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Section 138, 141 and 142 of the Negotiable Instrument Act 1881

A cheque is a bill of exchange which is payable on demand. There are two parties in a transaction: The person who issues the cheque is known as the drawer, whereas the person under whose favour the cheque is issued is known as the drawee. According to section 13 of the Negotiable Instruments Act 1881, a negotiable instrument means a promissory note, bill of exchange or cheque. The cheques are governed under the Negotiable Instruments Act 1881. A cheque bounce is termed as the cheque that cannot be processed because of the insufficient funds that are available in an individual’s bank account. The drawee issues a cheque bounce notice/demand notice to the drawer. The Cheque bounce notice states that if the amount due is not paid within the prescribed time, then the drawee will initiate the legal proceedings under section 138 of the Negotiable Instruments Act 1881 against the drawer.

Following are the provisions that are mentioned under Section 138, 141 and 142 of the Negotiable Instrument Act 1881.

Section 138 of the Negotiable Instrument Act 1881

Section 138 of the Negotiable Instrument Act 1881 states the provision relating to the dishonour of cheque for insufficiency of funds in the bank account. If there is any cheque issued by the drawer to the drawee to pay any amount and the cheque is returned/dishonoured by the bank because of the insufficient amount in the bank account to honour the cheque. The cheque is also dishonoured if it exceeds the amount that has been arranged to be paid from that bank account (by an agreement made with the bank).

Section 138 of the Negotiable Instrument Act 1881 shall not be applicable if the cheque has been presented to the bank after the period of its validity (after a period of 3 months). Section 138 of the Negotiable Instrument Act 1881 shall be applicable if the payee makes a demand for the payment of the money by giving a cheque bounce notice to the drawer within a period of 30 days from the receipt of the information from the bank regarding dishonour of cheque. This section shall also apply if the drawer fails to make a payment within 15 days from the receipt of cheque bounce notice.

Section 141 of the Negotiable Instrument Act 1881

Section 141 of the Negotiable Instrument Act 1881 states the provision relating to the offences that are committed by the company under section 138. In case if the offence is committed by any person who was in charge of the company and was responsible for the conduct of the business, then the person and also the company would be deemed guilty of the offence. However, if he proves that he had exercised due diligence in order to prevent such offence or if the offence was committed without his knowledge, then he would not be deemed guilty of an offence under section 138. In case if the offence is committed by a director/manager/secretary/officer of the company (with the consent or connivance or due to neglect), then they will be prosecuted and punished. Hence, there is a vicarious liability of the officers of the company. A person who is nominated as a director of the company is holding any office or employment in the Central Government or State Government, or a financial corporation owned by the Central or State Government shall not be liable for the prosecution under this chapter.

Section 142 of the Negotiable Instrument Act 1881

Section 142 of the Negotiable Instrument Act 1881 states the provision relating to the Cognizance of offences. Following are the provisions mentioned under this section:

  • The Court shall take cognizance of the offence punishable under section 138 only when the drawee makes a complaint in writing.
  • The complaint must be made within a period of 30 days from the expiry of the cheque bounce notice period (15 days).
  • The offences punishable under section 138 shall be tried by the Metropolitan Magistrate or a Judicial Magistrate of the First Class and not by any other inferior court.
  • A complaint can be filed by a manager or any other person who is authorised by the company. Also, they can represent the company during the course of legal proceedings before the Court.
  • The Magistrate must look whether the ingredients of offence is fulfilled or not, before taking cognizance of the offence.
  • The cause of action for filing a complaint under section 138 would arise after the expiry of 15 days from the cheque bounce notice and if the drawer fails to pay the amount within such period.
  • The drawee cannot make a complaint after the period of 30 days from the expiry of the cheque bounce notice period (15 days) as it is time-barred.
  • The drawee must allege that the cheque was dishonoured due to the insufficient fund in the bank account, even if the payment was stopped by the bank.
  • The limitation period will begin to run once the cause of action has arisen. The limitation period could not be stopped by presenting new cheque so as to have the fresh cause of action and fresh limitation period.
  • When the cheque is issued in favour of the company, a complaint under section 138 can be filed by the manager or any other officer who is authorized by the company.
  • Section 142 of the Negotiable Instrument Act 1881 does not prohibit or excludes the complaints that are being made by the Power of Attorney or Agents of the drawee.

Conclusion

In India, the Cheque bounce is considered to be one of the serious offences. It is also punishable with imprisonment or a fine mentioned under section 138 of the Negotiable Instruments Act 1881. The term of imprisonment may extend upto two years, and the fine may extend to twice the amount of the cheque drawn. There can also be a case where both imprisonment and fine will be given as a punishment for cheque bouncing. Hence, an individual can file a criminal case under section 138 of the Negotiable Instrument Act 1881, and it can also file a Summary suit under Order 37 of the Criminal Procedure Code 1908.

Validity and Enforceability of Click-wrap Agreements

Due to the recent technology development, there has been a rapid growth of the online Indian market, and it has considerably changed the everyday living of people. Therefore, communication is no longer within the four reachable walls and has a wide reach in today’s times. Businesses opened through electronic media has flourished, and a lot of employment has been generated. Electronic commerce is a means of the transaction of business electronically and is associated with the buying and selling of information, products and services over computerized or artificial intelligence communication networks.

As the country has witnessed a steady growth of e-commerce, its transparency and credibility have become one of the major issues which have to be dealt by Indians, and therefore the electronic contracts are looking for a place in the Indian legal world. The law of contract in India, which is the Indian Contract Act, 1872 gives statutory recognition to the common contractual rule. It does not lay down the rights and duties which the law will enforce, but it deals with the limiting principles, according to which parties may become liable for some rights and duties towards the other party.

Indian Contracts

To understand what e-contracts are, it is much more important to first understand what a normal contract is and how a simple contract is drafted. The Indian contract act speaks about the principles of the law of contract, its important elements, and the way it is formed, its performance and the remedies or solutions for breach of such contracts. It also helps in determining the circumstances in which promises are made by the parties to a contract, general principles of the formation of the contract and also prescribes the remedies which are available in the Court of law for the breach of contract against a person who fails to perform his undertaking created under the Contract.

