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Month: May 2023

Brief view of Hindu Divorce (Sec.13 HMA)


Divorce among Hindus was not recognized until the Hindu marriage Act, 1955. Manu says that a marriage can end only with the death of one of the spouses. Any divorce taken otherwise was not only frowned upon but deeply stigmatized and prejudiced. Divorce was considered as a sin.

British India only had the Divorce Act, 1869 which provided for the divorce procedure in India for people professing the religion of Christianity. Other than that there was no enactment for the divorce process in India.It was only in 1955 that parliament passed the Hindu Marriage Act 1955 and provision related to the concept of divorce was introduced in the act. Divorce, the said term has not been defined in the act but it simply means, dissolution of marriage. Various grounds of divorce are mentioned under section 13 of the Hindu Marriage Act.

GROUNDS OF DIVORCE

  1. ADULTERY- Section 13(1)(i)
    Adultery means voluntary sexual intercourse outside lawful wedlock. It is for the petitioner to prove that there was a lawful marriage and that the respondent had sexual intercourse with a person other than him/her. Marriage must be subsisting at the time of the act.

Supreme Court in Joseph Shine Vs Union of India ruled that adultery is not a crime and struck down section 497 IPC. It was observed that two individuals may part if one cheat but to attach criminality to infidelity is going too far. Adultery is a personal matter and how do couple deals with it is a matter of privacy at its pinnacle. This loss of moral commitment in marriage which creates a dent in the relationship has been left for the personal call of the couple. If they wish to, they can proceed with the divorce.

  1. CRUELTY- Section 13(1)(ia)
    Treating the petitioner with cruelty after the solemnization of marriage is a ground for divorce. Cruelty can be both physical and mental. Physical beating or causing bodily injury to the spouse amounts to physical cruelty. Physical cruelty is easy to determine. It is difficult to say what constitutes mental cruelty. Cruelty is also an offense under section 498A IPC
    Essentials-
    a) Factum of separation

b) Animus Deserdendi i.e., intention to desert

c) Desertion without any reasonable cause

d) Desertion without consent of the other party

e) Statutory period of 2 years must have passed before a petition is presented

  1. CONVERSION- Section 13(1)(ii)
    If any spouse ceases to be Hindu and converts into another religion without the consent of the other spouse, a divorce can be granted.
  2. INSANITY-Section 13(1)(iii)
    There are two requirements of insanity as a ground of divorce-

a) The respondent has been of incurable unsound mind

b) Respondent suffering continuously or intermittently from mental disorder of such a kind or extent that it would not be reasonable for the petitioner to continue living with the respondent.

  1. LEPROSY – Section 13(1)(iv) (Omitted)
    Leprosy was earlier one of the grounds of divorce is now omitted. The Law Commission in its report had recommended repeal of any provision which were discriminatory against leprosy-affected people. India is also a signatory to a UN Resolution which calls for the elimination of discrimination against persons suffering from leprosy. Parliament on 13th February 2019 passed, Personal Law Amendment bill removing leprosy as a ground for divorce under five personal laws including the Hindu Marriage Act.
  1. VENEREAL DISEASE –Section 13(1)(v)
    A sexually transmitted disease that is incurable and transmittable forms a ground of divorce, if either of the spouses is suffering from any such disease. A disease like AIDS is called venereal disease.conjugal rights for one year after the passing of a decree under section 9 of the act, then either of the spouses may present a divorce petition.

The court before granting a decree for divorce on this ground may be satisfied that the petitioner is not dis entitled to this right because of any bar laid down in s. 23 of the Act.


SPECIAL GROUNDS OF DIVORCE FOR WIFE
The wife has been given special grounds to seek divorce.

SECTION 13(2)(i) – BIGAMY
If a husband already has a wife before the commencement of the act and after the commencement of the act he gets married to another woman, either of the two wives may apply for divorce. The only rider is that the divorce petition would be successful if the other wife was alive at the time of the presentation of the petition.

SECTION 13(2)(ii)- RAPE, SODOMY or BESTIALITY
A wife can file a divorce petition if her husband has been guilty of Rape, sodomy, or bestiality since the solemnization of marriage.

Rape is a criminal offense under section 375IPC. Section 375 IPC which defines rape does not criminalize marital rape. Rape laws in our country continue with the patriarchal outlook of considering women to be the property of men post marriage. After marriage, a woman is supposed to have given implied consent for her body to be used in and as the way her husband likes.

Exception 2 to section 375 reads that sexual intercourse or sexual acts by a man with his wife who is not below 15 years of age, is not rape. Section 42A was inserted in the POCSO Act which says that the provisions of POCSO would prevail over any other law including IPC to the extent of the inconsistency. According to POCSO, a child is a person below 18years of age and any sexual intercourse with a child below 18years is a punishable offense. POCSO prevails over IPC. However, the law is still silent over the rape committed by a husband of his wife who is 18 or above.

Conclusion:

There are a number of provisions surrounding divorce in the Hindu Marriage Act of 1955. “Divorce as a Dissolution of Marriage” is defined under the Hindu Marriage Act. Fault Theory, Mutual Consent Concept, and Irretrievable Theory are the three basic divorce theories. In India, the fault theory is applicable to divorce cases. According to this view, a marriage may be dissolved if one spouse is guilty or accountable for a crime that falls under the category of matrimonial offenses. The innocent spouse may seek divorce as a remedy..

According to the Hindu Marriage Act, the primary grounds for divorce for Hindu women are adultery, desertion, conversion, leprosy, cruelty, etc. However, the idea of divorce is criticized by many thinkers. According to Section 125 of the Criminal Procedure Code, Hindu married women may also request maintenance. Therefore, the spouse who is innocent may approach the court and request a divorce as a remedy.

Rights and Duties of an Agent

In an agency agreement, the principal appoints an agent to carry out a particular duty or conduct business on his behalf. The principle is liable for the actions of his agent toward third parties because he is bound by such actions. Let’s now examine the obligations and rights of agents.

Rights of Agents

1. Right to Remuneration

As per section 219, the associate agent incorporates a right to receive the in agreement remuneration or absence of agreement, an affordable remuneration for rendering the services to the principal that aren’t voluntary or gratuitous. He becomes eligible to receive the remuneration as shortly as he completes the work that he undertook.

2. Lien on Goods

Some agents who have the possession of products, securities, or properties of their principal even have a lien on this merchandise, securities, or properties relating to their remuneration and conjointly for any expenses or liabilities that they once associate unpaid merchant, he incorporates a right to prevent the products in transit.

3. Right to be Indemnified

An agent represents his principal to third parties. As per sections 222 and 223, the associate agent incorporates a right to be indemnified by his principal for all charges, expenses, and liabilities that he incurs throughout the agency.

4. Right to Compensation

In line with section 225 of the aforementioned Act, the associate agent is entitled to say compensation for the injuries suffered as a consequence or wish of the ability of the principal. The principal should create compensation to his agent in respect of injury caused to such agent by the principal’s neglect or wish of ability.

Duties of Agents

A principal incorporates a right to sue his agent for damages just in case of breach of duty by the agent. The duties of agents are:

  1. Duty to follow the directions of the Principal [S.211]- Regarding this duty of Agent S. 211 provides: An agent is bound to conduct the business of his principal according to the directions given by the principal, or, in the absence of any such directions, according to the custom which prevails in doing business of the same kind at the place where the agent conducts such business. When the agent acts otherwise, if any loss be sustained, he must make it good to his principal, and if any profit accrues, he must account for it.

For Example in Pannalal Jankidas v. Mohanlal, AIR [1951] Agent purchased some goods for his principal and stored the goods in a godwon. Agent was also under the instructions to insure the goods. But he failed to insure the goods. The goods were destroyed by fire. It was held that Agent was liable to compensate.

