Friday, August 17, 2012

COMMUNAL RESERVATION

P.RAJENDRAN     www.prajendran.com

      All reservations are not of the same nature.  There are two types of reservations, namely, ‘vertical reservations” and “horizontal reservations”. Social Reservation in favour or SCs, STs and OBCs under Article 16(4) of the Constitution of India are “vertical reservations”.  Special Reservations in favour of Physically handicapped, Women etc. under Articles 16 (1) or 15 (3) of the Constitution of India are “horizontal reservations”. 
         Horizontal reservations cut across the vertical reservations – what is called interlocking reservations.  To be more precise, suppose 3% of the vacancies are reserved in favour of physically handicapped persons; this would be a reservation relatable to Article 16 (1).  The person selected against this quota will be placed in the appropriate category; if he belongs to SC category he will be placed in that quota by making necessary adjustments;  similarly, if he belongs to open competition (OC) category he will be placed in that category by making necessary adjustments. Even after providing for these horizontal reservations, the percentage of reservations in favour of the particular category, that is,  BC, SC, ST  remains – and should remain – the same.
          The Hon’ble Supreme Court of India has repeatedly pointed out that the proper and correct course is to first fill up the OC quota (50%) on the basis of merit; then fill up each of the social reservation quotas, i.e. SC, ST and BC; the third step would be to find out how many candidates belonging to special reservations have been selected on the above basis.  If the quota fixed for horizontal reservations is already satisfied no further question arises.  But if it is not so satisfied, the requisite number of special reservation candidates shall have to be taken and adjusted / accommodated against their respective social reservation categories by deleting the corresponding number of candidates from that category.  For example,  if 19 posts are reserved for SCs (of which the quota for women is four), 19 SC candidates shall have to be first listed in accordance with merit, from out of the successful eligible candidates. If such list of 19 candidates contains 4 SC woman candidates, then there is no need to disturb the list by including any further SC woman candidate.  On the other hand, if the list of 19 SC candidates contains only two woman candidates, then the next two SC woman candidates in accordance with merit will have to be included in the list and corresponding number of candidates from the bottom of such list shall have to be deleted so as to ensure that the final 19 selected SC candidates contain 4 woman SC candidates. But if the list of 19 SC candidates contains more than four woman candidates, selected on own merit, all of them will continue  in the list and there is no question of deleting the excess woman candidates on the ground that “SC women” have been selected in excess of the prescribed internal quota of four.
          Where a vertical reservation is made in favour of a Backward Class under Article 16 (4), the candidates belonging to such Backward Class, may compete for non-reserved posts and if they are appointed to the non-reserved posts on their own merit, their number will not be counted against the quota reserved for respective Backward Class.  Therefore, if the number of BC candidates, who by their own merit, get selected to open competition vacancies, equals or even exceeds the percentage of posts reserved for BC candidates, it cannot be said that the reservation quota for BCs has been filled.  The entire reservation quota will be intact and available in addition to those selected under open competition category.
         But, the aforesaid principle applicable to vertical (social) reservations will not apply to horizontal (special) reservations.  Where a special reservation for women is provided within the social reservation for Scheduled Castes, the proper procedure, as explained above,  is first to fill up the quota for Scheduled Castes in order of merit and then find out the number of  candidates among them who belong to the special reservation group of ‘Scheduled Caste Women”.  If the number of women in such list is equal to or more than the number of special reservation quota, then there is no need for further selection towards the special reservation quota.  Only if there is any shortfall, the requisite number of Scheduled Caste Women shall have to be taken by deleting the corresponding number of candidates from the bottom of the list relating to Scheduled Castes.  To this extent, horizontal (special) reservation differs from vertical (social) reservation. Thus women selected on merit within the vertical reservation quota will be counted against the horizontal reservation for women.

