Article 32, a cornerstone in many legal systems, stands as a powerful instrument of social ordering. Rooted in the principles of justice, fairness, and the protection of fundamental rights, Article 32 plays a pivotal role in upholding the rule of law and ensuring that individuals within a society are granted effective remedies for the violation of their rights.
I. Historical Context:
A. Origin and Evolution The historical development of Article 32 reflects a recognition of the need for a robust mechanism to safeguard individual liberties. Many legal systems, inspired by international human rights conventions, have incorporated similar provisions.
B. Constitutional Foundations Article 32 often finds its place in constitutional documents, emphasizing its status as a fundamental right and a protector of justice.
II. Functions of Article 32:
A. Guarantor of Fundamental Rights Article 32 typically empowers individuals to directly approach the highest court for the enforcement of fundamental rights. It serves as a direct avenue for citizens to seek redress for rights violations.
B. Judicial Review Article 32 enables the judiciary to review the constitutionality of laws, executive actions, or policies. The power of judicial review ensures that legal norms align with constitutional principles.
III. Impact on Social Ordering:
A. Protection of Individual Liberties Article 32 acts as a shield, protecting individuals from arbitrary actions by the state or other entities. Its enforcement contributes to the overall protection of civil liberties and human rights.
B. Legal Remedies and Justice The provision of legal remedies under Article 32 ensures that justice is not just a theoretical concept but a practical reality. It empowers individuals to seek immediate relief for rights infringements, fostering a sense of justice within society.
C. Deterrence and Accountability The existence of Article 32 acts as a deterrent against potential rights violations. By holding institutions accountable for their actions, it establishes a culture of accountability within the legal and governmental frameworks.
IV. Challenges and Controversies:
A. Potential Misuse Critics argue that the direct access to the highest court provided by Article 32 may be susceptible to misuse. Balancing the need for access to justice with the prevention of frivolous litigation remains a challenge.
B. Judicial Burden The high volume of cases filed under Article 32 can strain judicial resources, raising questions about the efficiency of the legal system.
Conclusion:
Article 32, as an instrument of social ordering, plays a vital role in shaping the legal landscape of a nation. Its historical roots, functions in protecting fundamental rights, and impact on social justice highlight its significance. While challenges exist, the enduring nature of Article 32 underscores its importance in ensuring that justice is not just a theoretical ideal but a tangible reality for individuals within a society.
The judicial process plays a crucial role in maintaining social order within a society. It serves as a mechanism for resolving disputes, administering justice, and upholding the rule of law. By establishing and enforcing legal norms, the judicial system contributes significantly to the overall stability and harmony of a community. This essay explores the ways in which the judicial process functions as an instrument of social ordering, examining its role in shaping behavior, resolving conflicts, and promoting a just and equitable society.
Establishment and Codification of Laws: The judicial process begins with the creation and codification of laws that reflect societal values, norms, and expectations. These laws act as a framework for acceptable behavior, defining the boundaries that individuals and institutions must adhere to in order to maintain social order. Through the legislative process, societies articulate their collective vision of justice, fairness, and morality.
Norm Enforcement and Deterrence: One of the primary functions of the judicial process is to enforce established norms and laws. The existence of a legal system with the power to adjudicate and punish serves as a deterrent, discouraging individuals from engaging in behavior that is deemed harmful or disruptive to the social fabric. The fear of legal consequences promotes conformity to societal expectations, contributing to the overall stability of the community.
Dispute Resolution and Social Harmony: Conflicts are an inherent part of human interaction, and the judicial process provides a structured and impartial means of resolving disputes. By offering a forum for the peaceful resolution of conflicts, the legal system prevents individuals from resorting to vigilante justice or other disruptive methods of settling grievances. This contributes to the maintenance of social harmony and fosters a sense of justice and fairness within the community.
Protection of Individual Rights: A well-functioning judicial system safeguards the rights and liberties of individuals. By adjudicating cases and interpreting laws, the judiciary ensures that the rights guaranteed by the legal framework are respected and protected. This protection of individual rights is fundamental to social ordering, as it establishes a balance between the interests of the collective and the autonomy of the individual.