  1. To carry out his work with reasonable care and skills [S.212] – Regarding this duty of agent S.212 provides –An agent is bound to conduct the business of the agency with as much skill as is generally possessed by persons engaged in similar business unless the principal has notice of his want of skill. The agents always bound to act with reasonable diligence, and to use such skill as he possesses; and to make compensation to his principal in respect of the direct consequences of his own neglect, want of skill or misconduct, but not in respect of loss or damage which are indirectly or remotely caused by such neglect, want of skill, or misconduct.
    In State Bank of Indore v. National Textiles Corporation [2004] certain cheques were presented to Bank by customer Bank sent to the drawee for collection. The cheques were lost in transit. It was held that Bank was liable to the customer for the lost cheques.
  2. To render proper accounts to his principal [S.213]- Regarding this duty of Agent S. 213 provides that an agent is bound to render proper accounts to his principal on demand. In State of Tamilnadu v. S.A Chettiar (1988) the agent filed suit against
    principal for rendition of accounts the Madras High Court observed that u/s 213 of contract Act it is provided that the agent is bound to render proper accounts to his principal on demand but there is no provision in the contract Act which empower the agent to file a suit for accounts against the principal.
  3. To communicate with principal [S. 214]-Regarding this duty of agent S.214 provides that an agent is bound to render proper accounts to his principal on demand It is the duty of an agent, in cases of difficulty to use all reasonable diligence in communicating with his principal, and in seeking to obtain his instructions.
    Thus agent is bound his principal’s directions when he faces difficulty although agent may at in good faith without communicating the principal in cases of emergency.
    For Example: Principal consigned hundred boxes of grapes to his agent at Allahabad and directed to send grapes immediately to Mrs. Sohan at Mumbai. When agent received the grapes in Mumbai he found that grapes could not bear
    the journey to Mumbai without spoiling. He sold grapes in Allahabad it was held that agent was not liable because he acted in good faith.
  4. Not to deal on his own accounts [S. 215 & S. 216]– Regarding this duty of agent S. 215 provides that an agent is bound to render proper accounts to his principal on demand If an agent deals on his own account in the business of the agency,
    without first obtaining the consent of his principal and acquainting him with all material circumstances which have come to his own knowledge on the subject, the principal may repudiate the transaction, if the case shows, either that any material fact has been dishonestly concealed from his by the agent, or that the dealings of the agent have been disadvantageous to him.
    Example: A directs B to sell A’s estate for himself in the name of C, A, on discovering that B has bought the estate for himself, may repudiate the sale, if he can show that B has dishonestly concealed any material fact, or that the sale has been
    disadvantageous to him.
  5. Duty to pay sum received for principal [S. 218]– Regarding this duty of agent S. 218 provides that an agent is bound to render proper accounts to his principal on demand.
  6. To protect the interest of principal [S.209]- Regarding this duty of agent S. 209 provides that when an agency is terminated by the principal dying or becoming of unsound mind, the agent is bound to take, on behalf of the representatives of his late principal, all reasonable steps for the protection and preservation of the interests entrusted to him.
  7. Not to delegate authority – In respect of this duty of agent an agent S. 190 provides that an agent cannot lawfully employ another to perform acts which he has expressly or impliedly undertaken to perform personally, unless by the ordinary custom of trade a sub-agent may, or, from the nature of the agency, a sub-agent must, be employed.

CONTRACT OF AGENCY

When a person employs another person to do any act for himself or to represent him in dealing with third persons, it is called a ‘Contract of Agency’. The person who is so represented is called the ‘principal’ and the representative so employed is called the ‘agent (Sec. 182). The duty of the agent is to enter into legal relations on behalf of the principal with third parties. But, by doing so he himself does not become a party to the contract to the contract not does he incur any liability under that contract. Principal shall be responsible for all the acts of his agent provided they are not outside the scope of his authority.

Competence of the parties to enter into a contract of agency

The person employing the agent must himself have the legal capacity or be competent to do the act for which he employ the agent. A minor or a person with unsound mind cannot appoint an agent so as to be legally represented by him (Sec. 183). But an agent so appointed need not necessarily be competent to contact (Sec: 184) and hence minor or an insane can be appointed as an agent he can bring about legal relations between the principal and the third party but such an incompetent agent cannot personally be held liable to the principal.

Creation of Agency: Agency may be created by any of the following ways:

  1. Expressly (Sec. 187)
    When an agent is appointed by words spoken or written, his authority is said to be express.
  2. Impliedly (Sec. 187)
    When agency arises from the conduct of the parties or inferred from the circumstances of the case, it is called implied agency.
    Example: A of Calcutta has a shop in Delhi. B, the manager of the shop, has been ordering and purchasing goods from C for the purpose of the shop. The goods purchased were being regularly paid for but of the funds provided by A. B shall be considered to be an agent of A by his conduct.

CLASSIFICATION OF AGENTS

A general classification of agents from the point of view of the extent of their authority is as follows
1) Special agent. A special agent is one who is appointed to perform a particular act or to represent his principal in some particular transaction as, for example, an agent employed to sell a house or an agent employed to bid at an auction. Such an agent has a limited authority and as soon as the act is performed, his authority comes to an end. He cannot bind his principal in any matter other than that for which he is employed. The persons who deal with him are bound to ascertain the extent of his authority.
2) General agent. A general agent is one who has authority to do all acts connected with a particular trade, business or employment. For example, the manager (general agent) of a firm has an implied authority to bind his principal by doing anything necessary for carrying on the business of the firm or which falls within the ordinary scope of the business. Such authority of the agent is continuous until it is put to an end. If the principal, by secret instructions, limits the authority of the general agent, and the agent exceeds the authority, the principal is bound by the agent’s acts done within the scope of his authority, unless the third parties dealing with the agent have a notice of the curtailment of the authority of the agent.
3) Universal agent. A universal agent is one whose authority to act for the principal is unlimited. He has authority to bind his principal by any act which he does, provided that act (i) is legal, and (ii) is agreeable to the law of the land.,


4)Another classification of agents from the point of view of the nature of work performed by them is as follows :

  1. Commercial or mercantile agent. A ‘mercantile agent’, according to Sec. 2 (9) of the Sale of Goods Act, 1930, means “a mercantile agent having in the customary course of business as such agent, authority either to sell goods, or to consign goods for the purposes of sale, or to buy goods, or to raise money on the security of goods.” This definition does not cover all kinds of mercantile agents which are as follows:
    (1) Factor. A factor is a mercantile agent entrusted with the possession of goods for the purpose of selling them. He has ostensible authority to do such things as are usual in the conduct of business [Pickering v. Busk, (1812) 15 East 38). He sells the goods in his own name as an apparent owner upon such terms as he thinks fit. He can sell them on credit as well. He has also the authority to receive the price and give a good discharge to the purchaser.

Example. P owned a motor car and delivered it to A, a mercantile agent, for sale at not less than £ 575. A sold the car for £ 340 to T, who bought it in good faith and without notice of any fraud. A misappropriated the £ 340 and F sued to recover the car from T. Held. as A was in possession of the car with P’s consent for the purposes of sale, T got a good title [Fakes v. King, (1923) 1 K.B. 2821.

(2)Auctioneer. An auctioneer is an agent appointed by a seller to sell his goods by auction for a reward generally in the form of a commission. He is primarily the agent of the seller but after the sale has taken place. he becomes the agent of the purchaser also. He resembles factor in all respects except that he has only a particular lien on the goods for his charges. He has authority
to receive the price of the goods sold. He can also sue for the price in his own name. The principal is liable to the third parties for the acts of the auctioneer if the auctioneer acts within the scope of his apparent authority even though he disobeys instructions privately given to him.
Example. P instructed A to sell a pony by auction, subject to a reserve price of £ 25, A. at the time of sale inadvertently stated that there was no reserve price and knocked the pony down to T at £ 16. Held, the sale was binding on P [Rainbow v. Hawkins, (1904) 2 K.B. 322)

(3)Broker. A broker is an agent who is employed to buy or sell goods on behalf of another. He is employed primarily to bring about a contractual relation between the principal and the third parties. He is not entrusted with the possession of the goods in which he deals. He, cannot act or sue in his own name. And as he has no possession, he has no right of lien.