According to section 10 of the Indian Contract Act, 1872, an agreement between two parties is a contract which is enforceable by law. An agreement is enforceable by law and can be termed as a valid contract if it is made by competent parties, out of their free consent and for lawful object and consideration. In layman words, a contract is an agreement binding between two or more parties intending to create a legal relationship, in which one makes the proposal while the other accepts the proposal or offer and thus it becomes a promise. Such acceptance has to be certain and not vague and must be free from any undue influence, force or misrepresentation.

Online Contracts

Due to the advance use of internet and electronic commerce in today’s times, online contracts needs to be given due importance mainly in terms of its multiplicity and reach. An electronic contract is also known as the online contract is an agreement drafted, modelled, signed and executed electronically, mainly with the use of the internet. Talking about the similarity of online contracts with paper made contracts, they both are drafted in the same manner. In case of an online contract, the seller intends to sell the products, present their products, terms and prices for buying such products to the prospective buyers. In return, the buyer or the interested person shows his/her interest by clicking on the ‘I Agree’ or ‘Click to Agree’ option for indicating the acceptance of the terms presented by the seller or they can sign electronically. Some of the contracts require electronic signatures which can be done in different ways like typing the name of the signer’s in the specific signature space, copying and pasting the scanned version of the signature or clicking an option meant for that purpose. The communication is basically made between two computers through servers. The online contract is brought to the scenario to help people in the way of formulating and implementing policies of commercial contracts within business directed over the internet. Online Contract is modelled for the sale, purchase, supply of products and services, and for stating terms and conditions of one party to another party involved in the contract.

Online contracts can be categorized into three types, mainly, i.e. browse or web wrap contracts, shrink wrap contracts and click-wrap contracts. Though these online contracts have become a major part of everyone’s routine life, most of the people are still not aware of the complex legal consequences that such contract brings to an individual’s life as these contracts face a lot of legal as well as technical challenges.

This article will entirely focus on “Click-wrap agreements” which mainly states Terms and Conditions of an online website to its visitors or buyers who agrees to this Terms and Conditions and follow them rigorously.

They are web-based agreements which ask the consent of the user by way of clicking “Ok” “I Agree” “I Accept” button on the dialog box. In these agreements, the user basically has to agree to the terms and conditions for usage of the particular software. Users who don’t agree to the terms and conditions will not be able to use or buy the product upon cancellation or rejection. A person witnesses web-wrap agreements almost regularly. The terms and conditions for usage are exposed to the users prior to acceptance. For the agreement of an online shopping site etc.

Although these e-contracts have carved a way to our life’s, no one really knows how to deal with it or how much to depend on it. Moreover, there are no precise judicial precedents on the validity and enforceability of click-wrap agreements which makes it tougher to understand it. Other countries like the USA has dealt with such situations where they have stated that as long as the essential elements of a contract are not disturbed, click-wrap agreements are equally enforceable just like the other contracts.

Essential elements of a Click-wrap Agreement

Some of the most important elements that make a click-wrap agreement a valid contract are:

  1. Offer

Just like a paper made contract, click-wrap contracts do make an offer to the other party. The click-wrap agreements make an offer by laying down terms and conditions for the other party, thus stating, what the party is offering to another party. So here, the click-wrap agreements complete the requirement of making an offer. What here important is that the offer is made with an intention to create a legal relationship between the parties. Moreover, an offer is only converted to a promise when accepted by the other party on an unconditional and absolute basis.

  1. Acceptance

In the click-wrap agreements, an acceptance by the other party is the most important thing. In short, a click-wrap agreement cannot be formed unless and until the party does not click on “I Agree” or “OK” buttons mentioned it in the dialog box, thus giving a valid acceptance. As the name suggests, a click-wrap agreement is not formed till the time the other party “clicks” the agreement. Once the agreement is clicked, the agreement is automatically wrapped and formed. Therefore, acceptance plays a major role in forming of an online click-wrap agreement.

Apart from these two mentioned elements, there are other essential elements too, which contributes to the formation of a valid online contract. They are:

  • Intention to create a legal relationship
  • There must be a lawful object in the contract
  • There must be a lawful or legal consideration
  • Capacity of Parties
  • Free and unaffected consent of both the parties
  • Possibility of Performance

Drafting of an Online Contract

The Indian Contract Act, 1872 gives legal status to the basic contract law. A valid agreement is shaped by free assent of competent parties for a legitimate consideration. This Act doesn't put a particular arrangement for conveying offer and acceptance. It might be made in writing, in oral, or by seeing the conduct of the parties and the circumstances. The express agreement is supposed to be communicated and gone into by words expressed or composed where the offer and entered into by words spoken or written where the offer and acceptance are expressly agreed upon at the time of formation of the contract. At the point when the agreement is derived from the conduct of the parties, an agreement is supposed to be implied. Such a contract comes into existence on account of conduct or Act of the parties.

The Information Technology Act, 2000 has made certain arrangements for the legality and the validity of online agreements yet no particular enactment has been fused for the legitimacy of online agreements in India. Regardless of whether no particular arrangement is made for the legitimacy of online agreements, it can't be challenged on technical grounds.

There are few ways accessible for shaping an electronic agreement, for example, email by which offers and acceptances can be traded. An online agreement can be framed by completing the website form provided for availing good or services offered by the seller on the website, for example, air tickets. The individual who plans to benefit the great or administrations offered in the site can submit a request on the site by filling the concerned structure and imparting such. The products offered can be conveyed straightforwardly through electronic methods for eg. e-tickets or might be later for, eg. Clothes. Another way accessible for the arrangement of an online agreement is through online agreements by tapping on the catch that says ' I Accept' while interfacing with a product and by tapping on 'I Agree' button while pursuing an email account.

The online agreement is framed through new methods of communications, for example, email, web, fax and phone. The necessity of fundamental component, for example, offer and acceptance in online agreement arrangement areas much basic all things considered for the development of the paper-based customary agreement. Agreement formation over sites is very not quite the same as the previous methods of agreement development. Online agreement arrangement predominantly brings issues up according to the relevance of the offer and acceptance rule.

Validity and Enforceability of E-Contracts

The Information Technology Act, 2000 gives different procedural, authoritative rules and manages provisions relating to all kind of online transactions. These incorporate computer information assurance, confirmation of reports by the method of the advanced or electronic mark. Although the IT Act, 2000 has given electronic agreements a certain type of acknowledgement, yet there are no solid legal points of reference for the legitimacy and enforceability of online agreements in India. In case of wrap contracts, we ordinarily acknowledge the terms and states of the agreement by tapping the catch that shows ' I Agree'. Many tend not perusing the terms and conditions cautiously before consenting to such. Yet, these moves ought to be made intentionally and cautiously simply in the wake of perusing the conditions of the agreement appropriately as it prompts a legitimate agreement, and the terms can be carefully implemented against them.

