debenture share etc.
 
 Deposit from Public: Public company can also accept deposits from the public but only after compliance of provision for the same which is provided in the in Company Act, 2013.
 
 Lower Risk : A Risk of each shareholder is limited to the face value of shares held by him in the public limited company and in public company the number of share are quite higher than Private Limited company hence the shareholders risk is considerably low.

Are you an Accused in False Cheque Bounce Litigation? Do this

Are you an Accused in False Cheque Bounce Litigation? Do this

In India, the biggest problem with Laws is that anyone can file the case against anyone even with a small iota of evidence as procedure are not taken seriously in trial and lower courts. For ex., it is the onus on the Court to ensure all the facts of the case at the time of verification before issuance of any Summons under Section 138 criminal complaint but it just does not happens and summons are issued due to local bar lawyers appearance or for any reasons and hence there are many cases where the appeal is filed for quashing of summons and case and expenses are made even if you are falsely accused in the case. Section 138 is a very popular section amongst commercial traders and market and in law and in simple terms it deals with Cheque Dishonoured cases / Cheque Bounce case. This particular article only deals with the scenario where you are falsely accused in Section 138 proceedings either you are not at all relevant to the case or you are relevant but the cheque was not for the transactions for which the case is filed. In regard to former act, you can approach High Court for quashing and if you are able to show you non-relevance in the case, the mostly the case will be quashed against you. However, in later case, the chances of quashing is less as you have to face the trial and this is where you feel a burden and most of them comes under pressure. Well, it is always advisable to always have your Lawyer in your contact list and be ready to take their advice and don’t ignore this aspect to avoid any legal costs.
 
Under Section 138 the best part is that before any Court case is filed, it is mandatory that Notice is issued and assuming it is issued to you and you believe that this is false case, then it is always better to reply their legal notice with full facts and defence. Please note that replying notice is not a simple work but it requires the full length strategy against the case and hence do take the assistance of legal attorney. 
 
You being in business or else, it is always necessary that you give good costs and budget in making the legal system complying with “Pre-Litigation measures Compliance” and if you are able to complete and maintain the “Pre-Litigation measures Compliance”, there is no doubt that you will be saved for surely in such false case being filed. If you want to know in details the “Pre-Litigation measures Compliance”, You can refer to our Book named “Methods, Strategy, Solutions, Savings on Recovery of Dues” which is available at this link https://www.amazon.in/Methods-Strategy-Solutions-Savings-Recovery/dp/9387457451 to know more about the Book and its Author credentials you can read this link https://www.bloomsbury.com/in/methods-strategy-solutions-savings-on-recovery-of-dues-9789387457454/ and https://www.bloomsbury.com/author/lalit-jain/]
 
Tips you can do in false cases against you under Section 138: 
• You shall always avoid giving extra security cheques or payment cheques and shall always keep the records of cheques being given. Assuming the cheques are being replaced by you, then ensure you collecting the earlier cheque and possible put everything in writing
 
• It is almost mandatory that you must instruct your account department or relevant departments or all office personnels not to issue any email in regard to any acknowledgement of debt as this will then lead to weakening your case
 
• Please comply with all the “Pre-Litigation measures Compliance”
 
• Be ready with all the documents, agreements, correspondences, etc with you related to the transaction you had with the person issuing the notice
 
•In the case of you in receipt of any Demand notice under Section 138 or else, here assuming Section 138, then please take the opinion of Lawyer and ensure drafting of reply. I have in my article named “Received LEGAL NOTICE= Don’t Panic = Certain Tips to REPLY” have given the tips to reply to the legal notice. Ensure replying in very tactfully and carefully
 
• You shall be ready that if such person issue notice will or possibly chances are there of him filing the case and hence in this scenario, speak to your Lawyer and try possibly filing counter claim, if there is a claim or issue the Legal notice from your end warning him to not take such action else damages suit will be filed by you and also it is preferably good to inform your association if both are from same market or else.
 