(4) Commission agent. A commission agent belongs to a somewhat indefinite class of agents. He is employed to buy and sell goods, or transact business generally for other persons receiving for his labour and trouble a money payment, called commission.
(5) Del credere agent. A del credere agent is one who, in consideration of an extra commission, guarantees his principal that the person with whom he enters into contract on behalf of the principal, shall perform their obligations. He occupies the position of both a guarantor and an agent.
Banker. The relationship between a banker and his customer is really that of debtor and creditor. But there is a super-added obligation on the part of the banker to pay when called upon to do so by the draft or order (in the form of a cheque) of the customer. To this extent, a banker is the agent of his customer.
Non-mercantile agents. These include attorneys, solicitors, insurance agents, clearing and forwarding agents and wife, etc.

Easement

The right to an easement goes from the time when humanity first emerged from savagery and acquired the habit of being neighbors to one another or respecting one another’s rights. The broad idea that a person should enjoy their property fully and exclusively while avoiding interfering with a neighbor’s lawful enjoyment of his own property rights was deemed essential for the common welfare. It appears that the original tenet of easements was this beneficial principle.

Definition:

Section 4 of the Indian Easements Act defines easement as: An easement is aright which the owner or occupier of certain land possesses, as such, for the beneficial enjoyment of that land, to do and continue to do something, or to prevent and continue to prevent something being done, in or upon, or in respect of , certain other land not his own. Eg.: ‘A’ the owner of the house has a right of way over B’s land. This is for the beneficial enjoyment of As house. This is an Easement.

According to Salmond, “Easement is that legal servient which can be exercised on some other piece of land for the benefit of a piece of land”

Dominant land; parcel of land with the benefit of the easement

Servient Land; parcel of land being burdened by the easement

Positive Easements; give rights of entry onto another person’s land to enable something to be done on the land e.g. right of way, rights to discharge water

Negative Easements; rights to prevent something being done e.g. rights to flow air through defined apertures, to support a building etc

REQUIREMENTS OF A VALID EASEMENT
The essential features of an easement, in the strict sense of the doctrine, are as follows:
(a) It is an incorporeal right; a right to the utilize and enjoyment of land not to the land itself;
(b) it is trusted upon corporeal property;
(c) it demands for its constitution two distinct tenements the “dominant tenement”
which enjoys the right, and the “servient tenement” which submits to it.
The characteristics that are required for the validity of an easement has been laid down by the court in Re Ellen borough Park. The Court of Appeal had to decide the status with respect to a right for residents to use a garden in the middle of a square around which their houses were built.

CREATION OF EASEMENTS

The title to easement may be by grant, by custom, by prescription or necessity. An easement can be acquired by grant. A grant is given by an agreement executed by a grantor in favour of  a grantee for a consideration. The grant becomes effective when the grantee has the right to enter upon the grantor’s land. The deed of easement may be separate or the grant may be included in a deed relating to the dominant heritage.

For example, X sells his land to Y and  by the same deed he may grant a right of way to Y for such land for another land of his. Grant is given by an agreement executed by the grantor in favour of the grantee for a consideration. The grant becomes effective when the grantee has the right to enter upon the grantor’s land. 

Easement by virtue of custom is a legal right acquired by the operation of law through continuous use of a land over a long period of time. Therefore the right of way continues to exist by grant, prescription or by virtue of custom.Easements, which are the subject matters of agreement between the parties, are for right of  way, right to air and light. Some easements are acquired by grant and others prescription and custom. Creation of an easement does not mean transfer of property.

In the same manner, surrendering an easement right does not imply transfer of property. Easement can be made, altered and released. Easement right cannot be created or modified orally. It must be in a written form. However, easements by prescription and custom need not be in writing.A deed of grant must clearly mention the purpose of which easement is granted. By the deed of grant the subservient owner gives full and free right to the dominant owner and his successors a passage wide enough for movement of people and vehicles between the dominant owner’s premises and the public road against a price consideration. In Moody v Steggles the grant of a right to fix a signboard to the adjoining property advertising the public house which constituted the dominant tenement was held to comprise an easement.

DURATION AND NATURE OF EASEMENTS

The Indian Easements Act, 1882 states in Section 6 that “An easement may be permanent, for a term of years or other limited period, or subject to periodic interruption, or exercisable only at a particular place, or at certain times, or between certain hours, or for a particular purpose, or on condition that it shall commerce or become void or voidable upon the happening of a specified event or the performance or nonperformance of a specified Act..”

The nature of easements is described in section 7 of the Indian Easement Act, 1882 which states that easements are restrictions of one or other of the following rights (namely):(a) Exclusive right to enjoy -The exclusive right of every owner of immovable property (subject to any law for the time being in force) to enjoy and dispose of the same and all  products thereof and accessions thereto.(b) Rights to advantages arising from situation – The right of every owner of immovable  property (subject to any law for the time being in force) to enjoy without disturbance by another the natural advantages arising from its situation

LEASE

Definition of Lease

Section 105 states the definition of a lease which states that it is a transfer of immovable property for a particular time period for a consideration of which the transferee has accepted the terms surrounding the agreement.

A lease is a contract wherein the lessor grants the lessee temporary use and pleasure of a thing, in whole or in part, in exchange for payment (rent).If the lease is for real estate that cannot be moved, the lessor is the owner and the lessee is the tenant. In this situation, the rent may take the form of cash or a share of the property’s profits.

What are the essentials of a lease?

  • Parties must be competent: The parties in a lease agreement should be competent to enter into a contract. Lesser should be entitled to a property and have absolute rights over that property.
  • Right of possession: Ownership rights are not transferred in a lease, only the possession of the property is transferred.
  • Rent: Consideration for a lease can be taken in the form of a rent or premium.
  • Acceptance: Lessee, who is to get the interest in the property after lease, has to accept the lease agreement along with the time period and terms & conditions imposed on the transfer.
  • Time Period: Lease always takes place for a particular time period which is to be specified in the lease agreement. It can be relaxed at the option of the lessor.
  • Maintain: Provision for the payment of the costs of maintenance and repair, taxes, insurance, and other expenses appertaining to the asset leased.
  • Term of Lease: The term of the lease is the period for which the agreement of lease remains in operation.
  • Ownership: During the lease period, ownership of the assets is being kept with the lessor, and its use is allowed to the lessee.
  • Terminating: At the end of the period, the contract may be terminated.
  • Renew or Purchase: An option to renew the lease or to purchase the assets at the end of the basic period.
  • Default: The lessee may be liable for all future payments at once, receiving title to the asset in exchange.

What happens when the lease agreement does not prescribe the time period of the lease?

Section 106 provides for the duration of the lease in the absence of the lease agreement. It lays down that in the absence of a contract, lease can be ended by both parties to the lease by issuing a notice to quit. The prescribed time period always commences from the date of receiving the notice to quit. Following are the circumstances:

PurposeTerm (Deemed)NoticePrescribed End
Agricultural or manufacturing purpose.Year to Year6 month1 year
Any other purpose.Month to Month15 days1 month

In this table, there is a distinction of two purposes in regard to Section 106 i.e. Agricultural or manufacturing and other purposes. Hence, two things can be derived from this table:

  1. When a lease for Agricultural or manufacturing purpose is deemed to be of year to year, then it will attract a 6-month notice that the lease will end on the expiry of 1 year from the date of the commencement of the lease.
  2. When a lease for any other purpose is deemed to be of the month to month, then it will attract a 15-day notice that the lease will end on the expiry of 1 month from the commencement of the lease.

There is proviso to this section which states that the notice to quit in this section should be written and conveyed to the party who is required to abide by it. If this is not possible then it should be attached to a conspicuous place in that property.

How is a lease executed?

Section 107 states about lease how made. This section covers three aspects:

  1. When there is a lease of Immovable property for a term of 1 year or more – This can only be made by a registered deed.
  2. All other leases of Immovable property – Can be either made by a registered deed or an oral agreement or settlement along with the transfer of possession of that property.
  3. When the lease is of multiple properties that require multiple deeds, it will be made by both the parties of the lease.