In the year 2015, an activity known as 'Digital India' was introduced by Narendra D. Modi, the current Prime Minister of India. This mission was launched to guarantee that taxpayer driven organizations accessible to the residents of our nation in any electronic manner which will prompt the improvement of online foundation and internet network in our nation. The activity of Digital India expects to interface provincial zones with rapid web organizations and comprises of three segments, for example, creation of digital infrastructure, Delivery of services digitally and digital literacy. Its fundamental article is to make our nation carefully enabled in the field of innovation.

The Indian Contract Act, 1872 gives a fundamental legally binding standard that an agreement is substantial in the event that capable parties make it out of their free assent for legal consideration. There is no particular method of imparting offer and acceptance; it tends to be done verbally, in writing or even by conduct. In this way, oral agreements are as legitimate as paper or traditional agreements. However, the main condition is that they should possess all the essential elements of a valid contract.

It was held on account of Bhagwandas Goverdhandas Kedia v. Girdharilal Parshottamdas, “that ordinarily, it is the acceptance of offer and intimidation of that acceptance which results in a contract. This intimation must be by some external manifestation which the law regards as sufficient. Hence, even in the absence of any specific legislation validating e-contracts cannot be challenged because they are as much valid as a traditional contract is.”

An online agreement is basically a communication between two parties as to move of merchandise/administrations. What's more, according to the Indian Evidence Act, any email correspondence and other correspondence made electronically is perceived as substantial proof in a Court of law. By thinking about the focuses, it very well may be inferred that the agreement that follows the correspondence is substantial as well and Indian law hence perceives the legitimacy of online agreements.

The residents of India are empowering the idea of Digital India. However, no unequivocal enactments are identifying with the exchanges done over mechanized correspondence organizations. A few laws, for example, The Indian Contract Act, 1872, Information Technology Act, 2000, Indian Copyright Act, 1957 and the Consumer Protection Act, 1986 somewhat are working and following up on settling issues that emerge identifying with the arrangement and approval of online agreements. The Information Technology Act, 2000 is the Act that administers the exchanges directed over the internet and clarifies the impressive method of acceptance of the offer and gives the standards to the renouncement of offer and acceptance in an obscure or inconclusive way. Subsequently, a different law for managing contracts dependent on electronic contracts is strongly suggested.

Online Contract as evidence

In a nation like India, where the proficiency rate isn't so high, the idea of 'Digital India' is a far reach. Individuals actually feel unreliable to do online-based transactions principally in light of the fact that the terms and states of such agreements are not straightforward. Another significant issue is the idea of the law administering the electronic agreements. Regardless of whether the IT Act, 2000 has authorized electronic agreements, there are no unequivocal arrangements referenced in the Act.

Reports are fundamentally registered for the preservation of proof, the affirmation of title, and to shield oneself from misrepresentation. The evidentiary estimation of electronic agreements has been given acknowledgement and can be perceived in the light of different areas of the Indian Evidence Act. Section 65B of the Indian Evidence Act manages the admissibility of electronic records. According to Section 65B of the Indian Evidence Act any data contained in an electronic record delivered by the computer in printed, put away or duplicated structure will be considered to be an archive and it tends to be acceptable as a proof in any procedure moving along without any more verification of the first subject to following conditions are fulfilled, for example, the computer from where it was created was in normal use by an individual having legitimate authority over the framework at the hour of delivering it, during the ordinary course of exercises the data was taken care of into the framework consistently, the output computer was in an appropriate working condition and have not influenced the precision of the information entered.

Section 85A, 85B, 88A, 90A and 85C of the Indian Evidence Act manage the assumptions as to electronic records. Section 85A has been embedded later to affirm the legitimacy of electronic agreements. It says that any electronic record in the form of electronic agreement is finished up and gets acknowledgement the second a signature mark is attached to such record. The assumption of electronic record is valid just if there should be an occurrence of five years of age record and electronic messages that fall inside the scope of Section 85B, Section 88A and Section 90A of Indian Evidence Act.

Remedies for Breach of E-Contracts

There is no particular standard in the event of a breach of the online agreement; however, the guidelines with respect to solutions for breaking of an agreement can be followed as given in The Indian Contract Act. A legitimate agreement offers rights to co-relative rights and commitments and they are enforceable in the courtroom when encroached on breach of the agreement. The Contract Act fundamentally discusses two solutions for the breach of agreement, for example, Damages and Quantum Merit. Yet, barely any different remedies are additionally accessible as given in the Specific Relief Act, for example, specific performance of contract and injunction restraining the other party from making a breach of contract.

Section 73 and Section 74 of the Indian Contract Act, 1872 deals with the standards with respect to the cure of harms on breach of the agreement. The individual whose rights are encroached by the break of agreement may bring an activity for harms or pay as far as money related an incentive for the misfortune endured by the parties.

There are two fundamental viewpoints to be considered as when any activity of harms i.e remoteness of damage and measure of damage. Sec 73 to 75 gives rules with respect to the appraisal of harms dependent on the popular case Hadley versus Baxendale. As indicated by the guidelines set down for this situation, there can be damages which normally emerged on the standard course of things from such break of agreement and can be called secondary damages and besides, damages for misfortune emerged from exceptional conditions i.e special damages. There are additionally different sorts of damages referenced in the Act, for example, nominal damage, pre-contract expenditure, compensation for mental agony and liquidated damages.

Different countries and their take

However, courts in other countries such as the US, have dealt with validity and enforceability of click-wrap contracts. The validity of click-wrap agreement was first considered in Hotmail Corporation v. Van $ Money Pie Inc., et al when the Court for the northern district of California upheld in the famous case of Hotmail Corporation that “the terms of the license bound the defendant as he clicked on the box containing “I agree” thereby indicating his assent to be bound.”

It was likewise held by the Appellate Division of Superior Court of New Jersey, that by tapping the "I Agree" alternative given in the exchange enclose the complainant party has entered to a substantial and restricting agreement and can be made obligated for the terms and conditions set down in the agreement. Click-wrap arrangements are, in this way, legitimate and enforceable in the US as long as the offer and acceptance rule is taken into consideration.

