UTTARAKHAND HIGH COURT  NAI NI TAL

THE HON’BLE SRI JUSTICE ALOK KUMAR VERMA

Anil Mehrotra Versus State of Uttarakhand 

No previous convictions, all documents filed, and charge-sheet submitted – Anticipatory bail granted considering personal liberty under Article 21 of the Constitution and absence of custodial interrogation necessity.

Sections 409, 420, 468, 471, and 201 IPC Scholarship scam matter – Applicant alleged to have embezzled scholarship funds – FIR lodged based on _ allegations of scholarships paid to non-students of concerned institutes – Applicant contended funds were paid directly by Social Welfare Department through online process, and he had deposited relevant amounts back

To read the Judgment  click here 

Anil Mehrotra Vs State of Uttrakhand_The Law Literates

All rights Reserved (Vaibhav Tomar Adv)

_*RAHUL GANDHI CASE*__*ED files chargesheet against Congress leaders Sonia Gandhi & Rahul Gandhi in National Herald case*_

_*The Enforcement Directorate (ED), has filed a chargesheet in Delhi’s Rouse Avenue Court, naming Congress leaders Sonia Gandhi and Rahul Gandhi in a money laundering case related to the National Herald newspaper. The chargesheet also names Congress Overseas Chief Sam Pitroda, Suman Dubey and others. Special judge Vishal Gogne has posted the matter for further proceedings on the 25th of this month. A prosecution complaint has been filed under the Prevention of Money Laundering Act (PMLA) for the offence of money laundering*_

_*ED began its probe in the National Herald case after member of Parliament Subramanian Swamy filed a complaint in 2014, accusing Sonia Gandhi, Rahul Gandhi, and other senior Congress leaders of taking over properties of the Associated Journals Limited – AJL for a mere sum of 50 lakh rupees. He alleged that the AJL properties were worth over 2,000 crore rupees. Sonia Gandhi and Rahul Gandhi were questioned in 2022 as part of the probe. The National Herald is published by Associated Journals Limited AJL, which is owned by Young Indian Private Limited. Sonia Gandhi and Rahul Gandhi each hold a 38 per cent stake in Young Indian, making them its majority shareholders. Young Indian is under the ED scanner over charges of acquiring AJL and its assets for 50 lakh rupees against an alleged loan extended by the Congress. On April 12 this year, ED served notices to take possession of immovable assets worth 661 crore rupees in Delhi, Mumbai and Lucknow, which it had attached as part of a money laundering probe linked to the National Herald newspaper and Associated Journals Limited – AJL*

all Rights Reserved- Vaibhav Tomar (Adv)

FROM SALOMON TO SATYAM : THE EVOLUTION OF CORPORATE VEIL DOCTRINE IN INDIA” INTRODUCTION

India’s rapid economic development and globalization have resulted in inflows of foreign investments in a variety of forms, subsidiary, merger, or venture. India allows nonresidents to act as the directors of Indian companies in order to attract global investments. However, foreign investors should not forget the unique legal structure and economic system of the country, such as its corporate veil lifting principle. This is a concept recognized worldwide and in countries such as Japan and Korea, whereby a court or statute may disregard the separate legal identity of a company to bring its shareholders, beneficial owners, or directors personally liable.

The landmark case of Salomon v. A. Salomon established that a company is a distinct legal entity from its members, with rights and obligations of its own. This principle is incorporated in Section 9 of the Companies Act, 2013, which gives companies characteristics such as perpetual succession, the right to hold property, and the capacity to sue or be sued in their name. This was subsequently vindicated by the Supreme Court of India in the case of Bacha F. Guzdar v. CIT, Bombay that recognizes the juristic personality of the company to be different from its shareholders. The same is known as corporate veil, that protects the interest of owners and officers.

The Companies Act 2013 contains provisions specifically allowing piercing into the corporate veil when fraud/malfeasance is part of the motive so accountability can be meted out. Such provisions bestow powers on the authorities to get beyond the independent legal person of the company and reach at the individuals responsible for improper acts and deeds.

However, The Companies Act, 2013 explicitly provides for situations where the corporate veil may be lifted in order to highlight the legislative intent not to allow the abuse of the corporate structure and have people made accountable when the corporate entity is being used as a shield for some wrongful activity.

Courts have established various grounds for lifting the corporate veil, including fraud, improper conduct, conflicts with public policy, enemy character, tax evasion, avoidance of welfare legislation, and sham companies. In Jones v. Lipman (1962), the company was deemed a sham when it was used to evade a land sale agreement, leading the court to enforce the contract against the individual. Similarly, in Connors Bros. v. Connors (1940) and Daimler Co. Ltd. v. Continental Tyre & Rubber Co. (1916), companies were treated as enemy entities during wartime due to their controllers’ affiliations with hostile nations. In Sir Dinshaw Maneckjee Petit (1927),the court ignored corporate entities used solely to evade taxes. The avoidance of welfare legislation was highlighted in Workmen Employed in Associated Rubber Industries v. Associated Rubber Industries (1986), where a subsidiary was used to split profits and reduce bonuses, prompting the court to include its income in the parent company’s profits. Lastly, in Gilford Motor Co. Ltd. v. Horne (1933), the court pierced the veil of a company created to breach a non-compete agreement, identifying it as a façade. These caselaws demonstrate the courts’ proactive approach to prevent the misuse of corporate entities.

KEY LEGAL PROVISIONS ON LIFTING UP OF THE CORPORATE VEIL

1. Section 339: Liability for Frauds of Conduct in Winding Up – In the course of winding up a company, the NCLT may render persons liable who carry on business with intent to defraud creditors or for any fraudulent purpose.

2. Section 7(7): Punishment for incorporation using false information.

3. Section 251(1): Liability for fraudulent application for removal of the company’s name from the register.

4. Section 216: Investigation of Ownership –The Central Government may appoint inspectors to investigate and report on:

– Who have an interest in the failure or success of the company.  Such persons who control or influence the policy of the company.   Such persons who have a beneficial interest in the company.