Social Change and Adaptation: The judicial process is not static; it evolves over time to reflect societal changes and values. Landmark legal decisions can shape social attitudes, challenge existing norms, and contribute to the evolution of a more just and equitable society. By adapting to the evolving needs of the community, the judicial process becomes a dynamic instrument for social ordering.
Conclusion:
In conclusion, the judicial process serves as a vital instrument of social ordering by establishing, enforcing, and adapting legal norms. Through the resolution of disputes, the protection of individual rights, and the promotion of justice, the judicial system plays a central role in maintaining social harmony and stability. As societies evolve, so too must the judicial process, ensuring that it continues to serve as an effective instrument for shaping behavior, resolving conflicts, and upholding the principles of justice and equity within a community.
The relationship between the judicial process and the constitution is a fundamental aspect of any legal system that follows a constitutional framework. Adjudication refers to the process of resolving legal disputes through a court or other judicial body. The constitution plays a crucial role in shaping and guiding the adjudicatory process. Here are some key aspects of the relationship between the judicial process and the constitution:
Constitutional Basis for Judicial Power:
Most modern legal systems derive their judicial authority from a constitution. The constitution defines the powers and limitations of the judiciary, outlining the structure of the judicial system and the authority of different courts.
2. Judicial Review:
Many constitutions grant courts the power of judicial review, allowing them to examine the constitutionality of laws, executive actions, and governmental policies. This power enables courts to strike down laws or actions that violate constitutional principles.
3. Interpretation of Constitutional Text:
Courts play a crucial role in interpreting the language of the constitution. They analyze constitutional provisions to determine their meaning and application in specific cases. This process, known as constitutional interpretation, is central to the adjudicatory function.
4. Protection of Constitutional Rights:
The primary function of the judiciary is to protect and enforce constitutional rights. Courts hear cases where individuals or entities claim that their constitutional rights have been violated and decide whether such violations have occurred.
5. Constitutional Constraints on Judicial Power:
While the constitution grants certain powers to the judiciary, it also imposes limits on those powers. For example, the constitution may prescribe the types of cases that courts can hear or specify procedural requirements that must be followed in the adjudicatory process.
6. Role in Constitutional Amendments:
In some legal systems, the judiciary may play a role in the constitutional amendment process. The courts may be involved in interpreting and applying constitutional amendments, ensuring that they align with the overall constitutional framework.
7. Constitutional Independence of the Judiciary:
Constitutions often establish the independence of the judiciary as a safeguard against interference from other branches of government. This independence is crucial for ensuring that the judiciary can fulfill its role as a check on the constitutionality of governmental actions.
8. Constitutional Challenges and Precedent:
Courts create legal precedent through their decisions, and this precedent can influence future adjudicatory processes. As courts decide cases, they contribute to the development of constitutional law and shape the interpretation of the constitution over time.
Conclusion:
In summary, the judicial process and the constitution are intertwined, with the constitution providing the foundation for the establishment, powers, and limitations of the judiciary. Adjudication, as a key function of the judiciary, involves interpreting and applying constitutional principles to resolve legal disputes and uphold the rule of law.
Precedent, also known as judicial precedent or case law, plays a crucial role in both statutory and codified legal systems. These systems are legal frameworks that govern a society, and they provide rules and regulations that individuals and institutions must follow. Here’s an explanation of the importance of precedent in each type of legal system.
Your provided text provides an accurate and comprehensive overview of the concept of precedent in common law legal systems. Here are some key points highlighted in the passage:
Definition of Precedent: A precedent is defined as a principle or rule established in a previous legal case that serves as a reference for a court when deciding subsequent cases with similar issues or facts.
Binding and Persuasive Authority: Precedent can be either binding or persuasive. Binding precedent must be followed by a court, while persuasive precedent is not mandatory but can be considered and used to guide the decision-making process.