Importance of Terms and Conditions

When we talk about Terms and Conditions in reference to anything, the first thing that pops up in mind is “a set of rules and regulations that an individual has to follow”. Terms and Conditions are mentioned priorly so that an individual knows, what he/she agrees to. We mostly see terms and conditions on a legal agreement, when you give an online exam, when you order food, or when a person subscribes for a particular thing. Now, when we subscribe for something, we are obviously paying for it, and at that moment it becomes utmost important to once go through all the terms and conditions a website wants to convey. A user using an application will often see a dialog box appearing on the screen, that ask the users two questions, which are, “I agree to Terms and Conditions” and “Cancel”. In the heat of the moment, the user mostly agrees with the terms and conditions and hardly gives it a read, but it is always advisable to have a look on it as it may lead to serious legal consequences in future.

A Terms of Service Agreement is a set of rules and regulations which users must agree to follow in order to use a service. Terms of Use is often named Terms and Conditions, Terms of Service or Disclaimer when addressing website usage.

In simpler words, this agreement set out rules and terms that the user has to agree to use the website.

However, a Terms and Conditions agreement is highly recommended to every website, it’s not required by law to have it. Talking about these, only privacy policies are required by the law for a website to have its own as it collects personal data information such as name, age, gender, email ID etc.

Most of the online applications created in India do have their own Terms and Conditions agreement, as it imposes a higher degree of responsibility on the owners and on as well as its users. It is always necessary to know the importance of such an agreement before drafting it.

Following are some of the vital clauses one should consider before drafting a terms and conditions agreement for its website.

  1. Prevent abuses and exploitation

A Terms and Conditions acts as a legally binding contract between the website owner and its users.

This is the agreement that sets the guidelines and rules that users must agree to and follow in order to use and access your website or mobile application. This agreement gives you the liberty to include the necessary sections to inform users of the guidelines of using your website or mobile app, what happens if users are abusing your website or mobile app, and so on.

Examples of actions of abusive users can include posting defamatory content, spamming other users, or attempting to infect the website or app with malware.

If your website or mobile application’s hosts content that is generated by users, you can include a clause in the Terms and Conditions to inform users that harmful language won't be tolerated, as well as spamming other users which entirely depends on the function of your website: via public or private messages.

All of these can result in having those users who are found abusing or spamming the website would be temporarily banned.

  1. The owner can own the content

As the owner of the website, you are the owner of the logo you create and the brand you build up through your network or the website. It excludes the user-generated content, as most websites will inform users that any content created by users is theirs.

When you lay down the Terms and Conditions, the owner can mention that who is the owner of such content which is mentioned above, and it is also protected through the Indian Copyright Laws.

This kind of clause is generally referred to as “the intellectual property clause” and is mostly present in every agreement as it safeguards the intellectual property of the party through various governing laws.

This clause can be drafted as “The Site and its original content, functionality, and features are owned by [Owner of Website] and are protected by Indian copyright, trademark, patent, trade secret, and other intellectual property or proprietary rights laws.”

  1. Limited Liability

Terms and Conditions agreements commonly include a warranty period or disclaimer that tries to limit the website owner's liability or responsibility in cases where errors or mishaps are found in the content presented on the website.

This kind of clause helps to notify the user that the owner can't be held responsible for any errors in the content presented, or for the information provided is complete, accurate, or suitable for any purpose.

  1. Termination of Accounts

As mentioned earlier in point 1, that how a Terms and Conditions agreement helps to prevent abuses, in addition to it, such an agreement also helps to include the clause of “Termination” which is widely referred as the “Termination Clause”.

This clause informs users that accounts which use abusive language will be terminated and banned from using the service offered.

The Termination clause is aimed at websites that have a registration section (e.g. user must register before using and/or accessing certain sections of the website), as you can ban or disable the abusive users based on the activity of their accounts.

A termination clause is easy to draft, and it can be done in the following way:

The website may terminate your access to the Site, without mentioning any notice or cause, which may result in the destruction and forfeiture of all information associated with your account. All provisions of this Agreement that, by their nature, should survive termination shall survive termination, including, without limitation, ownership provisions, indemnity, limitations of liability and warranty disclaimers.

  1. Mention the governing Law

As it imposes a legal relationship between a user and the website owner, it becomes important to mention a law that will govern the entire agreement and any mishap occurring from it. Generally, the governing law has to be of the jurisdiction where the business or the website is registered.

For example, if the website is registered in India, the clause will look like:

The laws of India govern these terms and conditions.

Conclusion

An online agreement’s validity and enforceability is a debatable topic in a country like India, where the buyer and seller relationship is very unstable. People have drastically shifted to shop online but are still somewhere sceptical when it comes to card payments and similar things. Talking about click-wrap agreements, which are generally the terms and conditions agreements, it has become utmost important to read and then agree with them, as it thus creates a legal relationship between the user and the owner, leading to legal consequences in future. However, there are still strong laws needed for the protection of such agreements to give them a better position in the judicial system. Due to no judicial precedents, right now, the stand of such agreements remains unclear. But as the IT Act recognizes such agreements, they do hold certain legal liabilities.

Child Custody under Christian and Parsi Law

Child custody is the legal right which is given to the child’s mother or father at the time of divorce proceedings or judicial separation to look after the child. Child custody is the process of controlling, caring and maintenance of the child who is below 18 years of age. There is no law which specifically mentions about the child custody rights under the Christian law. However, the Indian Divorce Act 1869 and the Guardians and Wards Act 1890 is applicable for all the matters that are related to the Christian children and their Guardianship. According to the Section 41, 42, 43, 44 of the Indian Divorce Act 1869, the Courts have the power to pass an order relating to the Custody, Education and Maintenance of the Christian children. There is no personal law which specifically mentions about the child custody rights under the Parsi law.

Types of Custody

In India, there are four types of Custody. They are:

  1. Physical Custody: Under Physical Custody, the child lives with his custodial parent. A custodial parent is a parent who is given physical/legal custody of the child by order of the Court.,
  2. Joint Physical Custody: In a Joint Physical Custody, the child lives with both the parents for a specific time period. Under the Sole Custody, the child lives with one of the parents only. Under the Third-party Custody, the child lives with the third party, and none of the biological parents has a right on the child.
  3. Sole Custody: The Sole custody is given in the cases where the other parent is abusive, violent or incapable, etc.
  4. Third-party Custody: In the third-party Custody, the child lives with the third party, and none of the biological parents has a right on the child.