5. Sections 210 and 212: Investigating Powers – Empower the Central Government to appoint inspectors for detailed investigations into a company’s operations and activities to detect fraudulent behavior or misconduct.

EVOLUTION OF THE CORPORATE VEIL IN FOREIGN JURISDICTIONS

This doctrine of lifting the corporate veil that originated from Salomon v. A Salomon and Co. Ltd. has been borrowed and developed in several foreign jurisdictions to avoid misuse of corporate structure. U.S. courts pierce the corporate veil for fraud, undercapitalization, or when corporate form is used to avoid legal obligations as in the case of United States v. Milwaukee Refrigerator Transit Co.

Similarly, Australian courts have followed the trend of applying the doctrine in circumstances of fraud or impropriety. What is common in each jurisdiction is that the court lifts the veil to hold persons liable where the company has been used as a shield to perpetuate injustice or fraud. In Canada, the courts used this doctrine in the case of fraud or where the company is a facade, as held in Clarkson Co. Ltd. v. Zhelka.

JUDICIAL APPROACH OF INDIAN COURTS:

Indian courts have applied the doctrine of lifting the corporate veil in a variety of contexts beyond punishing wrongdoers. For example, in Prem Lata Bhatia v. Union of India, the Delhi High Court held that transferring rented premises from a sole proprietorship to a private company did not warrant eviction, for possession effectively remained with the same person. Similarly, in Prasad-Sushee JV v. SingareniCollieries Co. Ltd., the Hyderabad High Court lifted the corporate veil to allow a subsidiary to rely on experience through its parent company in order to qualify for the tender.

Indian courts generally have supported the principle of a company’s separate legal identity vis-à-vis its shareholders and directors but have lifted the corporate veil only when absolutely necessary, as seen in Vodafone International Holdings B.V. v. Union of India & Another.

In the case, Vodafone, being a Netherlands-based company, acquired CGP Investments, a Cayman Islands entity controlled by Hong Kong’s Hutchinson. CGP held a 67% stake in Hutchinson-Essar Ltd., which was Hutchinson’s Indian mobile business. The Indian tax authorities contended that Vodafone should pay 110 billion rupees in taxes because capital gains had been made in India by Hutchinson. The Bombay High Court decided in favor of the tax authorities, but the Supreme Court, in its pro-business approach, ruled that the corporate veil should not be lifted in cross-border transactions involving tax issues, which is a clear precedent.

The Delhi High Court in J.B. Exports Ltd. v. BSES Rajdhani Power Ltd. has treated a parent company and its subsidiary as one unit to exempt sub-letting charges. Still, the corporate veil can still be pierced by arbitral tribunals. While the Delhi High Court in Sudhir Gopi v. IGNOU and the Bombay High Court in NOD Bearings v. Bhairav Bearing Corporation held that arbitral tribunals cannot lift the corporate veil. The case of UP v. Renusagar Power Company, a decision by the Supreme Court, was an exception. Therein, it held that Hindalco Ltd. was entitled to claim relief of reduced electricity duty available under the Uttar Pradesh Electricity Duty Act since it treated Hindalco and Renusagar Ltd., wholly owned by the former, as having “inextricable umbilical relations.”. This case is an example of the court lifting the veil for the advantage of a company. The Gujarat High Court in IMC Ltd. v. Board of Trustees of Deendayal upheld their authority to do so under the doctrine of alter ego.

The principle of separate legal identity of a company has been well accepted in common law jurisdictions, including India. The Supreme Court upheld this principle but recognized exceptions in L.I.C. India v. Escorts Ltd. & Others (LIC Case), where the corporate personality could be disregarded. The court can pierce the corporate veil when members abuse the corporate structure for fraudulent or improper purposes, and thus, the actual wrongdoer can be identified and dealt with under the law. In this way, mischief or fraud doers are dealt with appropriately.In GMR Energy v. Doosan Power Systems, the Delhi High Court allowed lifting the veil in non-fraud cases, differing from earlier judgments. Such conflicting judgments call for clarity from the Supreme Court on the scope of this doctrine in arbitration.

The LLP Act, 2008 grants LLPs separate legal existence but doesn’t apply the piercing of the corporate veil doctrine. However, Section 30 holds partners personally liable for fraudulent acts, including defrauding creditors.

THE SATYAM SCAM: A TURNING POINT IN THE EVOLUTION OF THE CORPORATE VEIL DOCTRINE IN INDIA

Satyam scam is one of the biggest scandals a business in India has ever suffered through. It was discovered that the Satyam Computer Services, which was once considered India’s most dominant IT firm, had manipulated several financial documents. This showed that company promoters abused the corporate veil or legal doctrine separating company assets and liabilities from directors and shareholders to hide fraudulent dealings where they deceived the public as well as investors.

The scam came into limelight when the then-chairman Ramalinga Raju, while admitting to fabricating records and underreporting cash reserves to inflate the balance sheet to over ₹7,000 crores in 2009, revealed to everyone that the misuse of the corporate veil had highlighted a great need for accountability, transparency, and stronger corporate governance procedures.

Though the principle of separate legal identity, which has emerged in Salomon v. Salomon & Co. Ltd., provides the independence of the company from the shareholders to act independently, Satyam’s case misutilized the concept for the hiding of fraudulent transactions. On the basis of this understanding, when analyzing the Satyam scam, one could note that the corporate veil doctrine evolved over time. Evolution of such malfeasance, especially when business is exploited for the purpose of committing fraud or committing any other wrongs, has led to the development of Indian judicial procedures like *piercing of the corporate veil*.

The truth is that in the Satyam case, courts and other regulatory agencies “pierced” the corporate veil, making those responsible for the fraud, including Ramalinga Raju, personally liable. The Satyam affair marked a sea change in Indian corporate law by the introduction of more stringent rules and the execution of the Companies (Amendment) Act, 2013, aimed at further improvement in corporate governance.

The Indian judiciary has played a vital role in corporate fraud cases where it has effectively lifted the corporate veil that ensured accountability. A classic example is the Satyam scam, which vividly depicts how the courts addressed the misutilization of the corporate veil by making individuals answerable for their acts.