Purpose of Precedent: The general principle in common law systems is that similar cases should be decided similarly to ensure consistent and predictable outcomes. Precedent serves as the mechanism to achieve this goal.
Black’s Law Dictionary Definition: The passage includes a definition from Black’s Law Dictionary, which describes precedent as a “rule of law established for the first time by a court for a particular type of case and thereafter referred to in deciding similar cases.”
Three Kinds of Law: The text notes that common law precedent is considered a third kind of law, alongside statutory law (laws enacted by legislatures) and regulatory law (rules and regulations created by executive branch agencies).
Equal Footing with Statutory and Regulatory Law: The passage emphasizes that common law precedent holds equal footing with statutory and regulatory law. This reflects the importance and authority of precedent in shaping the legal landscape.
Common Law Systems (Statutory Systems):
In common law systems, such as those in the United States, the United Kingdom, and many other countries, judicial decisions are a significant source of law. A precedent is created when a court makes a decision in a particular case, and that decision serves as a guide or authority for future cases.
Stare decisis, a Latin term meaning “to stand by things decided,” is a fundamental principle in common law systems. It emphasizes the importance of courts following prior decisions and maintaining consistency in the application of the law.
Precedent helps ensure predictability and stability in the legal system. Lawyers and judges can look to past decisions to understand how the law has been interpreted and applied in similar situations.
8. Civil Law Systems (Codified Systems):
In civil law systems, such as those found in many continental European countries, the legal code is the primary source of law. These systems rely more heavily on statutes and written laws, with less emphasis on precedent compared to common law systems.
However, even in codified systems, precedent can still play a role, especially in interpreting and applying statutes. Courts may consider past decisions as persuasive authority or use them to interpret vague or unclear statutory language.
Precedent helps fill gaps in the written law, providing guidance when the statute is silent or ambiguous. It contributes to the development of a consistent and coherent legal framework.
9. Binding precedent in English law Judges are bound by the law of binding precedent in England and Wales and other common law jurisdictions. This is a distinctive feature of the English legal system. In Scotland and many countries throughout the world, particularly in mainland Europe, civil law means that judges take case law into account in a similar way but are not obliged to do so and are required to consider the precedent in terms of principle. Their fellow judges’ decisions may be persuasive but are not binding. Under the English legal system, judges are not necessarily entitled to make their own decisions about the development or interpretation of the law. They may be bound by a decision reached in a previous case. Two facts are crucial to determining whether a precedent is binding:
The position in the court hierarchy of the court which decided the precedent, relative to the position in the court trying the current case.
Whether the facts of the current case come within the scope of the principle of law in previous decisions. 10. Persuasive precedent Persuasive precedent (also called persuasive authority or advisory precedent) is precedent or other legal writing that is not binding. precedent but that is useful or relevant and that may guide the judge in making the decision in a current case. Persuasive precedent includes cases decided by lower courts, by peers or higher courts from other geographic jurisdictions, cases made in other parallel systems (for example, military courts, administrative courts, indigenous and tribal courts, state courts versus federal courts in the United States), statements made in dicta, treatises, or academic law.
In a case of first impression, courts often rely on persuasive precedent from courts in other jurisdictions that have previously dealt with similar issues. Persuasive precedent may become binding through its adoption by a higher court. In Civil law and pluralist systems, as under Scots law, precedent is not binding but case law is taken into account by the courts. 11. Lower courts A lower court’s opinion may be considered as persuasive authority if the judge believes they have applied the correct legal principle and reasoning. 12. Higher courts in other circuits A court may consider the ruling of a higher court that is not binding. For example, a district court in the United States First Circuit could consider a ruling made by the United States Court of Appeals for the Ninth Circuit as persuasive authority. 13.Horizontal courts Courts may consider rulings made in other courts that are of equivalent authority in the legal system. For example, an appellate court for one district could consider a ruling issued by an appeals court in another district. 14. Statements made in obiter dicta. Courts may consider obiter dicta in opinions of higher courts. Dicta of a higher court, though not binding, will often be persuasive to lower courts. The obiter dicta are usually translated as “other things said”, but due to the high number of judges and several personal decisions, it is often hard to distinguish from the ratio decidendi (reason for the decision). For this reason, the obiter dicta may usually be taken into consideration.