Advantages of Lease

The advantages from the viewpoint of the lessee

  1. Saving of Capital: Leasing covers the full cost of the equipment used in the business by providing 100% finance. The lessee is not to provide or pay any margin money as there is no down payment. In this way, the saving in capital or financial resources can be used for other productive purposes, e.g., the purchase of inventories.
  2. Flexibility and Convenience: The lease agreement can be tailor-made in respect of lease period and lease rentals according to the convenience and requirements of all lessees.
  3. Planning Cash Flows: Leasing enables the lessee to plan its cash flows properly. The rentals can be paid out of the cash coming into the business from the use of the same assets.
  1. Improvement in Liquidity: Leasing enables the lessee to improve its liquidity position by adopting the sale and leaseback technique.
  2. Shifting of Risk of Obsolescence: The lessee can shift the risk upon the lessor by acquiring the use of assets rather than buying the asset.
  3. Maintenance And Specialized Services: In the case of a special kind of lease arrangement, the lessee can avail specialized services of the lessor for maintenance of asset leased. Although lesser charges higher rentals for providing such services, leases see overall administrative and service costs are reduced because of specialized services of the lessor.
  4. Off-the-Balance-Sheet-Financing: Leasing provides “off-balance-sheet” financing for the lessee in that the lease is recorded neither as an asset nor as a liability.

The advantages from the viewpoint of the lessor

There are several extolled advantages of acquiring capital assets on lease:

  1. Higher profits: The Lessor can get higher profits by leasing the asset.
  2. Tax Benefits: The Lessor being the owner of an asset, can claim various tax benefits such as depreciation.
  3. Quick Returns: By leasing the asset, the lessor can get quick returns than investing in other projects of the long gestation period.

Disadvantages of Lease

The disadvantages from the viewpoint lessee

  1. Higher Cost: The lease rental includes a margin for the lessor as also the cost of risk of obsolescence; it is, thus, regarded as a form of financing at a higher cost.
  2. Risk: Risk of being deprived of the use of assets in case the leasing company winds up.
  3. No Alteration in Asset: Lessee cannot make changes in assets as per his requirement.
  4. Penalties On Termination of Lease: The lessee has to pay penalties in case he has to terminate the lease before the expiry lease period.

The disadvantages from the viewpoint of lessor

  1. High Risk of Obsolescence: The Lessor has to bear the risk of obsolescence as there are rapid technological changes.
  2. Price Level Changes: In the case of inflation, the prices of an asset rise, but the lease rentals remain fixed.
  3. Long term Investment: Leasing requires the long term investment in the purchase of an asset and takes a long time to cover the cost of that asset

Types of the Lease

Leasing takes different types, which are given below;

  • Based on Nature.
    1. Operating lease.
    2. Financial lease.
  • Based on the Method of Lease.
    1. Direct lease.
    2. Sale & Leaseback.
    3. Leverage lease.
  1. Operating Lease: An operating lease is a cancelable contractual agreement whereby the lessee agrees to make periodic payments to the lessor, often for 5 or fewer years, to obtain an asset set’s services. According to the International Accounting Standards (IAS-17), an operating lease is one that is not a finance lease.
  2. Financial Lease: A financial (or capital) lease is a longer-term lease than an operating lease that is non-cancelable and obligates the lessee to make payments for the use of an asset over a predetermined period of time. According to the International Accounting Standard (IAS-17), in a financial lease, the lessor transfers to the lessee substantially all the risks and rewards identical to the ownerships of the asset whether or not the title is eventually transferred.
  3. Direct Lease: Under direct leasing, a firm acquires the right to use an asset from the manufacturer directly. The ownership of the asset leased out remains with the manufacturer itself.
  4. Sale & Leaseback: Under the sale & leaseback arrangement, the firm sells an asset that it owns and then leases to the same asset back from the buyer. This way, the lessee gets the assets for use, and at the same time, it gets cash.
  5. Leveraged Lease: Leveraged lease is the same as the direct lease, except that a third party, the lender, is involved in addition to the lessee & lessor. The lender partly finances the purchase of the asset to be leased; the lessor turns to be a borrower.

Distinguish between the Operating and Financial Lease

TopicsOperating LeaseFinancial Lease
DefinitionAn operating lease is a short term lease used to finance assets & is not fully amortized over the life of the asset.A financial lease is the lease used in connection with long-term assets & amortizes the entire cost of the asset over the life of the lease.
DurationShort term leasingLong term leasing
CostThe lessor pays the maintenance cost.Lessee pays the maintenance cost.
Cancel & ChangeableCancelable lease & It is a changeable lease contract.Non-cancelable lease & It is not a changeable lease contract.
Riskthe landlord bears the risk of the asset.The lessee bears the risk of the asset.
PurchaseAt the end of the asset is hot purchasable.At the end of the contract, the asset is purchasable.
RenewIt is a renewable contract.It is not a renewable contract.
Also calledService lease, short term lease, cancelable lease.A capital lease, long term lease, non-cancelable lease.

So, from the above discussion, we can say that a lease is a contract under which one party the lessor (owner) of an asset agrees to grant the use of that asset to another, the lessee in exchange for periodic rental payments. The rent is a tax-deductible expense.

RIGHTS & LIABILITIES OF LESSOR & LESSEE.

Rights and Liabilities of a Lessor

We already know who is a lessor, so legally a lessor is granted certain rights and certain liabilities. Section 108A talks about the rights and liabilities of a lessor, so let’s further analyse the rights and liabilities of a lessor.

Rights of a lessor

  1. Right to accretions- If during the tenancy period or during the duration of the tenancy any further accretion, accumulation or addition is made in the property then the lessor is entitled to such property. Such addition can be natural or by the expense of the lessee but after the termination of the tenancy period, the lessee must deliver the title to the lessor.
  2. Right to collect rent- The lessor has the right to collect rent or any form of consideration as mentioned in the terms and conditions of the contract from the tenant without any form of interruptions.

Liabilities of a lessor

  1. Duty of disclosure- The lessor is bound to disclose any form of a material defect in the property. There are two kinds of defects:
  • Latent defect- Latent defect cannot be discovered rationally or through inspection by the lessor.
  • Apparent defect- Apparent defect can be easily discovered through some inspection.

So basically a lessor shall disclose any apparent defect to the lessee and it is vital to disclose such defects as they interfere with the enjoyment of the property by the lessee.

  1. To give possession- The lessor must give possession of the property to the lessee on lessee’s request. However, this liability only arises when there is a request on behalf of the lessee.
  2. Covenant for quiet enjoyment- The lessee has all the rights to enjoy the property. It is the duty of the lessor to not cause any form of interruptions during the tenancy period. The Madhya Pradesh HC stated that actions such as physical interference or direct interference in the premises lead to a breach of enjoyment and interruptions.

Rights and liabilities of a lessee

Just like a lessor, a lessee has also some rights and liabilities which are granted to him by the Transfer of Property Act. So now we will analyse the rights and liabilities of a lessee.

Rights of a lessee

  1. To charge for repair- If the lessor fails to make any repairs in the property which the lessor is bound to do in that case the lessee can make such repairs by his personal expenses. If a lessee makes such repairs by his personal expenses then, in that case, it is the right of the lessee to deduct the cost of such repairs from the rent or the lessee may simply charge the lessor for such repair.
  2. Right to remove fixtures- The lessee has the right to remove any fixture in the property during the time period of the lease, however, after the termination of the lease deed the lessee must leave the property in the condition in which he received it. In case the lessee fails to do so, the lessor can sue the lessee.
  3. Right to assign his interest- The lessee can sub-lease the property or the lessee can absolutely transfer his interests. However, if the lease deed restricts a lessee to assign his interest then the lessee is prohibited to do so and even after the transfer of his rights, the lessee is still subject to all the liabilities related to the lease deed.
  4. Right to have benefits of crops- When the lease is of uncertain duration then, in that case, the lessee or his/her legal representative has been given the right to gain benefits from all the crops grown by them.