Monday, May 7, 2012

CONVERSION AND MARRIAGE

- P.RAJENDRAN     www.prajendran.com

           Whether the second marriage of a Hindu husband after conversion to Islam, without having dissolved his first marriage under law would be valid?  Whether the husband would be guilty of committing the offence of Bigamy under Section 494 IPC?  Whether the second marriage would be void in terms of the provisions of Section 494 IPC?  Such questions are being raised very often.
Section 494 IPC reads as follows:  “Whoever, having a husband or wife living, marries in any case in which such marriage is void by reason of its taking place during the life of such husband or wife, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine”.

The Hindu Marriage Act strictly enforces monogamy.  A marriage performed under this Act cannot be dissolved except on the grounds available under Section 13 of the Act. In that situation, parties who have solemnized the marriage under this Act remain married even when the husband embraces Islam in pursuit of another wife. Till the time a Hindu marriage is dissolved under the Hindu Marriage Act none of the spouses can contract a second marriage. Conversion to Islam and marrying again would not, by itself, dissolve the Hindu Marriage under the Hindu Marriage Act.  A second marriage of an apostate, would be illegal marriage qua his wife who married him under the Hindu Marriage Act and continues to be a Hindu. Though the marriage solemnized  by a Hindu husband after embracing  Islam may not strictly be a void marriage under the Hindu Marriage Act because he is no longer a Hindu, but between the apostate and his Hindu wife the second marriage is in violation of the provisions of the Hindu Marriage Act and as such would be non est.
The expression “void” defined under Section 11 of the Hindu Marriage Act has a limited meaning within the definition under that Section. On the other hand the same expression has a different purpose under Section 494 IPC and has been used in the wider sense. A marriage which is in violation of the provisions of law would be void in terms of the expression used under Section 494 IPC.  The real reason for the voidness of the second marriage is the subsistence of the first marriage which is not dissolved even by the conversion of the husband. The second marriage by a convert, therefore, being in violation of the Hindu Marriage Act, would be void in terms of Section 494 IPC. Any act which is in violation of mandatory provisions of law is per se void.
The conduct of a spouse who converts to Islam has to be judged on the basis of the rule of justice and right or equality and good conscience. A matrimonial dispute between a convert to Islam and his or her non Muslim spouse is not a  dispute “where the parties are Muslims”  and therefore the rule of decision in such a case was or is not required to be the “Muslim Personal Law”. In such cases the courts shall act and the judge shall decide according to justice, equity and good conscience.  The second marriage of a Hindu husband after embracing Islam being violative of  justice, equity and good conscience would be void on that ground also and attract the provisions of Section 494 IPC.
The above interpretation of Section 494 IPC would advance the interest of justice. It is necessary that there should be harmony between the two systems of law just as there should be harmony between the two communities. The result of the interpretation would be that the Hindu law on the one hand and the Muslim law on the other hand would operate within their respective ambits without trespassing on the personal laws of each other.
Much misapprehension prevails about bigamy in Islam. To check the misuse, many Islamic countries have codified the personal law, wherein the practice of polygamy  has been either totally prohibited or severely restricted. But India is a Democratic Republic.  Freedom of religion is the core of our culture. Even the slightest deviation shakes the social fibre.  Article 25 of the Constitution of India guarantees religious freedom whereas Article 44 seeks to divest religion from social relations and personal law.  Marriage, succession and like matters of a secular character, cannot be brought within the guarantee enshrined under Articles  25 and 26 of the Constitution of India.  The personal law of the Hindus such as relating to marriage, succession and the like have all an origin in the same manner as in the case of the Muslims or Christians. The Legislation – not religion – being the authority under which personal law was permitted to operate and is continuing to operate, the same can be superseded /supplemented by introducing a uniform civil code for all the citizens in the territory of India. The successive Governments till date have been wholly remiss in their duty of implementing the constitutional mandate under Article 44 of the Constitution of India, namely, “endeavour to secure for the citizens a uniform civil code throughout the territory of India”