Interpretation Judges in the U.K use three primary rules for interpreting the law. The normal aids that a judge has include access to all previous cases in which a precedent has been set, and a good English dictionary. Under the literal rule, the judge should do what the actual legislation states rather than trying to do what the judge thinks that it means. The judge should use the plain everyday ordinary meaning of the words, even if this produces an unjust or undesirable outcome. A good example of problems with this method is R v Maginnis (1987) in which several judges found several different dictionary meanings of the word “supply”. Another example might be Fisher v Bell, where it was held that a shopkeeper who placed an illegal item in a shop. window with a price tag did not make an offer to sell it, because of the specific meaning of “offer for sale” in contract law. As a result of this case, Parliament amended the statute concerned to end this discrepancy. The golden rule is used when use of the literal rule would obviously create an absurd result. The court must find genuine difficulties before it declines to use the literal rule. There are two ways in which the Golden Rule can be applied: the narrow method, and the broad method. Under the narrow method, when there are apparently two contradictory meanings to a word used in a legislative provision or it is ambiguous, the least absurd is to be used. For example, in Adler v George (1964), the defendant was found guilty under the Official Secrets Act of 1920.
The mischief rule is the most flexible of the interpretation methods. Stemming from Haydon’s Case (1584), it allows the court to enforce what the statute is intended to remedy rather than what the words actually say. For example, in Corkery v Carpenter (1950), a man was found guilty of being drunk in charge of a carriage, although in fact he only had a bicycle. In the United States, the courts have stated consistently that the text of the statute is read as it is written, using the ordinary meaning of the words of the statute. 1.”[I]n interpreting a statute a court should always turn to one cardinal canon before all others. … [Courts must presume that. a legislature says in a statute what it means and means in a statute what it says there.” Connecticut Nat’l Bank v. Germain, 112 S. Ct. 1146, 1149 (1992). Indeed, “when the words of a statute are unambiguous, then, this first canon is also the last: ‘Judicial inquiry is complete.’ “ 2. “A fundamental rule of statutory construction requires that every part of a statute be presumed to have some effect, and not be treated as meaningless unless absolutely necessary.” Raven Coal Corp. v. Absher, 153 Va. 332, 149 S.E. 541 (1929)
Pros and cons There is much discussion about the virtue or irrationality of using case law in the context of stare decisis. Supporters of the system, such as minimalists, argue that obeying precedent makes decisions “predictable.” For example, a businessperson can be reasonably assured of predicting a decision where the facts of his or her case are sufficiently similar to a case decided previously. This parallels the arguments against retroactive (ex post facto) laws banned by the U.S. Constitution. An argument often used against the system is that it is undemocratic as it allows judges, which may or may not be elected, to make law. A counterargument (in favor of the concept of stare decisis) is that if the legislature wishes to alter the case law (other than constitutional interpretations) by statute, the legislature is empowered to do so. Critics sometimes accuse particular judges of applying the doctrine selectively, invoking it to support precedent that the judge supported anyway, but ignoring it in order to change precedent with which the judge disagreed.
Conclusion:
In summary, while the role of precedent may be more explicit and central in common law systems, it still holds importance in codified systems. Precedent helps maintain consistency, predictability, and fairness in the application of the law, whether that law is primarily based on statutes or relies on a combination of statutes and judicial decisions. The relationship between statutory law and precedent can vary by jurisdiction, but both elements contribute to the overall functioning and evolution of legal systems. In common law systems, the reliance on precedent is a fundamental aspect of the legal process, contributing to the stability, consistency, and fairness of the legal system. It ensures that decisions are not made arbitrarily and that similar cases are treated similarly, providing a basis for legal predictability.
Ethical reasoning in the judicial process refers to the application of ethical principles and values in the decision-making and conduct of individuals within the legal system. Judges, lawyers, and other participants in the judicial process are expected to adhere to ethical standards to ensure fairness, justice, and the protection of individual rights.