Thus, by piercing the veil, the courts showed that legal entities should not be used to give protection to wrongdoers. Through such actions, the courts have reinforced the principles of justice, transparency, and corporate governance. This evolution of the corporate veil doctrine marks a significant shift in India’s legal landscape, ensuring that the legal separation between a company and its directors cannot be misused for fraudulent purposes. This precedent, as a result of the legal response to the Satyam scam, sets strong roots for the future of corporate malfeasance, with greater regulatory oversight and corporate accountability in India.

The evolution of the corporate veil doctrine, which was demonstrated in the Salomon case, to its use in fraud trials demonstrates a change in the way that people are held accountable for corporate misconduct, safeguarding the interests of investors and society as a whole. The Satyam case would later serve as a significant illustration of how the corporate veil theory might be used when it is abused for evil purposes.

CONCLUSION

The corporate veil lifting doctrine plays a very important role in preventing the misuse of corporate structures and for holding people liable for fraud or other improper conduct. In India, the application has been judicious, making the courts pierce only in exceptional cases where there has been substantial evidence that it is a mere façade to avoid liabilities under the law. This mechanism is therefore crucial in preventing companies from being used as tools for fraud, tax evasion, or any other wrong conduct, holding the individuals behind the company liable for their actions.

Nonetheless, application thereof must be balanced. Its place within justice administration and transparency in the corporate world remains imperative, but its use is hereby curtailed so that this tool will not be taken for granted. The corporate identity of a company shall, at all times, be given respect, and the use of lifting the corporate veil shall remain an exception rather than a course of action when there are ample indications showing definite proof that the corporate entity is being abused.

This doctrine will take the form of a means only of furthering ethical business practices and transparency more powerfully as India continuously modifies its corporate governance body to be more refined. Judges have to exercise this provision very cautiously so that while upholding the principle as a check on companies, they do not whittle away the legitimate rights or protections given to those concerns as it will continue to strike an efficient balance between holding individuals accountable for corporate misconduct and maintaining the integrity of the corporate structure in whole.

Submitted By- Mansi (3rd Year of 5 Year B.A. L.L.B) Academic Year- 2022-2027

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The Delhi Assembly election is just around the corner, with voting scheduled to take place on *February 5, 2025*, and the results will be announced on *February 8, 2025* ¹ ². This election will be a single-phase poll for all 70 constituencies in Delhi.

The Model Code of Conduct has come into effect with the announcement of the election schedule, ensuring free and fair elections ². The major political parties contesting the election are the Aam Aadmi Party (AAP), Bharatiya Janata Party (BJP), and Congress.

Currently, the AAP holds power in Delhi with 62 out of 70 Assembly seats, while the BJP has 8 seats, and Congress has none ². The election will see some key battles, including a contest between former MP Parvesh Verma and AAP leader Arvind Kejriwal ².

An Act to make provisions for live-in relationships for the citizens of India; in interest of both Parties, and for connected purposes.

BE it enacted by Parliament in the Seventy Sixth Year of Republic of India as follows :–

Statement of Objectives and Reasoning.– Given the prevalence of live-in-relationships in India,

It is imperative to establish a legal framework that addresses the rights, responsibilities, and Protections of individuals in live-in-relationships. There is, at present, considerable uncertainty as To law on the subject of live-in-relationships, as disputes arising under the same are subject to Precedents and guidelines established by courts of law which are not uniformly applicable.

2. This Act seeks to fill in the legislative void with respect to the regulation and protection of rights

And responsibilities of individuals in live-in-relationships. It provides legal recognition, Mechanisms for dispute resolution, and safeguarding their interests by comparing and applying the Proposed framework with existing laws, the Act ensures that live-in-relationships are recognized

And governed differently, reflecting their unique nature. The Act places paramount importance on

The welfare and security of individuals, particularly children, within live-in-relationships, aiming To provide them with adequate legal safeguards.

CHAPTER I

PRELIMINARY

(REGULATION AND PROTECTION) ACT, 2023.

(2) It extends to the whole of India including the Territories of States; Union Territories; and other Territories as may be acquired. All live-in-relationships arising outside said territories are subject To the law of the land they are residing in outside India.

(3) It shall come into force on such date as the Central Government may, by notification in the Official Gazette.

2. Definitions.– In this Act, unless the context otherwise requires,–

(a) Live-in-Relationship: Refers to a domestic arrangement where two individuals cohabit Without formal marriage, sharing their lives, responsibilities, resources, and performing voluntary Sexual intercourse akin to a marital relationship.

(b) Partners: Denotes individuals involved in a live-in-relationship.

© Children of the Relationship: Encompasses biological, or children born through reproductive Methods during the existence of the live-in-relationship.

(d) Child: biological children conceived by partners.

(€ )Cohabitation Agreement: Signifies a written contract between partners delineating their rights And responsibilities.

(f) Domestic Violence: Holds the same meaning as defined in the Protection of Women from Domestic Violence Act, 2005.

(g) Mediation: Signifies a voluntary dispute resolution process facilitated by a neutral third party.

(h) Arbitration: Denotes a dispute resolution method outside the court system, overseen by an Arbitrator.

(j) Spousal Support: Entails financial support provided to a partner as per this Act’s provisions.

(k) Annulment: Refers to the legal declaration of the nullity of a live-in-relationship.

(l) Asset Protection: Signifies measures taken to safeguard individual assets within the Relationship.

(m) Cohabitation: Denotes the act of two individuals living together in a romantic or domestic

Relationship, either prior to or instead of marriage, inclusive of same-sex relationships.

(n) Property: Encompasses both movable and immovable assets.

(o) Maintenance: Includes financial support for both partners and their children.

(p) Minor: Refers to individuals under the age of 18, with specific reference to the Protection of  Children from Sexual Offences (POCSO) Act, 2012, where applicable.

(q) Designated Authority: Means an authority appointed under the provisions of the Live-in Relationship (Regulation and Protection) Act, 2023, for the registration of live-in relationships.