Child Custody under Christian Law

According to Section 41 of the Indian Divorce Act 1869, the Courts have the power to pass orders relating to the Custody, Education and Maintenance of the children in the suit of separation. Section 42 of the Indian Divorce Act 1869  deals with the power of the Court to pass an order for custody after a decree of Judicial Separation. Section 43 of the Indian Divorce Act 1869 deals with the power of the Court to make an order for custody of children in suits for dissolution/nullity. Section 44 of the Indian Divorce Act 1869 deals with the power to make an order of custody of children after decree or confirmation of dissolution/nullity. Also, the Guardians and Wards Act 1890 is applicable for all the matters that are related to the Christian children and their Guardianship.

Child Custody under Parsi Law

Under Parsi law, there is no personal law that governs the Custody of the Parsi children. However, the Guardians and Wards Act 1890 is applicable for all the matters that are related to the Parsi children and their Guardianship. Section 17 of the Guardians and Wards Act 1890 deals with the matter that is considered by the Court in appointing the guardian. Following factors are taken into consideration while deciding Guardianship.

  • The Court takes into consideration the personal law to which the child is subject.
  • The age, sex and religion of the child.
  • The character and capacity of the (proposed) guardian and his nearness of relatives to the child.
  • Any existing or previous relations of the guardian with the child or his property.
  • If there are any wishes of the deceased parent.
  • The Court takes into consideration the preference of the child if he is old enough to make an intelligent preference.
  • If there is an issue of custody which involves two or more siblings, then the Court prefers to keep them together.
  • The Court takes into consideration the child’s comfort, health, material, intellectual, moral and spiritual welfare.
  • The Court shall not appoint/declare the guardian against the child’s will.

Case Law

Merlin Thomas Vs C.S. Thomas

AIR 2003 Ker 232

Kerala High Court on 18th February 2003

On 11th February 1995, the marriage was solemnized between Merlin Thomas and C.S. Thomas as per Christian rites. On 3rd January 1996, their child was born. The married life of the parties became strained after some time. Later, the husband was forced to file a decree of restitution of conjugal rights. The subject matter of the Original Petition is the custody of a minor child named Arya Rose Mary, who is six years old. The family court allowed the original petition.

The Family Court directed that the child custody will be given to the father for a period of 5 days in a week (Monday to Friday) and to the mother for a period of 2 days (Saturday and Sunday). During summer vacation, the custody for 1st half of the holiday will be with the mother, and 2nd half will be with the father. The order made by the family court was according to the provisions mentioned under the Guardians and Wards Act 1890. The appeal was made against the order of Family court before the High Court.

The High Court observed that the father is capable of giving better education to his child, but it must also be taken into consideration that the child is a girl child and the company of the mother is more affectionate in developing her personality, intelligence, character, etc. The High Court modified the order of the Family Court to the extent that the custody of the child to be continued with the mother and the father shall get the custody every second Saturday and Sunday in every month and during the time of the vacation period.

Conclusion

It is a well-established principle that the welfare of the child is paramount. It is the most important thing which is considered by the Court while deciding custody. The orders relating to the custody of the minor children are temporary orders, and it can be changed if there is any interest in the welfare of the child. Hence, child custody does not automatically get transferred to a particular parent, and any parent who wants the child custody can seek custody from the Guardian Court. It is important to note that a mother has the primary, also known as first rights over her child. However, this thing does not affect in deciding the custody of the child.

Hindu Succession Act

Question of Law

  1. Whether excluding daughter from the entitlement in HUF is valid?
  2. Whether unmarried daughter and married daughter have different titles in HUF?
  3. Whether the married daughter loses her privileges after marriage?
  4. Whether the law made in this behalf serves the objective of the legislation?

Court Observation

The Supreme Court consisting of the Division Bench of Three Judges before whom the matter was raised on some question of law with regards to The Hindu Succession Act. The Division Bench after considering the matter filed before the court authored a 121-page judgment in which such issues were dealt at length, the Solicitor General of India at length while submitting the arguments presented various precedents to present the status of the daughter with regards Hindu Succession Act and landmark judgments decided by the court. The court to decide the matter following explanation with the angle of law has been put forth by the court:

  1. Understanding the school of law that regulates Hindu law

The Two laws that basically regulate the law in the country like India are the two school of thought which are known as the Mitakshara School of Law and the Dayabgha School of Law. The Mitakshara applies to almost every part of the country except the part of Bengal. The rules that were enunciated to govern the practices in Maharashtra was Maharashtra School that prevailed in the North India whereas the city/island of Mumbai was regulated by the Bombay School in western India. In the country with the variety of communities as descendants of various religious, sometimes also understood as caste it was in the Southern region such practices were regulated by the Marumakkatayam, Aliyasantana and Namburdiri system of law.

  1. HUF (Hindu Undivided Family)

Ascendants and descendants connected to each other by birth in one single-family which continues such lineage for a long period of time practices, professing and propagating Hindu as their religion is called a Joint Hindu Family. In the business side of the matter, a Joint Hindu Family is also termed as Hindu Undivided Family which is a form of business organization wherein the Joint Hindu Family run business with appointing one-person male of the family who is the eldest in the family to be Karta (sole decision-maker of the business) and coparcener (supporter or worker in the business). The rights of any person to be in the organization arise only if you the person take the birth in the Joint Hindu Family. A Joint Hindu Family holds the assets of the business jointly under the name of the family. The understanding of the law that governs the HUF is that after there is any severance of the assets of the business, the family ceases to be called a Joint Hindu Family. The court in the matter understands and concluded that there exist any mere separation of the worship or separation at the food tables such separation will not hold the same understanding as to the separation of the HUF.    