Impartiality and Fairness:
Judges are expected to be impartial and treat all parties before the court fairly, without any bias or prejudice.
Ethical reasoning involves ensuring that decisions are based on the merits of the case and relevant legal principles, rather than personal beliefs or relationships.
2. Integrity and Honesty:
Participants in the judicial process, including judges and lawyers, are expected to uphold high standards of integrity and honesty.
Providing accurate and truthful information to the court is essential for the proper functioning of the justice system.
3. Confidentiality:
Ethical reasoning involves respecting the confidentiality of information shared during legal proceedings. Lawyers, judges, and other legal professionals must handle sensitive information with care.
4. Legal Ethics:
Adherence to professional codes of conduct and legal ethics is crucial. Lawyers, for example, have ethical responsibilities to their clients, the court, and the legal profession.
Ethical reasoning includes avoiding conflicts of interest, maintaining client confidentiality, and providing competent representation.
5. Respect for Human Rights:
Judicial decisions should be guided by a respect for fundamental human rights. Ethical reasoning requires judges to consider the impact of their decisions on individuals’ rights and freedoms.
6. Transparency:
Openness and transparency in the judicial process are essential for public trust. Ethical reasoning involves providing clear reasons for decisions and ensuring that the process is accessible and understandable to all.
7. Dignity and Respect:
Treating all individuals with dignity and respect is a fundamental ethical principle. This applies to interactions within the courtroom, as well as the treatment of litigants, witnesses, and others involved in the legal process.
8. Public Confidence:
Ethical reasoning takes into account the need to maintain public confidence in the legal system. Trust in the judiciary is crucial for the legitimacy and effectiveness of the justice system.
9. Continuing Education:
Legal professionals are encouraged to engage in ongoing education to stay informed about evolving ethical standards and legal developments. Ethical reasoning involves a commitment to staying current and adapting to changes in the legal landscape.
10. Balancing Conflicting Values:
Ethical reasoning often requires judges to balance conflicting values and interests, such as the right to a fair trial versus the need for public safety.
Conclusion:
Overall, ethical reasoning in the judicial process is essential for upholding the rule of law, ensuring justice, and maintaining the integrity of the legal system. It serves as a guiding framework for individuals involved in legal proceedings to make decisions that are not only legally sound but also ethically responsible.
The NCLT, also known as the tribunal, is a quasi-judicial body established to resolve corporate civil disputes under the Companies Act of 2013. The recommendations to establish the National Company Law Tribunal (NCLT) in India were made by the Eradi Committee. The Eradi Committee, officially known as the “High Powered Expert Committee on Companies and MRTP Acts,” was constituted in 1999 to review and suggest changes to the Companies Act, 1956, and the Monopolies and Restrictive Trade Practices (MRTP) Act, 1969.
The Eradi Committee submitted its report in 2001, proposing significant reforms to the corporate legal framework in India. One of its key recommendations was the establishment of a specialized tribunal for company law matters to streamline the adjudication process and enhance the efficiency of resolving corporate disputes. Based on the recommendations of the Eradi Committee, the National Company Law Tribunal (NCLT) was eventually set up under the Companies Act, 2013, replacing the Company Law Board (CLB). The NCLT became operational in 2016 and has since been playing a crucial role in adjudicating various company law matters, including insolvency proceedings, mergers and acquisitions, and other disputes related to corporate governance and compliance.
Legislative Basis: The NCLT was established under Sections 408 to 434 of the Companies Act, 2013. These sections deal with the establishment, composition, powers, and functions of the NCLT.
Composition:
The NCLT is composed of judicial and technical members.
Judicial members are typically retired judges of the High Court.
Technical members are individuals with expertise in various fields such as law, finance, economics, accounting, and industry.
Appointment:
The members of the NCLT, both judicial and technical, are appointed by the central government.
The appointments are made based on the recommendations of a selection committee.