CHAPTER II

ELIGIBLITY AND REGISTRATION LIVE-IN RELATIONSHIP

(define with respect to what is explained in HMA) , as per this Act, are eligible to enter into a Live-in relationship.

(2) Subsection (1) applies regardless of whether subsections (3) and (4) are complied with.

(3) After the live-in relationship document has been signed under subsection (1), it must also be Signed, in the presence of the individuals in the live-in relationship and each other, by:

(a) each of the two witnesses,

(b) the designated authority.

(4) After the witnesses and the designated authority have signed the live-in relationship document, The designated authority must ensure that:

(a) the fact that the two individuals have registered as partners in a live-in relationship,

(b) any other information prescribed by regulations, is recorded in the register as soon as is Practicable.

(5) No religious service is to be used while the designated authority is officiating at the signing of A live-in relationship document.

(6) Section 4(1) of the Live-in Relationship (Regulation and Protection) Act, 2023. Has given Meaning to this section.

(7) For the registration of live-in relationships, In this Act, “designated authority” means an Authority appointed under the provisions of the Live-in Relationship (Regulation and Protection) Act, 2023.

                                    CHAPTER III

RIGHTS AND OBLIGATIONS OF COHABITING COUPLES

5.Recognition of Live-in-Relationships.– (1) Live-in-relationships shall be officially recognized As valid domestic relationships under the provisions of this Act.

(2) Partners engaged in a live-in-relationship shall be entitled to the rights and responsibilities set Forth herein.

6. Rights and Obligations of Partners .– The partners in a live-in-relationship must perform their Duties and obligations, unless same is excused under provisions of this Act, or of any other law.

1) Partners within a live-in-relationship shall enjoy equal rights and responsibilities, particularly In matters concerning financial support, property, and child custody.

2) Partners have the right to co-own property, establish joint bank accounts, and collaboratively Decide on financial and household matters.

3) In the event of separation, partners retain the right to seek financial support from one another As determined by the court.

4) The Act ensures the protection of the rights of Children of the Relationship, encompassing Financial support, inheritance, and custody rights.

CHAPTER IV

DISSOLUTION AND NULLITY OF LIVE-IN RELATIONSHIPS

7. Dissolution of Live-in Relationships.– A live-in relationship may be dissolved based on the Grounds of irretrievable breakdown, provided that both individuals involved consent to the Dissolution.

8. Nullity of Live-in Relationships.– The criteria for nullity of live-in relationships and the Process for declaring a live-in relationship as void or voidable shall align with the provisions Outlined in the Special Marriage Act, 1954, with appropriate adjustments, grounds for Nullity of Live-in Relationships–

1) A live-in relationship may be declared null and void when there is an irretrievable breakdown In the relationship, making it impossible for the partners to continue living together as a Couple. This could result from significant differences, conflicts, or circumstances that make Cohabitation untenable.

2) If one of the individuals involved in the live-in relationship is below the age of consent (18 Years), the relationship may be declared null and void. This adjustment aligns with the age Requirement stipulated in the SMA for marriage.

3) If the live-in relationship was entered into under fraudulent circumstances, where one partner Misled the other or misrepresented facts significantly, it may be declared void. For example, If one partner falsely claimed to be unmarried or concealed a prior marriage.

4) If one of the individuals was coerced or forced into the live-in relationship against their will, It may be declared void. This aligns with the provision in the SMA that considers marriages Void if one party was coerced into the marriage.

5) Just as in the SMA, live-in relationships between individuals closely related within the Prohibited degrees of consanguinity or affinity may be declared null and void. These Prohibited degrees are defined in the Act, and relationships within these degrees are Considered socially or legally unacceptable due to their close kinship.

6) If one of the partners is incapable of engaging in a sexual relationship due to impotence or a Physical condition, and this condition was not disclosed before the live-in relationship began, The relationship may be declared void.

9. Termination of Agreement.– The cohabitation agreement, a cornerstone of the Cohabitation Relationship, shall cease to be in effect automatically upon the lawful marriage of the partners.

                           CHAPTER V

                 PROTECTION OF VULNERABLE PARTIES

10. Protection of Children.– The paramount importance shall be accorded to the welfare of Children of the Relationship. In cases where it is deemed necessary for the well-being of the Children, the court may appoint a guardian to ensure their physical and emotional well-being.

Partners shall share the responsibility of contributing jointly to the upbringing and education of

Their children, fostering an environment conducive to their growth and development.

11. Child Custody and Support.– Elaborate procedures for determining child custody in Cohabitation relationships shall be meticulously outlined, giving paramount consideration to the Best interests of the child.

Such procedures shall be subject to the jurisdiction of family courts, which are specialized in Handling matters related to child custody and support.

12. Domestic Violence.– In cases where domestic violence casts a dark shadow over the Relationship, the partner who has suffered such violence shall have the right to seek protection Orders under the Protection of Women from Domestic Violence Act, 2005.

Perpetrators of domestic violence shall be held accountable for their actions and may face Appropriate penalties under this Act, ensuring the safety and well-being of individuals in live-in Relationships.

13. Spousal Support (Maintenance) in Cohabitation Relationships.– Spousal support, also Referred to as maintenance, may be applicable in Cohabitation relationships when one partner is Financially dependent on the other or has made significant sacrifices, such as career or economic Opportunities, for the benefit of the relationship.

1) The determination of spousal support shall consider various factors, including but not limited To:

a) Duration of the Cohabitation relationship.

b) Financial needs and resources of each partner

c) Standard of living established during the relationship.

d) Contributions made by each partner to the relationship, both financial and non-financial.

e) Age, health, and employability of each partner.

f) Any agreements or understandings between the partners regarding support.

2) Spousal support may take various forms, such as periodic payments, lump-sum settlements, Or the allocation of specific assets. The type and duration of support shall be determined based On the specific circumstances of the relationship and the partners involved.

3) The duration of spousal support shall be determined with careful consideration of factors like The length of the Cohabitation relationship, the recipient partner’s ability to become Financially independent, and the overall goal of ensuring fairness and equity, which is under The jurisdiction of family courts.