Thursday, May 3, 2012

DAUGHTER'S RIGHT IN ANCESTRAL PROPERTY

-P.RAJENDRAN    http://www.prajendran.com/




The Hindu Succession  Act, 1956 is an Act to codify the law relating to intestate succession among Hindus. Intestate succession means succession to property left by a Hindu without any testamentary instrument like Will, Settlement etc. The Act brought about important changes in the law of succession but without affecting the special rights of the members of a coparcenary.  Coparcenary consists of  a male Hindu, his son,  grand son (son’s son) and great grand son (son’s son’s son).  Daughters were excluded from succession to coparcenary property. The law by excluding the daughter from participating in the coparcenary ownership not only contributed to her discrimination on the ground of  gender but also led to oppression and negation of her fundamental right of equality guaranteed under Article 226 of the Constitution of India.  Parliament felt that non inclusion of daughters in the coparcenary property was causing discrimination to them and accordingly decided to bring in necessary changes in the law.  Accordingly Section-6 of the Hindu Succession Act, 1956 was substituted by a new provision vide the Hindu Succession (Amendment) Act, 2005 as follows:
'6. Devolution of interest in coparcenary property.-(1) On and from the commencement of the Hindu Succession (Amendment) Act, 2005, in a Joint Hindu family governed by the Mitakshara law, the daughter of a coparcener shall,- (a) by birth become a coparcener in her own right in the same manner as the son; (b) have the same rights in the coparcenary property as she would have had if she had been a son; (c) be subject to the same liabilities in respect of the said coparcenary property as that of a son, and any reference to a Hindu Mitakshara coparcener shall be deemed to include a reference to a daughter of a coparcener: Provided that nothing contained in this sub-section shall affect or invalidate any disposition or alienation including any partition or testamentary disposition of property which had taken place before the 20th day of December, 2004.
(2) Any property to which a female Hindu becomes entitled by virtue of sub-section (1) shall be held by her with the incidents of coparcenary ownership and shall be regarded, notwithstanding anything contained in this Act, or any other law for the time being in force, as property capable of being disposed of by her by testamentary disposition.
(3) Where a Hindu dies after the commencement of the Hindu Succession (Amendment) Act, 2005, his interest in the property of a Joint Hindu family governed by the Mitakshara law, shall devolve by testamentary or intestate succession, as the case may be, under this Act and not by survivorship, and the coparcenary property shall be deemed to have been divided as if a partition had taken place and,- (a) the daughter is allotted the same share as is allotted to a son; (b) the share of the pre-deceased son or a pre-deceased daughter, as they would have got had they been alive at the time of partition, shall be allotted to the surviving child of such pre-deceased son or of such pre-deceased daughter; and (c) the share of the pre-deceased child of a pre-deceased son or of a pre-deceased daughter, as such child would have got had he or she been alive at the time of the partition, shall be allotted to the child of such pre-deceased child of the pre-deceased son or a pre-deceased daughter, as the case may be.

Explanation.- For the purposes of this sub-section, the interest of a Hindu Mitakshara coparcener shall be deemed to be the share in the property that would have been allotted to him if a partition of the property had taken place immediately before his death, irrespective of whether he was entitled to claim partition or not.
(4) After the commencement of the Hindu Succession (Amendment) Act, 2005, no court shall recognise any right to proceed against a son, grandson or great-grandson for the recovery of any debt due from his father, grandfather or great-grandfather solely on the ground of the pious obligation under the Hindu law, of such son, grandson or great-grandson to discharge any such debt: Provided that in the case of any debt contracted before the commencement of the Hindu Succession (Amendment) Act, 2005, nothing contained in this sub-section shall affect- (a) the right of any creditor to proceed against the son, grandson or great-grandson, as the case may be; or (b) any alienation made in respect of or in satisfaction of, any such debt, and any such right or alienation shall be enforceable under the rule of pious obligation in the same manner and to the same extent as it would have been enforceable as if the Hindu Succession (Amendment) Act, 2005 had not been enacted.

Explanation.-For the purposes of clause (a), the expression "son", "grandson" or "great-grandson" shall be deemed to refer to the son, grandson or great-grandson, as the case may be, who was born or adopted prior to the commencement of the Hindu Succession (Amendment) Act, 2005.  