Liabilities of a lessee

  1. Duty to disclose material facts– The lessee is bound to inform the lessor of any material fact which the lessee is aware of and the lessor is not. In case the lessee does not disclose such fact and the lessor suffers any loss then the lessee is bound to compensate the lessor.
  2. Duty to pay rent- The lessee is bound to pay the rent or the premium to the lessor or his agent in the proper time and proper place as decided by the lease deed. In case the lessee fails to pay his/her rent then, in that case, the lessor can eject the lessee on the ground of non-payment of rent or file a suit for arrears of rent.
  3. Duty to maintain the property- The lessee is bound to maintain the property in a good condition as it was when he was given the possession of the property. The lessor or his agent are allowed to inspect the property at the reasonable ground. Only the changes caused by irresistible forces can act as an exception for this liability.
  4. Duty to give notice– If the lessee becomes aware that any person has tried or is trying to damage the rights of the lessor or the title of the lessor is endangered then, in that case, the lessee must give notice to the lessor.
  5. Duty to use the property in a reasonable manner- The lessee must use Duty not to erect any permanent structure- A lessee cannot erect any permanent structures except in the case of agriculture without the consent of the lessor.
  6.   Duty to restore possession– After the determination of the lease, the     lessee must restore the possession of the property to the lessor.

        7  Duty to restore possession- After the determination of the lease, the lessee must restore the possession of the property to the lessor. If the lessee does not vacate the premises even after the expiry of the notice, the lessee is then bound to pay the damages. 

 If the lessee does not vacate the premises even after the expiry of the notice, the lessee is then bound to pay the damages. 

  1. the property in a manner as if it was his/her own property.

Termination of a lease

 A lease is terminated in eight different ways that are discussed below:

  1. A lease is terminated after the expiry of the specified time period.
  2. If the length of the lease is until the happening of some event and when that event happens the lease is terminated.
  3. If the lessor’s interest in the property is to terminate the lease on the happening of some event and when the event happens the lease is terminated.
  4. When the lessee surrenders by implying.
  5. When both the lessor and lessee mutually agree to end the contract.
  6. On the expiry of a notice which expressly conveys the intention to terminate the vacancy and such notice must be unconditional.
  7. Through forfeiture which legally allows a lessor to re-enter and reclaim his property.
  8. If the interest of both the lessor and the lessee in the whole property becomes vested at the same time in one person in the same right, then by the operation of law merger takes place

MEMORANDUM OF ASSOCIATION

The Memorandum of Association, which outlines a company’s constitution, serves as the cornerstone upon which the organization’s structure is created. It outlines the company’s activities’ range and how it interacts with the outside environment.

The first step in the formation of a company is to prepare a document called the memorandum of association. In fact memorandum is one of the most essential pre-requisites for incorporating any form of company under the Companies Act, 2013 (hereinafter referred to as ‘Act’). This is evidenced in Section 3 of the Act, which provides the mode of incorporation of a company and states that a company may be formed for any lawful purpose by seven or more persons, where the company to be formed is a public company; two or more persons, where the company to be formed is a private company; or one person, where the company to be formed is a One Person Company by subscribing their names or his name to a memorandum and complying with the requirements of this Act in respect of its registration.

Definition:

According to Section 2(56) of the Act “memorandum” means the memorandum of association of a company as originally framed and altered, from time to time, in pursuance of any previous company law or this Act. Section 4 of the Act specifies in clear terms the contents of this important document which is the charter of the company. The memorandum of association of a company contains the objects of the company which it shall pursue. It not only shows the objects of formation of the company but also determines the scope of its operations beyond which its actions cannot go. “THE MEMORANDUM OF ASSOCIATION”, as observed by Palmer, “is a document of great importance in relation to the proposed company”

In the celebrated case of Ashbury Railway Carriage & Iron Co. Ltd. v. Riche, (1875) L.R. 7 H.L. 653, Lord Cairn observed: “The memorandum of association of a company is its charter and defines the limitations of the powers of the company………. it contains in it both that which is affirmative and that which is negative. It states affirmatively the ambit and extent of vitality and powers which by law are given to the corporation, and it states negatively, if it is necessary to state, that nothing shall be done beyond that ambit………” [Egyptian Salt and Soda Co. Ltd. v. Port Said Salt Association Ltd. (1931) A.C. 677]

FORM OF MEMORANDUM OF ASSOCIATION

Section 4(6) of the Act provides that the memorandum of association should be in any one of the Forms specified in Tables A, B, C, D or E of Schedule I to the Act, as may be applicable in relation to the type of company proposed to be incorporated or in a Form as near thereto as the circumstances admit.
(i) the Form in Table A is applicable in the case of companies limited by shares;
(ii) the Form in Table B is applicable to companies limited by guarantee not having a share capital;
(iii) the Form in Table C is applicable to the companies limited by guarantee having a share capital;
(iv) the Form in Table D is applicable to unlimited companies not having a share capital;
(v) the Form in Table E is applicable to unlimited companies having a share capital.
A company shall adopt any of the model Forms of the memorandum of association mentioned above, as may be applicable to it.

1. NAME CLAUSE : firm must have its own name in order for others to recognize it as a distinct legal entity. Public companies must include the word “Limited” at the end of their names, while private companies must have the words “Private Limited.” The name of the company is a sign of its separate corporate existence, according to Section 4(1) of the Companies Act, 2013. If the company is, then this does not apply. Part 8 Company

The company name must not contain any expression or word that is associated with the federal, state, or local governments. The name must not, in accordance with Section 4(2), be such that its use would be illegal or objectionable in the eyes of the Central Government. To reserve a name, the company’s promoter must submit an application to the Registrar. For a period of 60 days from the date of the application for name reservation, the Registrar holds the company’s name in reserve.

2. SITUATION CLAUSE: The state where the company’s Register Office is located must be included in the Memorandum. In accordance with Section 12 of the Act, the company must have a registered office where all correspondence and notices may be addressed within 15 days of its incorporation. Every office or location where the company conducts business must have its name and registered office address painted or affixed on the outside..

3. OBJECT CLAUSE: The object for which the business is proposed to be incorporated, as well as any matters deemed necessary in furtherance of that object, must be specified in the Memorandum of Association. The company’s powers are limited by its memorandum of association. Any activity that goes beyond the Memorandum is known as an Ultra Vires transaction, and it is void from the start.

4. LIABILITY CLAUSE: The Memorandum of Association’s Liability provision must state whether a member of the company has restricted or unlimited liability. The liability of a member of a business limited by shares is capped at the outstanding balance on the shares the member owns. The Memorandum for a guarantee company must state the maximum contribution that each member agrees to make to the assets or the firm in the event of its dissolution.

5. CAPITAL CLAUSE: The capital amount with which the company is being registered must be stated in this section. The shares with fixed nominal values are those into which the capital is divided. The capital may be referred to as “nominal”, “authorized”, or “registered”. This figure establishes the upper bound beyond which the corporation is not permitted to issue shares without amending the memorandum.

6. SUBSCRIPTION CLAUSE: The Memorandum’s subscribers agree to purchase the specified number of shares listed next to their names in the Memorandum of Association. Each subscriber to the company’s memorandum must purchase a minimum of one share. Each subscriber must indicate how many shares they are willing to purchase next to their name.

In the case of Atlas Cycles (Haryana) Ltd. v. Atlas Products Pvt. Ltd [146 (2008) DLT 274 (DB)], use of the brand name as corporate name was settled. Both the plaintiff and the defendant companies belong to the same family. The Appellant-plaintiff was the proprietor of the trade mark in the name “Atlas”. The Respondent-defendant company containing the name “Atlas” in its corporate name started dealing in bicycles. The plaintiff objected to the use of the name “Atlas” by the defendant company. The Defendants were restrained from using the word ‘Atlas’ in their corporate/trade name in respect of bicycles and bicycle
parts.