4) Spousal support arrangements may be subject to modification if there are significant changes In circumstances, such as changes in income, employment status, or health. Such Modifications shall be made in a manner that continues to prioritize fairness and equity.

14. Savings Clause.– To uphold the principles of fairness and continuity, any rights, obligations, Or agreements entered into before the enactment of this Act shall remain unaffected by its Provisions, preserving the sanctity of prior commitments and arrangements. This provision ensures The preservation of established rights and legal arrangements.

15. Cohabitation Agreement.– Partners in a Cohabitation relationship shall enjoy the liberty to Enter into agreements meticulously designed to safeguard their individual assets, thereby fostering Financial security and peace of mind.

Partners shall retain the prerogative to amend their cohabitation agreement to reflect evolving Circumstances and changing needs.Such agreements shall be governed by the procedures and principles outlined in the Indian Contract Act, 1872, ensuring legal clarity and enforceability.

16. Determination of Paternity.– 1) Determining paternity in Cohabitation relationships shall be Approached with utmost care and consideration, acknowledging the rights and responsibilities of All parties involved.

2) The process of paternity determination shall follow these thoughtful procedures–

The court’s decision shall be based on the best interests of the child and the principles of fairness And equity.

17. Desertion.– Desertion, defined as one partner’s deliberate and unjustified abandonment of the Cohabitation relationship, shall be acknowledged as a severe breach of the partnership’s Obligations and shall serve as substantial grounds for legal action

In cases of desertion of the live-in-relationship, every reasonable effort shall be exerted to locate The absent partner. If, after exhaustive attempts, the deserting partner remains untraceable, such Circumstances shall constitute legal grounds for initiating appropriate legal action.

18. Abortion Rights.– Partners in a Cohabitation relationship, whether involving biological, Children conceived through assisted reproductive methods (such as IVF) by both the parties in the Live in relationship shall jointly exercise equal and unwavering decision-making authority when Addressing matters related to abortion rights.

                               CHAPTER VI

DISPUTE RESOLUTION IN LIVE-IN-RELATIONSHIPS

19. Mechanisms for Dispute Resolution.– Dispute resolution mechanisms in Cohabitation Relationships shall be governed by the provisions of the Arbitration and Conciliation Act, 1996,Unless otherwise agreed upon by the parties or as prescribed by this Act.

20. Cost Allocation.– The allocation of costs related to dispute resolution mechanisms shall be Determined based on the outcome of the resolution process and in accordance with the Arbitration And Conciliation Act, 1996.

21. Mediation.– Mediation, as a primary method for resolving disputes within Cohabitation Relationships, shall be encouraged and prioritized.

Mediation shall involve a neutral third party, either mutually agreed upon by the partners or Appointed by the court, whose role shall be to facilitate communication and negotiation between The parties with the aim of reaching a mutually acceptable resolution.

Mediation shall prioritize preserving the relationship, safeguarding the best interests of any Children involved, and ensuring the fair distribution of assets and responsibilities.

22. Arbitration.– In the event that mediation fails to yield a resolution, partners may opt for Arbitration as an alternative dispute resolution method.

Arbitration shall involve the appointment of an impartial arbitrator, agreed upon by the parties, Who shall render a binding decision after considering the merits of the dispute.

The arbitration process shall aim to provide a fair and just resolution while maintaining the privacy And efficiency of the Cohabitation relationship.

23. Legal Proceedings if Alternative Dispute Resolution fails.– In cases where mediation and Arbitration fail to yield a resolution, partners may resort to legal proceedings under the jurisdiction Of family courts.

Legal proceedings shall be guided by the relevant provisions of this Act, ensuring fairness, equity, And the protection of the rights and responsibilities of all parties involved.

      CHAPTER VII               MISCELLANEOUS

24. Enforcement and Penalties.– Any person found in violation of this Act shall be subject to Penalties as determined by law, with due consideration for the nature and severity of the violation.

25. Amendment and Repeal.– This Act may be amended or repealed by subsequent legislation As deemed necessary by the competent legislative authority.

26. Power to Remove Difficulties.– In the event that any difficulty arises in giving effect to the Provisions of this Act, the Central Government may, by order published in the Official Gazette, Make such provisions not inconsistent with the provisions of this Act as may appear to be necessary For removing the difficulty, ensuring the smooth implementation of the Act.

27. Act to Have Overriding Effect.– The provisions of this Act shall have an overriding effect On any other law in force, ensuring that the rights and responsibilities outlined herein take Precedence

28. Act to be Gender-Neutral.– This Act shall be construed as gender-neutral and shall apply Equally to all individuals, irrespective of gender, promoting equality and fairness in Cohabitation Relationships.

29. Act Not to Prejudice Customary Laws. – Nothing in this Act shall prejudice the provisions Of any customary law or any other law for the time being in force, respecting the diversity of legal Traditions within the country.

30. Jurisdiction.– Courts with jurisdiction over family matters, as prescribed by law, shall have The authority to adjudicate cases under this Act, ensuring specialized and informed decisions in Matters pertaining to Cohabitation relationships.

31. Marriage and live in relationship- Since the Vedic culture, marriage has been revered as a Sacred union in India. In India, marriages are solemnized according to the requirements of the Special Marriage Act or the personal laws of the religions of the parties. According to the law,

Marriage is a contract between a man and a woman in which they agree to support and live Together. Marriage as a concept has evolved over time. After a formal ceremony, marriage is Usually considered one of the basic rights of citizens. It has a legal meaning and includes a Number of duties and responsibilities related to property inheritance, inheritance and other Matters. As a result, marriage includes all the legal requirements of tradition, revelation, and Election, as well as the legal consequences of that relationship.