  1. Hindu Succession Act before the 2005 Amendment

The understanding that was explained needs a thorough revision of the provision of the Hindu Succession Act prior to the year 2005, wherein the courts understand that there exists no logical but firm emphasis to incorporate and appropriate the assets among the male members of the family. The family assets though not literally but theoretically were apportioned between the male members of the family such ascendants like father, grandfather, great grandfather and so on and in the descendant's such son, grandson and so on. The law is understood to provide such lineal descendants up to the third generation, and the fourth generation would rise to such right after the death of the first generation. Nothing but the birth in the family accrues such rights to any person such was the understanding with regards to the confinement. The person taking birth in the Joint Hindu Family inherits the coparcenary rights from the father, grandfather and/or great grandfather. Any person being a coparcener in the HUF holding any property from any other mean and not from the inheritance from the member of the HUF will not be treated as his property in coparcenary right. No person can claim as a single individual right over any property belonging to the Joint Hindu Family every person belonging to the family and is in coparcenary relationship to the HUF hold the asset of the HUF jointly. With regards to any other option of entitlement as coparcener is by way of adoption, the court held that it is the only way that is understood other than the primary reason of inheritance that exists as per the rule of law and the customs that support the reasoning of law. The Court with respect to the position of the women in the Joint Hindu Family understand that there exist a relationship of women, but such relation due different perception was limited to the entitlement of family member but not as a coparcener. The court also further explains that as the rule of law prevails over any conclusion out customs or traditions and coparcenary is the creation of law and as far as the law is concerned the regulation that governs the partition of the Hindu Undivided Family such can only be demanded by any person in the capacity of a coparcener. The test for the partition of the Joint Hindu Family can only be concluded with the person being coparcener or not and/or such person has exercised the right for partition.

  1. Obstructed and Unobstructed Heritage

The terms have been defined in the school of thoughts/law which govern the actions and regulated the practices of heritage in the Hindu laws, the Mitakshara School of the law states that unobstructed heritage rights also are known as “apratibandha daya” and the obstructed rights is known as “sapratibandha daya”. The rights have their defined way in determining the privileges and rules of their devolution and apportionment. As the unobstructed rights state that any right accrued to any person by way of nothing else than by birth it should be obstructed by an action, it should accrue from the start and continue until the apportionment or his death whichever is earlier. The unobstructed rights mean any person born in the family has a birthright in the property of the Joint Hindu Family at the earliest day of birth. An obstructed right is rather an indirect rule of receiving such privilege which is directly connected to the birth of the person, and obstructed right arises when a person who is a coparcener in the Joint Hindu Family is dead or died by any reason as such, and there exists no male issue after the death of the coparcener and when the person as remainder receive such right.

The obstructed right suggests that there exist an obstruction because of which such right or privilege per say has to be withheld in this case it is obstructed by the existence of the male coparcener. It is the death of the coparcener when the obstructed rights in come in existence. The Court considered a brief overview of the school of law which governs and regulates practices of the inheritance, and the parallel history of the Joint Hindu Family and the focuses its attention on the provisions of the Hindu Succession Act, 1956. The Court finds it important for any person to understand the matter needs a fair overview of the Mitakshara School of thought to further create a basis of for deciding and understanding the law.

Supreme Court Stand

The Supreme Court opines that it was fair for the court to consider the law governing the Hindu Succession before directing anything in the above matter. The court further explains the Hindu Succession Act, 1956 pre-amendment scenario.

The Supreme Court herein mentioned that as the law governs the act of Human in the civilization or as the modern goes society it does not mean that the law is correct in each sense and phase of life, as the changing times' models of the life changes and new policy which better suits the society needs to be implemented and so for all those reasons which penultimate goal to secure, pursue and decide in favour of justice is resort to be taken and thus benefits all. As per the Hindu Succession Act, 1956 wherein section 6 dealt with the devolution of rights in the coparcenary interest in the Joint Hindu Family assets which are governed by the Mitakshara School of Law. In the Act, the important thing is to consider that section 6 of the Act excludes the rule of succession, which concerns to Mitakshara coparcenary property. Any person who interests in the property existed, and he dies after the existence of the Act of 1956 his interest in the property will be dealt with the rules and regulation and/or principles of survivorship among the remaining members of the coparcenary who also can be called as surviving members of the coparcenary.

In the year after 2005, various matters were filed, and the decision was made in behalf of the male child or male member of the family the discussion was held on the various occasion in different states considering the status of women in33 the world and with due consideration to the equal status and rights, and liabilities of the women was given priority and many states in the logical conclusion decided to make amendment in the Hindu Succession Act, 1956 and such amendment was made and complied. The extension of the rights of women was recognized in the Mitakshara School of law regarding the coparcenary in the Joint Hindu Family. In the Several States such as Andhra Pradesh, Tamil Nadu, Karnataka and Maharashtra the rights of women were extended to the equal status as to men in the Joint Hindu Family as a coparcener in the property. In Karnataka, the insertion in the following act was made in the year 1994 by amendment as section 6A pursuing to section 23 of the Karnataka Act, 1994. In the year 1985 the amendment was made in the state of Andhra Pradesh, and four years after the amendment in Andhra Pradesh the amendment was made in the State of Tamil Nadu in 1989. In the year 1994, the State of Maharashtra made the amendment by making an insertion by way addition under 29A in the Hindu Succession Act, 1956 as the notification came in very late, but the amendment was also proposed by Kerala in the year 1975. As the amendment was agreed and accepted in the law of succession in very few states, the inheritance was badly affected in consideration of women’s rights.    

The Supreme Court of India, in its explanation, stated that there exists human relationship which is to be considered for inheritance or any such right of a coparcener. In the year 2005, the vast number of litigants with a new approach and new interpretation to the meaning of the provisions of the coparcener states that there should be an equal recognition to men and women while such position is concerned. The section 6 of the Hindu Succession Act will be dealt and interpreted differently from the time the Amendment Act of 2005 comes into effect, and it states that the daughter as a child to the person who owns the assets in the property of the Joint Hindu Family should be treated in the same way as a child born to such person as a son.