• Assuming the case is filed, then you can try your hand at filing the quashing of summons and case and try informing the Court as to why this case shall be dismissed.
 
• Assuming the case is not dismissed but is ordered for trial, then nothing else choose a lawyer to defend the case and go for the fight in your favour and you can file the damage suit if you think so or other steps as that particular case calls for. In all aspects take the assistance of Lawyer who intends to avoid courts and use Courts as last resort
 
• Try talking to common friend and close the matter in amicable manner but not at the costs of you ending up paying or settling against you or else but in order to avoid any litigation. Please note that most of the time taking this route calls for EGO and is also termed as lowering your head and hence most of the Lawyers avoid this statement as then you may leave such lawyer and look for else which is not a good option. Lawyers with ethics and experience will always take care of yours and hence be ready for his opinion and if want you can take second opinion and then take a call.

Think, Ensure, Assure and then confirm your Business Name

Think, Ensure, Assure and then confirm your Business Name

India has known to be an Entrepreneurs country and in fact, there is no hidden fact that Entrepreneurs are born in India. However, with changing times and laws and its impact, the Traditional Entrepreneurs are not getting themselves upgraded or changed with the system and this has affected them a lot in many ways. I have in another article named “Traditional Business = Are we not personally responsible for the decline in Business?” have given a brief description of how Traditional Businesses are getting lost in this fast-changing business race.

Here the intent of the Topic is Business Name and its relevance to its growth. The majority of the Business Owners have now started giving importance to have their own brand especially in the Manufacturing Sector and also in the Service sector. The online sales companies providing the platform to sell their goods/services have almost made it mandatory of proving that the brand is either owned by them or Trademark Registration Application has been filed which is a good sign and a way to promote their brand.

The term “Business name” means the name of the business entity which is being chosen by the Entrepreneur which most of the time either becomes their brand entity in the market and or just a compliance name. For ex., CCD is a brand but the name of the business entity is different. It is of utmost importance for every business owner to understand the difference between a business name and brand name and this calls for an initial discussion of long term planning in small ways. Once there is clarity on the business name and brand name and way of doing the business, necessary steps can be taken.

The brand name is normally called as Brands. The term Brands means “Brands create trust, provide orientation, influence purchasing decisions and bind customers. Brands suggest quality and create identity. A good brand increases the value of business entities and at the same time sharpens the business’s profile, as it helps you to differentiate yourself from your competitors”.

Once the idea becomes a concrete plan, the second stage comes is the Business set-up and once that is decided, here comes the major decision step i.e., Business Name and Brand name. In today’s era, Brand is a reputation that decides the goodwill of your products or services and hence it shall not be taken lightly or to say be taken seriously. There are many business entities who have hired consultants to decide on the name of the business, brand, color to be used, pattern to be used, sound to be used and else and else and this is nothing but a part of marketing strategy to create the brand and then to sell the products or services

I invite your attention that under the provisions of Companies Act, 2013, one cannot get the name if the same is either registered or is being filed under Trademark Act and also if the mark falls under Section 9 and 11 of Trademark Act and in fact, even the Partnership Firm is not getting the name which is already on their database but since there is no online system as with ROC, it is not sure how they work. Most of the times, Entrepreneurs start their business as Sole Proprietorship and start using the name and then they find it difficult to convert into another entity with ROC for not getting the name as per the criteria laid down by ROC in regard to name approval and hence it is always better to see if the same is available with ROC and then apply for Trademark Registration and then either you can get the name approval done and if You intend to do the business as Sole Proprietorship or Partnership, you can get the same file with TM Office and start advertising so that you can then claim its prior ownership and this will safeguard from other who intend to use similar names.