In many western countries, people live a lot in relationships. The definition of cohabitation is a Living arrangement in which non-marital partners live together to maintain a long-term Relationship comparable to marriage. The basic principle of cohabitation is that potential Partners want to assess their compatibility before committing. Without marriage, a live-in A relationship is a de facto union where the couple sleeps in the same room. In the West, commonmarriages, informal marriages, fictitious marriages, arranged marriages and other names for this Non-marriage is used. Although there is no legally recognized marriage ceremony, civil Marriage contract or civil registration, it is a type of human relationship that is legally recognized As marriage in some jurisdictions. Most residential partnerships take place in large cities. In a A large part of India, which consists of cities and villages, such a practice is still considered taboo.

Due to a number of factors, including tolerance and lack of commitment, there is a gradual shift From the sacrament of arranged marriage to love marriages and eventually to live-in Relationships.

CONCLUSION

The Live-in-Relationship (Regulation and Protection) Act, 2023, seeks to provide a comprehensive Legal framework for recognizing, regulating, and protecting the rights and responsibilities of Individuals in live-in relationships in India. It addresses a pressing need, given the prevalence of Such relationships in the country and the absence of clear legislation governing them. This Act Begins by defining critical terms such as “live-in-relationship,” “partners,” “children of the Relationship,” and other related concepts. It lays the foundation by establishing eligibility criteria For individuals entering live-in relationships and the process for their registration. This ensures that The law is applicable across India and clarifies the legal status of such relationships. The Act Recognizes the unique nature of live-in relationships and provides partners with equal rights and Obligations. It emphasizes financial security, property rights, and child custody. In cases of Dissolution, it allows for separation based on mutual consent and addresses the nullity of Relationships under specified circumstances. The Act prioritizes the welfare and protection of Vulnerable parties, particularly children. It outlines procedures for determining child custody and Support while addressing issues related to domestic violence. Spousal support or maintenance is Addressed comprehensively, ensuring fairness and equity. The legislation also offers mechanisms For dispute resolution, with mediation and arbitration as preferred methods before resorting to legalProceedings. It maintains a gender-neutral approach, ensuring equal protection to all individuals, Regardless of gender, and respects customary laws where applicable. In conclusion, The Live-in-Relationship (Regulation and Protection) Act, 2023, endeavors to bring clarity and fairness to the Lives of individuals in live-in relationships. It balances the rights and responsibilities of partners, prioritizes the welfare of children, and provides a legal framework for dispute resolution. This Act Marks a significant step towards recognizing and regulating live-in relationships, fostering an Environment of security and stability for those choosing this domestic arrangement.

Submitted by

Urvashi Manwani (BA LLB. DIVISION – B)

(Top 25 Blogs) SYMBIOSIS LAW SCHOOL NAGPUR, BlogCompetition In India 2024 by The Law Literates

Introduction: The Hindu Succession Act 1956 was a significant change brought to the position of the women in the society in regard to the inheritance of the ancestral property. The transfer of the property from father to sons was common but the enactment of this amendment act 2005 ensures with transforming the property ownership, as women being recognized as the legal heirs to the property. The enactment of this act included the property rights of their fathers and husbands. In relation to this act, it made legally permissible for the daughters to inherit their father’s property but it made restrictions in respect to joint family under Mitakshara system. However, it is noted this act made the first step towards the gender equality in the property rights but the norms of the society still persist making the search for gender equality still a battle. This context was further enhanced by the 2005 Amendment which upgrade a daughter’s position to inherit her father’s property by allocating her equal standing alongside the sons and making her a coparcener. Though, there are many social changes that are yet to happen before women will completely know what inheritance of the ancestral property and their rights under such laws are.

Key Provisions of the Hindu Succession Act,1956:

This act provided the inheritance and succession to the property among Hindus, Buddhists, Jains, and Sikhs. The following points are some of the major provisions of the act:

Prior to the enactment of this act women had a very little right to claim the property. This act provides a base under Section 8, property rights to daughters, wives, and mothers as Class I heirs. Women’s right in regard to husband’s property was brought into the law by including and raising them as Class I heirs.

In case of joint family this act does not give any co-owners rights to women as it had the provisions for men. So, in the ancestral property under the Mitakshara system the women did not automatically eligible as coparceners.

For the self-acquired property, the property which is acquired by the person himself can be inherited by a legal heir irrespective of the gender. For the ancestral property, traditionally it was considered that sons were the co-owners of joint family property.

In this act, some heirs were disqualified from inheriting of the property rights. For example, the disqualification sates that people who were proved of having guilty of some offenses like killing a person from whom it was supposed to be inherited and those who renunciates their religion was barred from inheriting property.

By this act a Hindu is allowed to execute a will for the disposal of his property. For example, if a man dies intestate the property shall be divided according to the provisions of the act by giving priority to Class I heirs above all.

This act enhanced the right to property for the widow’s inheriting her deceased husband. Thus, making mandatory the financial security of the widows.

The act gives the permission to a Hindu by altering his will in her lifetime by making it flexible and right to update.

The 2005 Amendment:

The Hindu Succession Act (Amendment) Act 2005 made a notable change towards the step of gender equality in regard to the property rights to women’s inheritance and coparcenary rights within the Hindu families. While daughters could inherit the property but not given the right to inherit the joint family property matters.

The 2005 Amendment to the Hindu Succession Act, 1956 marked a remarkable milestone by recognizing daughters as equal coparceners with sons in regard to the ancestral property. This act enabled the daughters to become the coparceners in the ancestral property and giving them the right to sell, transfer their share independently. The 2005 Amendment act also gave the right to the daughters that they could claim their rightful share even if the father had died before the amendment was passed. This change was pivotal ensuring that daughters have the same rights as of the sons in respect to ownership and inheritance. The married women were also granted with the same rights as unmarried women or men. Thus the 2005 amendment represents a turning point in regard to inheritance and ownership of the property by the women, but continued efforts are being made to enhance the awareness and settle practical issues surrounding the inheritance rights for women.  

Judicial Trends and Landmark Cases:

In the case of Rangammal v. Kuppuswami (2011), the Supreme Court of India addressed the issues of decimating the women from inheriting property under traditional laws. The discussion centered around a women’s right to inherit her father’s property right, in spite of local tradition which excluded her from the inheritance. The court ruled that such practices were invalid and violating the constitutional principle of gender equality. It stated that The Hindu Succession Act ensures equal inheritance rights for both men and women. Thus, the decision reinforced that gender-based inequality in regard to the inheritance of property is unconstitutional and ensures that women’s are capable to having equal rights as of men’s.