A person cannot be permitted to name a company even after his personal name if that name resembles the name of an existing company. [K.G. Khosla Compressors Ltd. v. Khosla Extractions Ltd., (1986) 1 Comp LJ 211: AIR 1986 Del 181]

Conclusion:

The Memorandum of Association is a legal document that outlines the company’s charter and serves as the cornerstone of the organization’s structure. It limits and defines the company’s authority. A contract or act that the company undertakes or engages in that is outside the scope of the authority granted by the memorandum will be deemed ultra vires the company and void. The Companies Act, 2013, however, shall take precedence over any provisions in a company’s memorandum if those provisions are inconsistent with those in the Act.

A company’s memorandum of association may be modified in a number of ways, including by changing the company’s name, its objects, the State in which the registered office will be located, the share capital structure, capital reduction, or the directors’ liability provisions.

Articles of Association (AOA)

When a company is formed, certain rules and regulations are laid down along with the objectives of the company’s operations and its purpose. These laws regulate the internal affairs of a company. There are two important sets of documents that define these objectives and govern the functioning of the company and its directors or internal affairs. These documents are Articles of Association (AOA) and Memorandum of Association (MOA). Here, we will discuss in detail the Articles of association. 

Articles of Association contain the by-laws that regulate the operations and functioning of the company like the appointment of directors and handling of financial records to name a few. Let’s imagine the company as a machine. The articles of association then can be considered the user’s manual for this machine. It defines the operations that the machine is supposed to perform and how to do that on a day-to-day basis.

Definition of Articles of Association of a Company

As per Section 2 (5) of the Companies Act, 2013, Articles of Association have been defined as 

“The Articles of Association (AOA) of a company originally framed or altered or applied in pursuance of any previous company law or this Act.”

Objectives of the Articles of Association

Sec 5 of the Companies Act, 2103 states that the Articles of association:

  • Must include the regulations for the management of the company
  • Include matters that have been prescribed under the rules

They do not prevent a company from including additional matters in the AOA or from doing any alterations as may be considered necessary for the functioning of the company affairs.

Forms of Articles of Association (AOA)

The forms for Articles of Association (AOA) in tables F, G, H, I, and J for different types of companies have been mentioned under Schedule I of the Companies Act, 2013. AOA must be in the respective form.

  • Table F- AOA of a company limited by shares
  • Table G- AOA of a company limited by guarantee and having a share capital
  • Table H- AOA of a company limited by guarantee and not having a share capital
  • Table I- AOA of an unlimited company and having a share capital
  • Table J- AOA of an unlimited company and not having a share capital

Registration:

According Section 7 of Companies Act, 2013 and Companies (Incorporation) Rules, 2014, every company shall, at the time of incorporation, register its AOA & MOA with ROC.

Contents of Articles of Association

Contents of Articles of Association of a limited company is prescribed in Table-F of the Companies Act, 2013. Generally, the contents of AOA are as follows:

  • Interpretation
  • Private Company
  • Share Capital and Variation Of Rights
  • Preference Shares
  • Alteration to Memorandum
  • Control of Shares
  • Shares held Jointly
  • Increase of Capital
  • Lien on Shares
  • Calls on Shares And Transfer Of Shares
  • Transmission of Shares
  • Forfeiture of Shares
  • Alteration of Capital
  • Capitalisation of Profits
  • Buy-Back of Shares
  • Issue of Shares In Kind
  • General Meetings
  • Proceedings at General Meetings
  • Voting Rights and Proxy
  • Directors
  • Proceedings of The Board
  • Chief Executive Officer, Manager, Company Secretary or Chief Financial Officer.
  • Common Seal
  • Borrowing Powers
  • Operation of Bank Accounts
  • Dividends and Reserve
  • Accounts
  • Audit
  • Winding Up
  • Secrecy
  • Indemnity
  • Execution Clause

Alteration of Articles of Association:

A company has a statutory right to alter its articles of association. But the power to alter is subject to the provisions of the Act and to the conditions contained in the memorandum.

According to Section 14(1), a company may, by a special resolution alter its AOA.

Registration of Alteration
According to Section 14(2) read with rule 33 of Companies (Incorporation) Rules, 2014, every alteration of the articles shall be filed with the Registrar, together with a printed copy of the altered articles, within a period of fifteen (15) days in Form No. INC 27 with fee, who shall register the same.

Effect of Alteration of Articles of Association
According to Section 14(3), any alteration of the articles registered with ROC shall, subject to the provisions of this Act, be valid as if it were originally in the articles.

Points to Note

  1. The alteration of AOA must not exceed the powers given by the memorandum. In the event of conflict between the memorandum and the articles, it is the memorandum that will prevail.
  2. The alteration of AOA must not be inconsistent with any provisions of the Companies Act or any other statute.
  3. Articles may impose on the company conditions stricter than those provided under the law;
  4. The Articles must not include anything which is illegal or opposed to public policy.
  5. The alteration must be bona fide for the benefit of the company as a whole.
  6. The alteration must not constitute a fraud on the minority by a majority. If the alteration is not for the benefit of the company as a whole, but for majority of shareholders, then the alteration would be bad.
  7. Articles cannot be altered so as to compel an existing member to take or subscribe for more shares or in any way increase his liability to contribute to the share capital, unless he gives his consent in writing (Section 38).
  8. By effecting alteration in its articles, a company cannot defeat escape from its contractual obligation with any person.
  9. The Articles of Association cannot be altered so as to have retrospective effects.
  10. The alteration must not be inconsistent with an order of the Court under Sections 397 or 398 and 404 of the Companies Act, 1956.
  11. Section 8 Company cannot alter Article except with the approval of Central Government.

Social Impact of Betting in India

[Preamble of the Public Gambling Act of 1867]

Preamble-Whereas it is expedient to make provision for the punishment of public gambling and the keeping of common gambling-houses in the United Provinces, East Punjab, Delhi and the Central Provinces:

It is hereby enacted as follows:-…

India as a country is a very diverse, emotional and religious one. Since time immemorial, betting, gambling and such activities have been looked down upon by the Indian society. So much so that even the Pandavas in the Mahabharata who were considered to be almost symbol of righteousness, fell to the trap of gambling and lost their entire kingdom to it. Thus, gambling is looked upon as a social evil in the Indian Society which is considered to be very addictive and intoxicative.

The social impact of betting in the present day India would in my opinion be hazardous. 

India, is a developing country where even today more than 21.9% of the country’s population lives below the poverty line. These poor people in the quest of making quick money will tend to go for shortcuts of betting and gambling and in the process will majorly lose, (as there is just one winner and a number of losers in such cases) and will fall even lower in the economic index.

Not just the poor people, even the middle class people may tend to opt the shortcut of gambling or betting and as a result may end up falling to the class of poor people.

Betting and gambling give man a chance to earn disproportionate amounts of money in a short time without labor; this fuels the dream of avarice of men. It lures a man away from an honest day’s work. If the already not so rich Indian in dream of earning quick income starts losing all his life long saving on betting, we might altogether give rise to new situation where suicides and disappearing acts maybe on the rise.

The oldest instance of Gambling is the story of Prince Nala told in the Mahabharata. One day Brihadasva, a reputed sage well-versed with the ancient lore guided Yudhishthira on his starting of the 13 yrs. Exile by detailing the heart rending hardships which Nala and Damayanthi underwent patiently and how in the end they regained their prosperity. 

Nala was the ruler of Nishadha. He was the commander of a vast army and conquered many countries and extended the frontiers of his kingdom from coast to coast. He was renowned as an able administrator and a just ruler. Damayanthi was the princess of Vidharbha whose beauty was so much praised that it had crossed all the three worlds. So much so that even the Gods wanted to marry her, but after a series of events, finally Nala married Damayanti and this generated hatred for him amongst a number of young unmarried men across the three worlds. One of those many haters was a demon named Kali who for vengeance lured Nala, who was a known gambler, into gambling with him. In the gamble Nala lost all his wealth and kingdom. The act worked in favour of Kali but the love between Nala and Damayanti was enough to help them sail together through this issue. After a number of years and through the series of events and hardships, finally Nala and Damayanti regained their lost glory.