Jurisdiction:
The NCLT has jurisdiction over a wide range of company law matters, including disputes related to mergers and acquisitions, insolvency proceedings, class action suits, and others.
In the context of the Companies Act, 2013, a buyback of shares refers to the repurchase of a company’s own shares by the company itself. The provisions related to the buyback of shares are outlined in Sections 68, 69, and 70 of the Companies Act, 2013, along with relevant rules.
The term “buyback” refers to a company’s repurchase of its own shares or securities from existing shareholders. This provision allows the company to approach shareholders and propose the purchase of their shares at a predetermined buyback price, resulting in a reduction of total outstanding shares and a decrease in shareholders’ equity ownership.
Section 68(1) of the Companies Act, 2013 outlines various modes through which buybacks can be conducted:
Buyback from Existing Shareholders or Security Holders on a Proportionate Basis:
The company makes a proportionate offer to all existing shareholders or security holders based on their current shareholding.
2, Buyback from the Open Market:
The company purchases its own shares from the open market, typically through stock exchanges, at prevailing market prices.
3. Buyback of Securities Issued to Employees:
Companies have the option to repurchase securities issued to employees, often as part of stock option or sweat equity schemes.
These modes provide flexibility for companies to structure their buyback strategies based on specific needs and prevailing market conditions.
To finance buybacks, companies can utilize different sources, as per Section 68(1) of the Companies Act, 2013:
Free Reserves:
Companies can use accumulated profits (free reserves) to fund the buyback.
2. Security Premium Account:
The security premium account, holding amounts received as securities’ premium during share issuance, can be utilized for financing the buyback.
3. Proceeds of the Issue:
Companies may use proceeds from the issue of shares or other specified securities to finance buybacks. It’s important to note that proceeds from a previous issue of the same kind of shares or securities cannot be used for buybacks.
By tapping into these sources, companies ensure that their buyback initiatives are supported by appropriate financial backing, contributing to effective and compliant buyback transactions.
Regulatory Restrictions on Buy-Back
Regulatory restrictions are in place to govern buyback activities, promote fairness, safeguard shareholder interests, and uphold the financial system’s integrity. Section 70 of the Companies Act, 2013, delineates these restrictions, which include:
Prohibition on Buyback through Subsidiary or Investment Companies:
Companies are expressly forbidden from directly or indirectly acquiring their own shares or specified securities through subsidiary companies, including their own subsidiaries. The prohibition extends to buybacks conducted through any investment company or a group of investment companies.
2. Default on Repayment or Financial Obligations:
Companies are barred from engaging in share buybacks if they have defaulted on obligations such as repayment of deposits, interest payments on deposits, redemption of debentures or preference shares, dividends to shareholders, or repayment of term loans or interest to financial institutions or banking companies. However, if such defaults are rectified, and a three-year period has elapsed post-rectification, the buyback restriction ceases to apply.
These regulatory restrictions serve the dual purpose of ensuring that companies maintain financial discipline and fulfill their commitments to various stakeholders before embarking on buyback activities.
Conditions for Buy-Back
To ensure the fairness and transparency of the buyback process, Section 68 of the Companies Act, 2013 outlines specific conditions that must be met. Here’s a detailed exploration of these conditions:
Authorization by Articles of the Company (Section 68(2)(a)):
The buyback must be authorized by the company’s Articles of Association, explicitly permitting the repurchase of its own shares.
2. Shareholder Approval through Special Resolution (Section 68(2)(b) & (c)):
Shareholder approval through a special resolution in a general meeting is required to authorize and determine the terms and conditions of the buyback.
If the buyback does not exceed 10% of the company’s paid-up equity capital and free reserves, board approval suffices without the need for a special resolution.
3. Maximum Limit of Buy-Back:
The aggregate value of shares bought back should not exceed 25% of the company’s paid-up share capital and free reserves.
4. Debt-Equity Ratio Post-Buy-Back (Section 68(2)(d)):
Following the buyback, the aggregate of the company’s secured and unsecured debts should not exceed twice the paid-up capital and free reserves.