In the case of Vineeta Sharma v. Rakesh Sharma (2020), theSupreme Court of India stated that the 2005 amendment to the Hindu Succession Act, which gave the daughters the same right of inheritance as of sons in ancestral property. The court ruled that daughters irrespective of their marital status or whether they were before or after of the enactment of the amendment are qualified of the equal coparcenary rights in ancestral property. This judgement ensures that it is applicable even to the daughters whose fathers had passed before the enactment, encouraging equality in the gender rights and settling previous uncertainties. In conclusion it established that daughters are entitled to receive the same rights as of sons.

Impact on Women’s Socioeconomic Position:

The Hindu Succession Act 1956 and its amendment 2005 promotes the equal property rights in respect of inheritance which also impacted their socioeconomic positions. While challenges remain constant these reforms laid a foundation for permitting women in the following ways:

Challenges in Realizing Equal Property Rights:

Though the Hindu Succession Act 1956 and its 2005 amendment were a crucial step towards equality in the inheritance of the property rights, there are some significant challenges which are as follows:

Future Outlook of Gender Equality in Property Rights:

The Hindu Succession Act 1956 gave limited access to women’s right in property but 2005v amendment granted the daughters with the full inheritance of the property rights. In spite of these reforms’ challenges like lack of awareness, social resistance restricting from the full implementations. The following points states the future outlook for women’s property rights.

Conclusion: The Hindu Succession Act 1956 has played a significant role in transferring the women right to inherit the property especially with the 2005 amendment that granted daughters with the equal coparcenary rights. These changes mark a significant milestone towards gender equality, promoting women right in property and challenging long legal proceedings. However, the lack of awareness and the cultural and societal attitudes hinders the full implementations of the act especially in the less developed areas of our country. By this act the married women were granted with the same rights as of the unmarried women and men. The inheritance of the property grants the right to pass it to the future generation. Public awareness is made by various organizations to promotes the women property rights from legal aid camps, workshops and programs. Though the journey towards the gender equality is ongoing. While the legal foundation continued societal change and strong implementations are necessary to ensure that women can fully implement their rights to achieve economic independence and challenges the historical inequality of the inheritance of the property.

Written by Sairindhri Dey, 1st Year BBA-LLB Student  (2024-29)                           
(Top 25 Blogs)Techno India University, West Bengal, BlogCompetition In India 2024 by The Law Literates

In India we have corporate democracy which means certain decisions are to be taken by a simple majority that is shareholders holding 51% of the company’s shares and certain decisions are to be taken by a special majority. The provisions where special resolutions which includealteration of memorandum article or mergers or amalgamation will be required means 75% of the shareholders present in the meeting should vote in favor of the resolution then only the resolution can be carried forward minority shareholders neither have a veto power not have overriding powers. Therefore, the Companies Act 2013 addresses these concerns, providing them with rights and safeguarding the interests of the minority.

Who is a Minority Shareholder?

A minority shareholder refers to an individual or entity that holds a minority or less than a controlling interest in a company. In other words, a minority shareholder owns a portion of the company’s shares that is smaller than 50%. They do not have the power to control or influence major decisions within the company on their own since they do not hold a majority of shares minority shareholders have Limited voting rights in corporate decisions, they may not be able to sway the outcome of major resolutions or appointments without the support of other shareholders.

What is the Rule of Majority?

Rule of majority means the company will be managed by the majority and the shareholders including the management of the company. If they pass any resolution then it is binding on all the members of the company to follow that. Now as the minority shareholders own less than 50% of the total share, they do not have voting rights and they cannot single-handedly elect directors, the majority shareholders take advantage of this and pass the resolution for compulsory acquisition of minority shareholders.

Rights of the Minority Shareholders

1. Right to Information – Under section 101 of the Companie Act,2013 minority shareholders can access relevant and timely information about the company’s financial performance, operations, and strategic plan, as regular updates, on major corporate developments and decisions.

2. Voting rights – Under Section 108 of the Companies Act, 2013, the right to vote on important matters including the election of directors’changes of the company’s article of incorporation protections against dilution of voting power without proper notification. This right is protected under section 108 of the Companies Act (CA),2013.

3. Equal dividend– In the title the right to receive a share of the company’s profit in the form of dividends if declared by the board of directors fair and equal treatment in dividend distribution.

4. Preemptive rights- The right to maintain a proportion ownership stake in the company but have the first opportunity to purchase additional shares before their offer to external parties.

5. Right to sue- the ability to take legal action against the company or its management for action that may harm the interests of minority protection against unfair conduct by the majority shareholders on the management number.

6. Appointment of directors– Section 151 states who can elect a Director. This includes small shareholders whose shares of nominal value are not less than 20,000 rupees. They can nominate and vote for a director’s insurance representation on board protection against the may undermine the ability of minority measure holders to have faire in the director appointments number.

7. Exit option– The right to sell or transfer shares at a fair market value. The ability to exist the investment without facing unfair restrictions.

8. Right to inspect records – Certain corporate records including finance my needs of meeting and other element documents access to information that helps in understanding the company affairs.

9. Fair treatment in marginal and acquisition– The right to receive fair consideration and treatment in the event of acquisitions or other significant corporate transaction protection against a transaction that may be designed to unfairly benefit majority shareholders.

10. Right to share in surplus acid– In the event of liquidation the right to receive a share of the remaining acids after creditors have been satisfied.

OPPRESSION AND MISMANEGMENT

In the case Elder vs. Watson Ltd 1952 (Scotland), the shareholders committed a crime against the minority shareholders. The meaning of oppression is any act in the company that causes harshness and burdensome on the public interest and the minority shareholders if there is any breach of fiduciary duty by the majority shareholders. The negligence in management which causes loss to the shareholders and affects the management or the company is known as mismanagement.