(5) Nothing contained in this section shall apply to a partition, which has been effected before the 20th day of December, 2004".
        The new Section 6 provides for parity of rights in the coparcenary property among male and female members of a joint Hindu family on and from 09-09-2005.  Thus on and from 09-09-2005 the daughter is entitled to a share in the ancestral property and is a coparcener as if she had been a son.  The States of Tamil Nadu,  Andhra Pradesh, Karnataka  and Maharashtra  made necessary changes in the law giving equal rights to daughters in the ancestral property by enacting State amendments and in these states the daughters have been provided parity of rights in the co-parcenary property with effect from the dates notified by the said State amendments.  The effective dates are:- Tamil Nadu(25-03-1989),  Andhra Pradesh (5-9-1985)  Karnataka (30-07-1994) and Maharashtra (22-06-1994).  The State of Kerala abolished the joint family system by enacting the Kerala Joint Hindu Family System (Abolition) Act. 1975 with effect from 1-12-1976.
  
      The right accrued to a daughter in the ancestral property, by virtue of the Amendment  Act, 2005 is absolute, except in the circumstances provided in the amended Section-6.  The excepted categories to which new Section-6 is not applicable are two, namely, (1)  where the disposition or alienation including any partition which took place before 20-12-2004 and (2) where testamentary disposition of the property was made before 20-12-2004.

Monday, January 30, 2012

LIMITED LIABILITY PARTNERSHIP

- By P.Rajendran  www.prajendran.com

 Limited Liability Partnership  (LLP)  is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership. Since LLP contains elements of both ‘a corporate structure’ as well as ‘a partnership firm structure’ LLP is called a hybrid between a company and a partnership

    The LLP structure is available in countries like United Kingdom, United States of America, various Gulf countries, Australia and Singapore. On the advice of experts who have studied LLP legislations in various countries, the LLP Act is broadly based on UK LLP Act 2000 and Singapore LLP Act 2005. Both these Acts allow creation of LLPs in a body corporate form i.e. as a separate legal entity, separate from its partners/members. 

The desirability of LLP form in India was expressed in the context of small enterprises by Bhat Committee (1972), Naik Committee (1992), Expert Committee on Development of Small Sector Enterprises headed by Sh. Abid Hussain in 1997 and  Study Group on Development of Small Sector Enterprises (SSEs) headed by Dr. S P Gupta (2001). The committees set up by the Ministry of Company Affairs, namely, Committee on Regulation of Private Companies and Partnerships headed by Sh. Naresh Chandra (2003),  Committee on New Company Law (Dr. J.J. Irani Committee) (2005) also recommended for legislation on LLPs.

The Limited Liability Partnership (LLP) Bill, 2006 was introduced in the Rajya Sabha on 15th December, 2006. The Bill was referred to the Lok Sabha Standing Committee on Finance, for examination. The Standing Committee consulted various chambers of commerce, professional institutes and other experts and also heard the M/o Corporate Affairs. The said Committee presented/submitted its report to the Parliament on 27th November, 2007. Based on such report the Ministry of Corporate Affairs revised the LLP Bill and the revised LLP Bill, 2008 was introduced in the Rajya Sabha on 21st October, 2008. This was passed by the Rajya Sabha on 24th October, 2008. The Bill was passed by Lok Sabha on  12th December, 2008. The President gave assent to this Bill on 7th January, 2009.

Any two or more persons associating for carrying on a lawful business with a view to profit may set up an LLP. The LLP Act does not restrict the benefit of LLP structure to certain classes of professionals only. A minimum of two partners will be required for formation of an LLP. There will not be any limit to the maximum number of partners. A body corporate may be a partner of an LLP. An entity which has objectives like “charitable or other not for profit objectives” would not be able to set up LLP since the essential requirement for setting LLP is ‘carrying on a lawful business with a view to profit’. The LLP Act 2008 allows Foreign Nationals including Foreign Companies & LLPs to incorporate a LLP in India provided at least one designated partner is resident of India. However, the LLP/Partners would have to comply with all relevant Foreign Exchange Laws/ Rules/ Regulations/ Guidelines. Every limited liability partnership shall have either the words “limited liability partnership” or the acronym “LLP” as the last words of its name. Indian Partnership Act, 1932 is not applicable to LLPs.