5. Shares or Securities Should be Fully Paid-Up (Section 68(2)(e)):
The shares or specified securities bought back should be fully paid up at the time of repurchase.
6. Completion Period (Section 68(4)):
Every buyback should be completed within one year from the date of passing the special resolution or board resolution.
7. Minimum Gap Between Buy-Back Offers (Section 68(2)(g)):
There must be a minimum gap of one year between two successive buyback offers to prevent back-to-back offers within a year.
8. Extinguishment of Shares (Section 68(7)):
Shares or specified securities bought back must be extinguished or physically destroyed within seven days from the last date of completing the buyback.
9. Waiting Period for New Buy-Back Offers (Section 68):
After completing one buyback offer, the company must wait for at least one year before making another buyback offer.
10. Post-Buy-Back Restrictions on Issuance of Shares or Other Specified Securities (Section 68(8)):
After completing a buyback, the company is prohibited from issuing the same kind of shares or specified securities for six months, with certain exceptions like bonus shares, ESOPs, sweat equity, or conversion of debts or preference shares into equity.
By adhering to these conditions, companies ensure that the buyback process complies with regulatory standards, safeguarding the interests of shareholders.
Stepwise Procedure for Buy-Back by Private Companies
Executing a buyback of shares involves a meticulous step-by-step procedure to ensure compliance with regulatory frameworks. Here’s a detailed guide for buybacks by private companies:
Authorization by the Articles (Section 68(2)):
Ensure the company’s articles authorize share buybacks.
2. Convene the Board Meeting (Section 68(2)):
If the buyback is 10% or less of total paid-up equity share capital and free reserves, authorize it through a board resolution.
3. Convene General Meeting (Section 68(2)):
For buybacks exceeding the 10% threshold, obtain shareholder approval through a special resolution in a general meeting.
4. File Form MGT-14 with the Registrar:
File a copy of the board and special resolutions with the Registrar of Companies (ROC) within 30 days.
5. File a Letter of Offer (Rule 17(2)):
File a letter of offer with the ROC before the buyback, providing details such as number of shares, price, and mode of buyback.
6. File Declaration of Solvency (Section 68(6) and Rule 17(3)):
File a declaration of solvency in Form No. SH-9 with the ROC, stating the company’s ability to meet liabilities and remain solvent.
7. Dispatch of a Letter of Offer (Rule 17(4)):
Dispatch the letter of offer to shareholders within 20 days from the date of filing.
8. Offer Period (Rule 17(5)):
Keep the buyback offer open for 15 to 30 days from the date of dispatch.
9. Verification of Offers (Rule 17(7)):
Complete verification within 15 days from offer closure; shares lodged without rejection communication in 21 days are considered accepted.
10. Open a Separate Bank Account (Rule 17(8)):
Open a separate bank account, deposit funds to cover the buyback sum.
11. Extinguishment of Shares (Section 68(7)):
Extinguish or destroy bought-back shares within seven days from completion.
12. Closure of Offer (Rule 17(9)):
Make cash payments to shareholders within seven days after offer closure; return certificates for non-accepted or partially accepted shares.
13. File Form SH-11 (Section 68(10) and Rule 17(13)):
Within 30 days of completion, file Form No. SH-11 with the ROC, including buyback details and relevant documents.
14. Maintain the Statutory Register (Section 68(9) and Rule 17(12)):
Maintain a register of bought-back securities in Form No. SH-10 at the registered office.
Following this comprehensive procedure ensures that private companies navigate the buyback process with adherence to legal requirements and transparency.
Here are key points and provisions related to buyback of shares under the Companies Act, 2013:
Authority for Buyback:
The buyback of shares must be authorized by the company’s articles of association.
The board of directors must also be authorized by a special resolution passed by the shareholders.
2. Sources of Funds:
Buyback can be funded through the company’s free reserves, securities premium account, or proceeds of an earlier issue of the same kind of shares.
It cannot be funded through the proceeds of any earlier issue other than the specified ones.