Circumstances that can be classified as Mismanagement: Hindrance of company directors from carrying out their responsibilities, breaches of legal regulations, and non-compliance with the company’s Memorandum of Association (“MOA”) and Articles of Association (“AOA”). Misuse of financial resources.

Case laws: Shanti Prasad Jain Vs. Kalinga Tubes Ltd. There were three shareholders holding shares in equal proportion and equal representation on the board. They agreed mutually that when new shares will be issuedthey will first share it. Later, the company converted from private limited to public limited. Existing shareholders put allegations on the new shareholders that through malafide

intentions they have issued shares. The court held that it was perfectly justified on the part of the majority shareholders to offer new shares as it was not mentioned in the article so, the court cannot interfere.

PROTECTION AGAINST OPPRESSION AND MISMANAGEMENT

Sections 241 and 244 of the Companies Act, 2013 make it clear that the right to complain lies with the “members”, subject to the requirement under Section 244 in respect of holding share capital and the word used in these sections is “members”. The applicability of Section 241 of the Companies Act, 2013 is an equitable jurisdiction that is intended to protect the Minority Shareholders of the company from any Oppression and Mismanagement at the hands of Majority members. In case of operation and mismanagement, they can approach the NCLT (National Company Law Tribunal) its quasi-judicial authority that settlescorporate debates. Section 408 of the Company Act gives control to NCLT to undertake advisory law. Requisition for General Meeting a request to the board of directors to call for a General Meeting by those shareholders who hold 10% of the company’s voting power. Institution of class action suits beneath section 245 of Companies Act 2013 with the NCLT on an application at a request of a hundred members of the company or 5% of the add up to members which even is lesser or in case of an unlimited company any individual of the company owning at least 5% of the company’s issued share capital. A class of action suit is an opportunity given to a group of people who are having common interest to reach out to NCLT

Ways to safeguard the interest of minority shareholders

Protecting the interest of minority shareholders is crucial for maintaining fairness and equity within a company here are several ways to save the rights and interests of minority shareholders:

1. Transport corporate governance– Implement strong corporate governance practices that emphasize the transfer in accountability and fairness and clearly define the roles and responsibilities of the Boards of Directors, committees, and Management.

2. Equal treatment– Ensure that all shareholders regardless of their ownership percentage are treated fairly and equally and avoid any discriminatory practices that may disadvantage minority shareholders.

3. Information transparency– Provide kind and comprehensive information to all shareholders including financial reports, strategic plans, and major decisions. Foster an open communication channel to address concerns and keep minority shareholders informed.

4. Independent Directors– Appoint independent directors to the board who can represent the interests of minority shareholders. Independent Directors can act as a check on management decisions and ensure a balanced perspective.

5. Legal Protections- Comply with relevant laws and regulations related to shareholder rights. Provide a mechanism for a minority shareholderto seek legal redress in case of any unfair treatment or violation of their rights.

6. Exit Strategies– Offer fair and reasonable exit options for minority shareholders such as buyback programs or fair market for their sharesand ensuring that they are exiting on fair terms.

7. Fair Dividend Policies- Establish a clear and fair dividend distribution policy that considers the interests of all shareholders. Avoid that disproportionately benefits majority shareholders.

CASE LAWS

TATA CONSULTANCY SERVICE VS. CRYUS INVESTMENT PVT LTD.

The Shapoorji Pallonji Group (SP Group), under the leadership of Cyrus Mistry, held 18.37% of Tata Sons Limited’s total paid-up share capital. In 2012, Cyrus Mistry was appointed as the Executive Deputy Chairman of Tata Sons for a five-year term. By the year’s end, the Board of Directors elevated Cyrus to the position of Executive Chairman of Tata Sons, effective December 29, 2012, while Ratan Tata took on the role of Chairman Emeritus. On October 24, 2016, the Tata Sons Board of Directors passed a resolution to remove Cyrus from his position as Executive Chairman of the company. Subsequently, Cyrus was ousted from the board of Tata Industries Limited, Tata Consultancy Services Limited, and Tata Teleservices Limited, after separate shareholder votes. The SP Group, Cyrus Investment Ltd., and Sterling Investment Corporation Pvt Ltd. filed a petition under sections 241, 242, and 244 of the Companies Act 2013, making allegations of mismanagement, oppression, and discrimination. The National Company Law Tribunal(NCLT) determined that Cyrus Mistry’s removal as Executive Chairman was unconstitutional and ordered his reinstatement. In January 2020, the Supreme Court upheld the NCLAT order, postponing the verdict until December 17, 2020. The Supreme Court ultimately ruled that the actions of Tata Sons did not constitute persecution or mismanagement of minority shareholders. The judgment favoured the Tata Group. The bench, led by Justice S.A. Bobde along with Justices V. Ramasubramanian and A.S. Bopanna, delivered the ruling. The court concluded that dismissing an individual as a chairman of the company is not a matter under section 241 of the Companies Act unless it can be shown to be oppressive or detrimental. Sections 241 and 242 of the Companies Act of 2013 do not grant restoration powers to the person who was alleged for mismanagement. Consequently, on December 18, 2019, the Supreme Court reversed the order of the National Company Law Appellate Tribunal that had reinstated Cyrus Mistry as the executive chairman of Tata Sons.

CONCLUSION

The Companies Act 2013 provides a strong legal framework to protect the interests of minority shareholders. While the provisions are designed to ensure fairness and transparency, challenges remain that can hinder the effectiveness of these protections. It is crucial for minority shareholders to be aware of their rights and the mechanisms available to them under the Companies Act. By staying informed and engaged, they can better protect their interests and contribute to a more equitable corporate environment. As we move forward in an increasingly complex corporate landscape, the importance of safeguarding minority shareholders cannot be overstated. Whether you are a minority shareholder or a corporate leader, understanding these protections is essential for fostering a fair and transparent business ecosystem.

Submitted By:: Ruchira Deb

ACADEMIC YEAR: First year, BBA.LLB(H)

(Top 25 Blogs) Techno India University, Kolkata, BlogCompetition In India 2024 by The Law Literates