LLP form is a form of business model which is organized and operates on the basis of an Agreement and it provides flexibility without imposing  detailed legal and procedural requirements, enables professional/technical expertise and initiative to combine with financial risk taking capacity in an innovative and efficient manner. LLP shall be a body corporate and a legal entity separate from its partners. It will have perpetual succession.  The LLP is a separate legal entity, and is liable to the full extent of its assets but liability of the partners is limited to their agreed contribution in the LLP 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 mutual rights and duties of partners inter se and those of the LLP and its partners shall be governed by the agreement between partners or between the LLP and the partners. This Agreement would be known as “LLP Agreement”. As per provisions of the LLP Act, in the absence of agreement as to any matter, the mutual rights and liabilities shall be as provided for under Schedule I to the Act. Therefore, in case any LLP proposes to exclude provisions/requirements of Schedule I to the Act, it would have to enter into an LLP Agreement, specifically excluding applicability of any or all paragraphs of Schedule I.

LLP form is a form of business model which is organized and operates on the basis of an Agreement and it provides flexibility without imposing  detailed legal and procedural requirements, enables professional/technical expertise and initiative to combine with financial risk taking capacity in an innovative and efficient manner. LLP shall be a body corporate and a legal entity separate from its partners. It will have perpetual succession.  The LLP is a separate legal entity, and is liable to the full extent of its assets but liability of the partners is limited to their agreed contribution in the LLP 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 mutual rights and duties of partners inter se and those of the LLP and its partners shall be governed by the agreement between partners or between the LLP and the partners. This Agreement would be known as “LLP Agreement”. As per provisions of the LLP Act, in the absence of agreement as to any matter, the mutual rights and liabilities shall be as provided for under Schedule I to the Act. Therefore, in case any LLP proposes to exclude provisions/requirements of Schedule I to the Act, it would have to enter into an LLP Agreement, specifically excluding applicability of any or all paragraphs of Schedule I.

Under “traditional partnership firm”, every partner is liable, jointly with all the other partners and also severally for all acts of the firm done while he is a partner. Under LLP structure, liability of the partner is limited to his agreed contribution.  Further, no partner is liable on account of the independent or un-authorized acts of other partners, thus allowing individual partners to be shielded from joint liability created by another partner’s wrongful acts or misconduct. Mutual rights and duties of the partners within a LLP are governed by an agreement between the partners or between the partners and the LLP as the case may be. The LLP, however, is not relieved of the liability for its other obligations as a separate entity.

A basic difference between an LLP and a joint stock company lies in that the internal governance structure of a company is regulated by statute (i.e. Companies Act, 1956) whereas for an LLP it would be by a contractual agreement between partners. The management-ownership divide inherent in a company is not there in a limited liability partnership.  LLP will have more flexibility as compared to a company. LLP will have lesser compliance requirements as compared to a company.

LLPs shall be registered with the Registrar of Companies (ROC) appointed under the Companies Act, 1956) after following the provisions specified in the LLP Act. Every LLP shall have a registered office. An Incorporation Document subscribed by at least two partners shall have to be filed with the Registrar in a prescribed form. Contents of LLP Agreement, as may be prescribed, shall also be required to be filed with Registrar, online.

Every LLP would be required to file annual return in Form 11 with ROC within 60 days of closer of financial year. The annual return will be available for public inspection on payment of prescribed fees to Registrar. The incorporation document, names of partners and changes, if any, made therein, statement of account and solvency annual return will be available for inspection by any person and the fees for such inspection of an LLP is Rs 50/- and fees for certified copy or extract of any document u/s 36 shall be Rs. 5/- per page.