Further, section 6(1)(a) states that there exists no difference between the daughter and the son, which if exist, is supported by law. Section 6 (1) (a) of the Act does not define the gender of the issue while it dies to say that any person by taking birth in the family is eligible for the position of the coparcener any even if the neonate is a girl can take this position or if so is eligible for such position if she had been a male. In the Act, while layperson makes a plain reading understand that it confers the same rights to female and male in the context of inheritance. The Court realizes the effect of the amendment will be brought in practices from the day this judgment is passed, but there has been injustice caused to many litigants who have filed the suit against not just the Supreme Court but many High Court in different states wherein the amendment act has not been passed by or approved by the State Government, and the same provisions of the Act have been complied with following the inequality to which justice never approves and/or permits if exists, so in the regards with the objective to make the wrong done right this amendment will have the retroactive effect, and all the cases wherein the right of coparcenary which has been denied to all the females will be reversed and applied but in such situation that the other facts may comply with the decision understood and applied with appropriate provision but just the facts of gender inequality will be dealt with this understanding. There also remains one question as regards to the death of any person who dies after the year of 2005 when the Amendment Act confirms the status of the provisions therein, the Court states as far as the section 6(3) of the Act is concerned if any person belonging to the Joint Hindu Family dies then such apportionment of the property will be passed by the testamentary or intestate succession and nothing shall be permitted to apportioned by the survivorship. The Court further states that there existed partitioned by way division of shares among the members of the Joint Hindu Family and should be divided and allotted and apportioned if there or happens any partition after the death of such person as concerned in the Act. In this partition, as mentioned earlier, there should not exist any gender inequality; the daughter should be allotted an equal share in the property of the father if there be a partition.

There as stated exists the coparcenary right up to the third generation of lineal ascendants or descendants where in a situation the daughter is deceased at the time such partition her son and daughter will have the same rights as it was the son of the deceased son of the father who died up to three generations. The litigation, though, has brought a change in a delayed manner, but such change has brought itself with a vast area to be covered and provided for new thinking and relinquishment old idea and beliefs. The Act now states the apportionment by survivorship is completely have to go away as it destroyed the process to achieve the objective of the Act.

Liability on Female Coparceners

The Supreme Court, while explaining the concept of equality emphasized on the facts the equality if is intended to be brought home, will have to bring in its entirety there cannot exist equality where the privileges are provided but evaded from the act of responsibility and/or liability attached to such privileges. Section 6(4) of the Act makes the daughter liable in the same way as Son will if at all, such liability arises.

The Hindu Law with this presumption of equality Will has to be stated with the interpretation that as any debt incurring on the Joint Hindu Family was repaid of settles or discharged by the son, grandson and/ or great-grandson likewise the daughter herein will have to discharge such debt as same if she was a son.

The Court states that in deciding the matter, we state that we recognize the issues but also the proviso id read by a plain meaning provides a relief for all the partition commenced and concluded before the 20th December 2004 wherein the court states that only the partition that was made by the execution of the partition deed registered under the Indian Registration Act, 1908 and all such partitions decreed by the Court will be considered for such relief.

The issues that were not resolved earlier is that the decisions in the controversial matter of Prakash v/s Phulavati it raised a question before the Court whether the requirement of the father alive at the time of such partition or at the time when such Amendment Act of 2005 is mandatory or not whereas no established foundation has been found where to answer in the question in any other than it can be that is no mandatory requirement of the father to be alive in the year of Amendment Act if any time the father of the daughter dies, and there occurs a partition the daughter will be allotted an equal share in the property of the father. The Court disagrees with the opinion of the bench in the case of the Prakash v/s Phulavati. 

Conclusion

In India, as succession is one of the common topics of discussion as the long history manifest the family and generational hierarchy in the country. The Country though were practising the succession in most the conventional way appeared appropriate with the tradition followed by the royal families, but as the advance of understanding and maturity in the legal sector it was ruled as the guidelines issued which was enacted as the Act in the country by the legislature in the year 1956 known as the Hindu Succession Act, 1956. The understanding formed under the enacted Act was though governed with better perception than ever before but such rule of law if wishes to sustain the changes, need to be modified to the extent it satisfies the modern world expectation and so the matter has taken as priority by the Supreme Court to provide the way ahead for this Act to have a future and suffice the objective sought by the maker of the Law. The Act lacks the important aspects of modern world which is equality between male and female, the rights and privileges though not exclusive but includes liability was tilted towards the male in the family in the Joint Hindu Family. The Court has changed the perception of the Act and provides equal opportunity to male and female in the Joint Hindu Family with regards to liabilities and assets of the Hindu Undivided Family. The Court also makes such act retroactive and further serves the objective of the lawmaker and also makes it sustainable in today’s world.

Oppression and Mismanagement

As per the definition mentioned under section 397(1) of the Companies Act 1956, the word Oppression has been defined as “when the affairs of the company are being conducted in a manner that is detrimental to the interest of the Public, member/members”. The acts of the company that are against the provisions of the law, the acts of the company’s conduct that is against the principles of fair dealing, the acts of depriving a member of his membership, the acts of the imposition of risky objects that are being opposed by the other shareholders, the act of issuing shares to a particular section of the shareholder in order to benefit them, the act of exercising an undue or harsh burden on other members/shareholders, any other acts which cause detrimental to the interest of the members/shareholders are considered as an oppressive act.

As per the definition mentioned under section 398(1) of the Companies Act 1956, the word Mismanagement has been defined as “conducting the affairs of the company in a manner that is detrimental to the interest of the public/company”. The act which constitutes the differences between the directors, the act of improper appointment of a director, the act where the bank accounts are operated by an unauthorized person, the act of continuation in office by the director even after expiry of the term period, the acts that violate the Memorandum of Association and Articles of Association, and any other acts which cause detrimental to the interest of the members/shareholders are considered as an act of mismanagement.

An individual shareholder of the company and the minority shareholders of the company has the power to make an application to the National Company Law Tribunal in order to take up action against the abuse of power and authority which leads to an act of Oppression and Mismanagement.

Who can apply?

An application can be made by any member to the tribunal for seeking the relief in the cases of oppression under section 241 of the Companies Act 2013. The Central Government can also apply for the order of the tribunal if it is of the opinion that the acts of the company are oppressive in nature or if there is an act of mismanagement. Section 244 of the companies Act 2013 states the following requirements of the members of the company who shall have the right to make an application to the tribunal under section 241:

  • If the company has a share capital then, the members should not be less than 100 or not less than one-tenth of the total number of its members whichever is less or,
  • Any member or members holding not less than one-tenth of the issued share capital of the company. The applicant/applicants must have paid the money on all calls and other sums due on his or their shares.
  • If the company does not have a share capital then, not less than one-fifth of the total number of its members.
  • The tribunal can waive all or any of the requirements that are stated above on an application made by the members.