Thus, the lesson Brihadasva tried to give to Yudhishthira from this story was that Gambling brings you loss and misery but if you stay strong together, the bad times too will pass ending with you regaining your lost glory.

The teacher of the Gods Brihaspati dealing with gambling in chapter XXVI, verse 199, recognised that gambling had been totally prohibited by Manu because it destroyed truth, honesty and -wealth, while other law givers permitted it when conducted under the control of the State so as to allow the king a share of every stake. Such was the notion of Hindu law givers regarding the vice of gambling.

Not just the Hindu religious texts, even the Quran, i.e., the Muslim religious text has its views on gambling as follows: Hamilton in his Hedaya, vol. IV, book XLIV, includes gambling as a kiraheeat or abomination. He says: “It is an abomination to play at chess, dice or any other game; for if anything is staked it is gambling, which is expressly prohibited in the Koran; or if, on the other band, nothing be hazarded it is useless and vain.“

The Delhi High Court in the case of Haryana State Lotteries, Iqbal vs Govt. Of Nct of Delhi & Ors., 1998 (46) DRJ 397 quoted P.V. Kane that,” Conceding, for the sake of argument, that indulgence in gambling even on the part of such a virtuous, noble and philosophic warrior as Yudhishthira was justified or at least excusable, there is nothing to show that the code of Kshatriya chivalry permitted him to gamble away his own spirited, devoted and virtuous queen and his four valiant brothers. It appears that the real aim of the great author of the Mahabharata is to emphasize that gambling is such a reprehensible pastime and so ruinous and degrading that even the greatest and the best, when once they indulge in it, lose all sense of duty, morality and the claims of love and affection. It has already been seen how gambling was looked upon as a great vice in the king by writers on politics and also the Dharmasastras. Even the Puranas here and there condemn gambling. For example, the Brahmapurana (171.29-38) condemns it in strong language. It says that the gambler’s wife is always in distress and the gambler, on seeing the condition of his wife, is also worried (this is in almost the same words as Rg. X. 34, 10-11), the Vedas condemn gambling and that there is no sin comparable to gambling.”

The SC in the case of The State of Bombay vs R. M. D. Chamarbaugwala, 1957 AIR 699; Disregarded gambling by citing the Rigveda and also the Mahabharata as mentioned below.

The Rigveda disregards the practice of gambling in its hymn XXXIV, verses 7, 10, 11 and 13 as follows:

7. Dice verily are armed with goads and driving hooks, deceiving and     tormenting, causing grievous woe. They give frail gifts and then destroy the man who wins, thickly anointed with the player’s fairest good.

10. The gambler’s wife is left forlorn and wretched: the mother mourns the son who wanders homeless.

11. Sad is the gambler when he sees a matron, another’s wife, and his well-ordered dwelling. He yokes the brown steeds in the early morning, and when the fire is cold sinks down an outcast.

13. Play not with dice: no, cultivate thy corn-land. Enjoy the gain, and deem that wealth sufficient. There are thy cattle there thy wife, O gambler. So this good Savitar himself hath told me.

Mahabharata:

  • Verse 221 advises the king to exclude from his realm gambling and betting, for those two vices cause the destruction of the kingdom of princes.
  • Verse 224 enjoins upon the king the duty to corporally punish all those persons who either gamble or bet or provide an opportunity for it. 
  • Verse 225 calls upon the king to instantly banish all gamblers from his town. 
  • Verse 226 the gamblers are described as secret thieves who constantly harass the good subjects by their forbidden practices. 
  • Verse 227 calls gambling a vice causing great enmity and advises wise men not to practice it even for amusement. The concluding 
  • Verse 228 provides that on every man who addicts himself to that vice either secretly or openly the king may inflict punishment according to his discretion.

The SC in the case of All Kerala Online Lottery Dealers Association vs. State of Kerala & Ors.,[(2016) 2 SCC 161 said,” It is common case that lottery is a species of gambling.  Gambling is considered as a pernicious vice by all civilized societies from time immemorial. The Rigveda’s, Smritis and Arthashastras   have   condemned gambling as a vice.  Several Judges and learned authors are unanimous in their condemnation of gambling.  Experience has shown that the common forms of gambling are comparatively innocuous when placed in contrast with widespread pestilence of lotteries. The  former  are  confined  to  a  few persons and places, but the latter infests the whole  community;  it  enters every dwelling; it reaches every class; it preys upon the hard  earnings  of the poor; it plunders the ignorant and the simple.”

The SC in the case of Dr. K.R. Lakshmanan vs. State of Tamil Nadu & Anr., 1996 AIR 1153; said,” We are convinced and satisfied that the real purpose of Arts.19 (1) (g) and 301 could not possibly have been to guarantee or declare the freedom of gambling. Gambling activities from their very nature and in essence are extra- commercium although the external forms, formalities and instruments of trade may be employed and they are not protected either by Art. 19 (1) (g) or Art. 301 or our Constitution.”

Time and again the courts have referred to the religious texts and have thereby disregarded Gambling as a social evil that is very harmful for any society. They have very categorically laid instances whereupon the Indian society has looked down upon Gambling, and betting as an addictive social evil, and have then said that they should at no cost be practiced by anyone in the society.

Taking into view all the above points, it Gambling cannot be out rightly considered bad for a society. 

The SC in the case of The State of Bombay vs R. M. D. Chamarbaugwala, 1957 AIR 699; Has citied 

  • Yajnavalkya, a Vedic sage who sought to bring it under State control but he too in verse 202(2) provided that persons gambling with false dice or other instruments should be branded and punished by the king.
  • Kautilya, one of the best Indian teacher, philosopher, economist, jurist and royal advisor of all times also advocated State control of gambling and, as a practical person that he was, was not-averse to the State earning some revenue therefrom. 

Kautilya during his era had legalized gambling and it was made state-regulated industry with a 5 per cent tax on winnings.

The RBI Report in 2003, ‘State Finances – A study of Budget 2002-03,’ showed that there is a tremendous increase in states’ profits from lotteries.\

Gambling if legalized in India will serve two purposes:

  • It will introduce a new concept in the entertainment and hospitality industry;
  • It will generate revenue for the state.

 It is also a good way for employment generation and reduction of crime rate.

An analogy might perhaps be made with the stock market. 

In case of Stock Markets also people place their amounts on a particular share and in case the price of the share goes up they end up gaining profits, else there may also be cases of bankruptcy where a person placed all his amount on a share and the share went down in the market drastically. The sums of money involved in stock market are also massive.

The Government has introduced STT (Securities Transaction Tax) which is applicable on every transaction done at stock exchange. That means if you buy or sell equity shares, derivative instruments, equity oriented Mutual Funds this tax is applicable. The STT collection contributes to about 0.5 – 1% of the total revenue collected by the Indian Govt. The percent may seem quite low but the amount it generates is huge.

APPEAL,REFERENCE AND REVISION (Cr.P.C)

APPEAL

The word “appeal” has not been defined in The Code of Criminal Procedure, 1973, (hereinafter CrPC), however, it can be described as the judicial examination of a decision, given by a lower court, by a higher court. The Merriam-Webster dictionary defines appeal as “a legal proceeding by which a case is brought before a higher court for review of the decision of a lower court”.

The supreme court has supervisory jurisdiction due to the victims’ right to redress.The Criminal Procedure Code, 1973, Chapter 30, Sections 395 to 405, deals with reference and revision. Without negligence or irregularities, justice is administered in a fair and proper manner. Under the Criminal Procedure Code, review procedures include both appeal and modification. They have the authority to carry out or commute a punishment. The right to a hearing does not grant the litigant any rights; rather, it solely preserves the High Court’s authority to administer justice in line with the law. They may even have the authority to request an inquiry, subject to some restrictions.