For more details, send your queries to mail@prajendran.com



Saturday, January 7, 2012

BENAMI TRANSACTIONS IN PROPERTY


Whenever a property has been purchased by one person for which consideration has been paid or provided by another person, the said transaction is considered to be a “benami” transaction. The proposition of law regarding the ownership of any property would be that the person in whose name the property has been purchased is presumed to be the real owner of the property and the burden of proving the transaction as benami is on the person who asserts that the property was purchased through the funds provided by him.  Property means property of any kind, whether movable or immovable, tangible or intangible, and includes any right or interest in such property. The Benami Transactions (Prohibition) Act, 1988 is a piece of prohibitory legislation and it prohibits benami transactions subject to stated exceptions. Sections 3,5,8 of the Act came into force on 5-9-1988 and the remaining sections came into force on 19-05-1988.
The object of the Benami Transaction (Prohibition) Act, 1988 is to vest ownership rights in benamidar as against the real owner.  The benamidar before the enactment of Benami Transactions (Prohibition) Act, 1988 could not have any right, title and interest in the property which the benamidar could convey.  Before the Benami Transactions (Prohibition) Act, 1988 was passed, two kinds of transaction were recognized by the courts in India. The first kind of benami transaction was called the real benami transaction in which when ‘A" sells a property to ‘B’ but the sale deed mentions ’C’ as the purchaser. Here the real owner is ‘B’ and ‘C’ is only the benamidar. The second class or kind of transaction is the sham transaction in which one person purports to transfer his property to another without intending to pass the title to the transferee. This second type of transaction was ‘loosely’ called benami transaction. In the first type of transaction, since there are three persons involved, it is also referred as tripartite benami transaction. The fundamental difference between the two categories of transactions is that in the former there is an operative transfer resulting in the vesting of title in the transferee, whereas in the latter there is no operative transfer and the transferor continues to retain title of the property notwithstanding execution of the documents; 

Section-3 of the Act reads as follows:-

(1) No person shall enter into any benami transaction.

 (2) Nothing in sub-section (1) shall apply to the purchase of property by any person in the name of his wife or unmarried daughter and it shall be presumed, unless the contrary is proved, that the said property had been purchased for the benefit of the wife or the unmarried daughter.
 (3) Whoever enters into any benami transaction shall be punishable with imprisonment for a term which may extend to three years or with fine or with both.”
Therefore, purchase of property by any person in the name of his wife or unmarried daughter for the benefit of the wife or the unmarried daughter is not prohibited under the Act.  There is a rebuttable presumption that the property had been purchased for the benefit of the wife or unmarried daughter. If the concerned person does not let in any satisfactory evidence to rebut the presumption that the property was purchased for the benefit of the wife or unmarried daughter,  the transaction cannot be treated as a benami transaction and he cannot be held to be the real owner. If he fails to prove that the property was purchased not for the benefit of the wife or unmarried daughter he cannot claim that he is the owner of the property.
To prove benami the following aspects should be considered:
(1) the source from which the purchase money came
(2) the nature and possession of the property after the purchase
(3) motive, if any, for giving the transaction a benami colour
(4) the position of the parties and the relationship, if any, between the claimant and the alleged benamidar
(5) the custody of the title deeds after the sale
(6) the conduct of the parties concerned in dealing with the property after the sale.


Section 4 of the Act reads as follows:-
“(1) No suit, claim or action to enforce any right in respect of any property held benami against the person in whose name the property is held or against any other person shall lie by or on behalf of a person claiming to be the real owner of such property.
(2) No defence based on any right in respect of any property held benami, whether against the person in whose name the property is held or against any other person, shall be allowed in any suit, claim or action by or on behalf of a person claiming to be the real owner of such property.”
Therefore, on coming into force of the Benami Transactions (Prohibition) Act, 1988 defence raised for the proof of the fact that the property held by a person is in the capacity of a benamidar is expressly prohibited. Neither the court is permitted in law to consider such defence nor to record its findings. 
 -P.RAJENDRAN    www.prajendran.com