It is relevant to note that in India, brands and nowadays business names are governed by the Trademark Act, 1999, and also under the Common Law. Statutory protection of a trademark is administered by the Controller General of Patents, Designs, and Trade Marks, a government agency that reports to the Department of Industrial Policy and Promotion (DIPP), under the Ministry of Commerce and Industry. It is important to understand that Trademark Registration is not mandatory but the prior usage is and hence even if you are using the mark for a long time and is found similar to already registered mark which is prior to you, then your name or mark will be canceled. There are provisions under the Companies Act wherein if any company is formed with names similar to names which are being used by another business entity, then such business entity can make an application for rectification of names and there are many matters where the name change is ordered and if failed, then further coercive action is also being ordered.

In this era, brand name/business name if similar to brand name performs four functions:
· It identifies the product and its origin
· It guarantees its unchanged quality
· It advertises the product
· It creates an image for the product

In, Mahendra and Mahendra Paper Mills Vs Mahindra and Mahindra Ltd (09.11.2001), Mahindra & Mahindra Ltd., the respondent herein, instituted a suit before the Bombay High Court seeking a decree of permanent injunction against Mahendra & Mahendra Paper Mills Ltd., the appellant herein, restraining it from using in any manner as a part of its corporate name or trading style the words “Mahendra & Mahendra” or any word which is deceptively similar to “Mahindra” and/or ‘Mahindra & Mahindra’. In the said suit the plaintiff filed an application seeking an interim order of injunction against the defendant on similar terms. The Hon’ble Court after perusal of the records passed the interim order by stopping the Defendant from using the name ‘Mahendra & Mahendra’ in his business establishment, which order was confirmed by the Division Bench of the court, is under challenge in this appeal filed by the defendant.

The reading of the above paras gives the clear picture that choosing the business name is of utmost importance as any name in which you invest money and there is goodwill being created amongst the public at the large, sudden change of name may result in slowing down the business and or may result in winding up. We are in the era of Trademarks and hence the Business name is the most important decision for any Entrepreneurs or Startups.

The best way to chose the business name, in my view, is as under:
· Figure out many names on a priority basis
· Search Trademark Database in alternative Classes
· Check Google
· If possible, check US Trademark Database (Paid one)
· Check ROC Database (from all consonants view)
· If the name is available, then at the very earliest time, file the Trademark Application and get the TM Number and if time permits, get the Registration done else move ahead
· File RUN Application and get the name reserved with ROC
· Once the Bank Account is opened, if possible put in all social websites to prove its usage

Is it Risk-Free to do Business on Trust and no Written Contracts?

Is it Risk-Free to do Business on Trust and no Written Contracts?

Majority of the SME business entities do not give any attention nor are intended keenly in executing any written contract forget about executing legal documents and most of the business is just done on a Trust basis or you can say by keeping it simple by minimizing documents at least. Well, trust was earlier had a great role to play in doing business and in fact, was a great way to deal with but with the change in time, the nature of doing business have also changed and also the factor which runs the market. It is also a fact that it is not wrong to say that executing legal document does call for complicated paperwork and most of the SME business entities avoids getting into this complication of the legal process. But is this the way to do the business and there is no risk? Well, it is very certain to say that it is a huge risk in doing the business with no written contract and some of the risks which can be discussed are as under:

  • Conflict between two business parties regarding payment method, product specification, service SLA, etc and this basically becomes the majority of times in relationship breakdowns and thereby customers and thereby goodwill and reputation in the market and devalue of the brand image;
  • A business done without invoice comes with a major risk of non-payment

There is no doubt that business done on Trust and no written contracts are good and simple but in an increasingly complex legal environment, it’s not worth taking these kinds of risks.


An experienced and skilled lawyer will any time provide the business entities with the right kinds of documents and in fact can be of huge assistance in taking his guidance to develop the business templates which can be used in business on regular basis. The contracts if used properly can help business entities to minimize risk and maximize profit and also help in anticipating the risk in any business deal. The aim of any good law firm is to allow the business entities to just get on with business, rather than wasting time sorting out messes?