The correctness of the lower court

the regularity of proceedings in the court

power of revision cannot be uses in interlocutory orders

The argument of the person applying for revision should be considered during the hearing even though they are too brief

There are some situations where an appeal is not permitted. The legislators took this into consideration and included the revision idea to the law in order to entirely prevent any miscarriage of justice, even in situations where the CrPC has restricted the right of appeal. The powers of revision granted to the higher courts are included in Sections 397 to 405 as well as the process for using these powers. It should be recognized that these powers are by definition broad and discretionary.

REVISION

Revision Although the term “revision” is not defined in the Cr.P.C, Section 397 of the Cr.P.C grants the High Court or any Sessions Judge the authority to request and review any proceeding’s records. Ascertain oneself:

1.as to the correctness,legality,or propriety of any finding,sentence or order, whether recorded or passed,and

2.as to the regularity of any proceedings of an inferior court.

Difference between an Appeal, Reference and Revision

APPEALREFERENCEREVISION
It is defined under Chapter XXIX of the Criminal Procedure Code.It is defined under Chapter XXX of the Criminal Procedure Code.It is defined under Chapter XXX of the Criminal Procedure Code.
It is defined from Section 372- 394 of the Criminal Procedure Code .It is defined from Section 395-396 of the Criminal Procedure Code .It is defined from Section 397-402 of the Criminal Procedure Code .
An appeal is made to the higher court on the points of the fact and laws.Reference is made to the higher court on the points of the law.Revision is made to both higher and lower court on the already adjudicated matters.
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In some cases, an appeal can be filed with leave of the court by an aggrieved person or accused.Reference is made by the trial court to the High Court.The revision can be initiated by the trial court suo moto or the High Court.

State recognition 

An existing state, an old state that has vanished and reappears, or the division of an existing state into two States are all ways that new states are created. It is crucial to obtain recognition as a state if a new state possesses specific rights, privileges, and obligations. But before a State is regarded as a State, there are a few minimal requirements. For a State to be regarded as a sovereign State, it must first obtain De Jure recognition (when a state is acknowledged legally). Whether to award recognition or not depends in large part on political philosophy. It must establish relations with the other States in existence in order to be recognized as a State.

The word “Recognition” refers to the ratification, confirmation, or acknowledgement that something done in one’s name by another person was legitimate.Recognizing an entity does not only mean that it has met the necessary criteria; it also means that the state doing the recognizing will interact with the entity being recognized and grant it the privileges and immunities that are typically associated with recognition under domestic law. Therefore, it is asserted that political viewpoints rather than legal justifications typically determine whether something is recognized or not. It is appropriate because it serves the interests of the State to establish relations with a foreign State and grant her some privileges. As a result, when States decide whether to recognize something, they will undoubtedly assess its benefits and drawbacks.

Definition:

“In recognizing a state as a member of international community, the existing states declare that in their opinion the new state fulfills the conditions off statehood as required by International law” (Oppenheim)

Is there a duty to acknowledge? According to Lauterpacht and Guggenheim, acknowledgment is not only required but also constitutive. This point of view has drawn criticism for being inconsistent and having no connection to state practice. In the words of Browlie, “recognition is an optional and political act and there is no duty in this regard.”

Essentials for recognition as a state under Public International Law

Under the International Law, Article 1 of the Montevideo Conference, 1933 defines the state as a person and lays down following essentials that an entity should possess in order to acquire recognition as a state:

  • Population;
  • Territory;
  • Government;
  • Sovereignty;
  • Control should tend towards permanency.

If these conditions are fulfilled, then the State can be recognized

Theories of recognition

The recognition of a new entity as a sovereign state is based on two main theories:

  1. Consecutive Theory

According to the sequential theory of state recognition in international law, a state must be acknowledged as a sovereign by all other states in order for it to be regarded as an international person. According to the subsequent conception of state recognition in international law, a State only acquires the status of an international person and becomes subject to international law after being recognized. Therefore, unless an entity is recognized by the existing States, even though it exhibits all the qualities of a state, it does not acquire the status of an international person.

Criticism of the consecutive theory of state recognition in International Law

This theory has been criticised by several jurists. Few of the criticisms of this theory are:

  • This theory is criticised because unless a state is recognised by other existing states, rights, duties and obligations of statehood community under International Law is not applicable to it.
  • This theory also leads to confusion when a new state is acknowledged and recognised by some of the existing states and not recognised by other states.

2. Declaratory Theory

In support of the Declaratory Theory of Statehood, Wigner, Hall, Fisher, and Brierly are the leading figures. This theory holds that any new state can form without the approval of any current states. According to Article 3 of the Montevideo Conference from 1933, this hypothesis has been established. According to this theory, a new state’s existence is independent of whether or not it is acknowledged by an older one. Under international law, a new state has the right to preserve its integrity and independence even before being acknowledged by other governments.

Criticism of the declaratory theory of state recognition in International Law

The declaratory theory of statehood has also been criticised. This declaratory theory of state recognition in International Law has been criticised on the ground that this theory alone cannot be applicable for recognition of a state. When a state having essential characteristics comes into existence as a state, it can exercise international rights and obligations and here comes the application of declaratory theory, but when other states acknowledge its existence and the state gets the legal rights of recognition, the consecutive theory comes into play.

Modes of Recognition of State in International Law

  1. De facto Recognition.
  2. De jure Recognition.

These are the two modes of recognition of State in International Law.

 De facto Recognition of States under International Law

It is the process of acknowledging a new state by a non-committal act.

  • De facto recognition is a provisionally grant.
  • It is the first step to the next mode of recognition.
  • It is a temporary and factual recognition as a state
  • It can either be conditional or without any condition.
  • A test of control for newly formed states.

When the other existing countries have an opinion that the new state does not have enough capacity but the new state holds a sufficient territory and control over a particular territory.

Example: The Soviet Union was de facto recognized by the government of the UK in 1921

De jure recognition of States under International Law

When the other existing countries have an opinion that the new state has all the eligible capacity then such state will be recognized by the de jure recognition. To grant recognition under the de jure method there is no need for the fulfillment of the first mode.

  • It is granted when the newly formed state acquires permanent stability and statehood.
  • It grants the permanent status of a newborn state as a sovereign state.

Example: The Soviet Union was given de jure recognition Soviet Union was in 1924.

In conclusion, there is no distinction between de facto and de jure as it is for the states to give effect to the internal acts of the recognized authority. This was held in the case Luther v. Sagar . [(1921)3 KB 532]

The distinction between De Facto and De Jure Recognition of State in International Law

S.No.De facto Recognition of StateDe jure Recognition of State
1.De facto recognition is a provisional and factual recognition.De jure recognition is legal recognition.
2.De facto recognition is granted when there is the fulfilment of the essential conditions of statehood.De jure recognition is granted when the state fulfils all the essential condition of states along with sufficient control and permanency.
3.De facto recognition is a primary step towards grant of de jure recognition.De jure recognition can be granted either with or without grant of de facto recognition.
4.De facto recognition can either be conditional or non-conditional.De jure recognition is a final and non-conditional recognition
5.De facto recognition is revocable in nature.De jure recognition is non-revocable.
6.The states recognised under this mode have only a few rights and obligations against other states.The state recognised under this mode have the absolute right and obligations against other states.
7.The state with de facto cannot undergo state succession.The state with de jure recognition can under state succession.
8.The state with de facto recognition cannot enjoy full diplomatic immunities.The state with de jure recognition enjoys full diplomatic immunities.

Conclusion

A necessary step for a state to take use of all the rights associated with statehood under international law is state recognition. Different jurists have argued for and against the Consecutive Theory and Declaratory Theory of Recognition, but we can infer that the theory used for recognition is somewhere between the two.

De jure or de facto, the recognition confers rights, privileges, and obligations. De jure recognition confers absolute rights, liabilities, and privileges on a state; de facto recognition confers only limited rights, privileges, and duties. There are too many political influences coming from the state’s recognition on the global stage.

There are numerous examples of powerful states putting up barriers to a newly constituted state being recognized. When the recognizing state believes the new state does not meet the requirements to be a sovereign state, withdrawal may even be an option. The modes of recognition, i.e., de facto and de jure recognition, vary from situation to case and can be done in either an express form or an implicit form.