Powers of the National Company Law Tribunal

The powers of the National Company Law Tribunal are mentioned under section 242 of the Companies Act 2013. Following are the orders that can be passed by the National Company Law Tribunal:

  • An order for the regulation of the conduct of the company’s affairs in future.
  • An order for the removal of the director of the company.
  • An order for the purchase of shares/interest of any members by the other members or by the company.
  • An order for the consequent reduction in the share capital, in case of purchase as mentioned aforesaid.
  • An order for the imposition of costs as deemed fit.
  • An order for the restrictions on the transfer of allotment of the company’s shares.
  • An order for the recovery of undue gains made by the director during his office and the manner of utilisation of the recovery.
  • An order for the termination, setting aside or modification of any agreement that has been made between the company and the director on such terms and conditions which are not just and equitable in the opinion of the tribunal.
  • An order for the termination, setting aside or modification of any agreement that has been made between the company and any other person, except than those referred above. There is an exception that such an agreement shall not be terminated, set aside or modified except after due notice and after obtaining the consent of the concerned party.
  • An order for the setting aside of any transfer, delivery of goods, payment, execution or other act relating to the property that has been done by or against the company within a period of 3 months before making an application.
  • An order for any other matter that is just and equitable.

Appeal

An appeal can be made to the National Company Law Appellate Tribunal against the order of the National Company Law Tribunal. Any person who is aggrieved by the order of the National Company Law Tribunal can make an appeal to the National Company Law Appellate Tribunal. However, no appeal can be made, if the National Company Law Tribunal has passed the orders after taking consent from both the parties. An appeal must be made within a period of 45 days from the order passed by the National Company Law Tribunal. The extension period of 45 days can be sought after giving sufficient reasons for the delay in filing the appeal.

Conclusion

There are adequate provisions mentioned under the Companies Act 2013, to prevent the acts of Oppression and Mismanagement in the company. The Minorities shareholders are entitled to make an application to the Courts or Tribunals in order to protect their interest in the company from the Majority shareholders. Hence, the Courts or Tribunals are empowered to appoint such numbers of persons that are necessary for safeguarding the interest of the company, minority members and public at large.

Fraudulent and Invalid Contracts

A contract is a formal agreement that takes place between two parties when they agree upon an arrangement in the same sense for a particular amount of consideration. All contracts are regulated by the Indian Contract Act, 1872. A contract acts as legal evidence when disputes arise between two parties.

When there is a business, it is mandatory to secure loose ends with contracts. Even small businesses are required to fulfil contractual obligations.  These contracts may be made for the following purposes:

  1. Agreements or contracts that are made under Partnerships, Joint Ventures or Consortium.
  2. There are agreements made for goods and services, the retailers, wholesalers, and independent contractors.
  3. Contracts are also formulated when goods are purchased or rented from another party. Such agreements are termed as Rental agreements and Franchise Agreements.

Elements of a Contract

  1. Offer and Acceptance

For a contract to take place, it is essential that one party has something to offer and the other party is willingly ready to accept the offer without any further conditions. A valid contract will only come into existence when one party accepts the offer in an exact manner. If either of the party is not satisfied with the terms and conditions of the contract laid down, negotiation can re-done by both parties.

  1. Legalities of the Contract

The contract should include terms and conditions which adhere to the rules and regulations of Indian Contract Law, 1872. It should fulfil all the legal requirements of the contract law.

  1. Capacity of Parties

It is one of the most important elements for the validity of a contract. The Capacity of Parties includes:

  • Mental Capacity of both the parties to carry out the agreement.
  • Agree to the terms and conditions of the contract.
  • The parties involved in the agreement should be above the age of legal consent.
  1. Consideration

For a contract to be considered as valid, there has to be some consideration which should be agreed upon by both the parties in the same sense. It is not mandatory that consideration should be in the form of money. A consideration can be an interest, right, benefit ( to both the parties) or it can be of monetary value.

  1. Written and Verbal Contracts

Agreements can be both oral as well as written. However, written agreements are easy to enforce in the court of law, although both kinds of agreements are valid. Written contractual agreements are needed in situations where a considerable amount of time will pass before the contract is honoured, such as a last will and testament which includes a high value or amount of consideration, debts, and/or property.

Invalid and Fraudulent Contracts

Businessmen have a belief that after signing a contract, there are very few exceptions to its enforcement in the court of law and contracts are otherwise free from issues. A contract is a way through which two or more parties agree upon things to carry out a business activity in exchange for consideration.  But, these contracts are only valid when they meet the required criteria as mentioned above. The fact is that not every contract made is valid. There may be circumstances where the elements of a contract are absent and thus making it unenforceable or not otherwise fully enforceable.

Sometimes, a situation arises wherein the elements of a contract are met but they are against the public policy. In such circumstances, even though the contracts meet all the requirements, it is not enforceable.

Situations where a contract is Invalid or Fraudulent:

  1. Contracts against the Public Policy

Sometimes, even when the contract meets all the elements of a valid contract, still they cannot be enforced in the court as such agreements are against the Public Policy. When contracts do not adhere with the policies made for the general public, they are termed as invalid. For example, a clause in an employment contract to not compete in the organization is against public policy. Employers may do this to ensure that employees do not leave the organization. Therefore, such agreements are morally not possible to impose.

  1. Illegal Contracts

Contracts which are imposed on the party through ways of coercion, undue influence, or by any other way which is against the law are illegal contracts. The consent is obtained through illegal means which is not ethically correct and therefore such agreements are voidable on the choice of the party whose consent is so obtained.

  1. Offer/Acceptance/Consideration violates the law

If any of the elements of a contract like the offer, acceptance, or consideration is related in such a way that it violates the law then such contracts are invalid in the eyes of the law. For example: when consideration for a contract is gambling, robbery or a murder.

  1. Purpose is Illegal

A contract will only be enforceable when they are ethical and moral in the eyes of Law. Any contract made for an illegal purpose does not constitute the elements of a valid contract. If the purpose of a contract is to commit a crime or do any sort of illegal activity through such an agreement, the court will not interfere, and the agreement will be considered as an invalid one.

Conclusion

It is important to note that, breach of contract cannot be imposed, if the contract, itself is invalid. In such cases, the suing party is not awarded any damages or compensation and therefore, it is the responsibility of both the parties to make sure that elements of a contract are met and there are no mistakes or errors.  It is always recommended to draft a business contract, a professional person is contracted as such agreements, involves huge amounts and can lead to losses for both the parties. A lawyer will make sure that there are no errors and no legal consequences arising further.

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