3. Conditions for Buyback:
The company cannot make a buyback within 12 months from the date of the previous buyback.
The company cannot buy back more than 25% of its aggregate paid-up capital and free reserves in any financial year.
4. Method of Buyback:
Buyback can be through the open market, a tender offer, or any other method as specified in the Companies (Buy-back of Securities) Rules, 2014.
5. Declaration of Solvency:
Before the buyback, the company must file a declaration of solvency with the Registrar of Companies (RoC). This declaration should be made by the board of directors and confirm that the company is solvent and can meet its debts.
6. Escrow Account:
The company is required to open a separate bank account (escrow account) and deposit at least 15% of the amount earmarked for buyback before the commencement of the buyback.
7. Completion of Buyback:
The buyback process must be completed within 6 months from the date of passing the special resolution.
Securities bought back must be extinguished and physically destroyed within 7 days of the last date of completion of buyback.
It’s important for companies to comply with these regulations and any other relevant provisions under the Companies Act, 2013, when engaging in the buyback of shares. Non-compliance can lead to legal consequences. It is advisable to consult legal and financial professionals for guidance in specific cases.
Pawn or Pledge is a special kind of bailment where a movable thing is bailed as security for the repayment of a debt or for the performance of a promise. As per section 172 of the Indian Contract Act, 1872, a Pledge is a contract where a person deposits an article or good with a lender of money as security for the repayment of a loan or performance of a promise. Pledge is also known as a pawn. The depositor or the bailor is the Pawnor and the bailee or the depositee is the Pawnee. The Pawnee is under the duty to take reasonable care of the goods pledged to him. Let us learn about the Rights of the Pawnee and Pawnor.
Ownership of the pledged goods does not pass to the pledgee. The general property remains with the pledger but a “special property” in it passes to the pledgee. The special property is a right to the possession of the articles along with the power of sale on default. Delivery of the goods pawned is a necessary element in the making of a pawn. The property pledged should be delivered to the Pawnee.
Essential Features of a Pledge
Since a Pledge is a special kind of bailment, all the essentials of bailment are also the essentials of the pledge. Apart from that, the other essentials of the pledge are:
• There shall be a bailment for security against payment or performance of the promise.
• The subject matter of the pledge is goods, • Goods pledged for shall be in existence.
• There shall be the delivery of goods from pledger to pledgee.
• There is no transfer of ownership in the case of the pledge.
Exception: In exceptional circumstances, the pledgee has the right to sell the movable goods or property that have been pledged.
Who may pledge?
Any of the following persons may make a valid pledge:
i. The owner, or his authorized agent, or
ii. One of the several co-owners, who is in the sole possession of goods with the consent of other owners, or
iii. A mercantile agent, who is in possession of the goods with the consent of the real owner, or
iv. A person in possession under a voidable contract before the contract is rescinded, or
v. A seller who is in possession of goods after the sale or a buyer who has obtained possession of the goods before the sale, or
vi. A person who has a limited interest in the property. In such a case, the pawn is valid only to the extent of such interest.
Rights of Pawnor and Pawnee:
I. Rights of Pawnor
The following are the rights of Pawnor:
1. Right to receive back the goods: The pawnor has the right to receive the goods back after he has paid the loan or interest or performed his promise.
2. Right to the redemption of debt: If the pawnor fails to perform the promise of repayment of time, debt within the time, the pawnor still has the right to redeem his goods before their sale. However, he needs to pay the expenses that arise due to him.
3. Right to maintenance and preservation of goods: The pledgor has the right to see whether the pawnee is preserving and maintaining the goods properly or not.
4. Rights of the ordinary debtor. He will have all the rights similar to those of the ordinary debtor provided by various Indian laws.
II. Rights of Pawnee:
The following are the rights of the Pawnee, to whom the goods are pledged.
1. Right to Retain Goods: According to Section 173, he has a right to retain the goods pledged until the loan is repaid. He can also retain them for the interest of the debt and all expenses incurred while preserving the goods. He has only the right to a particular lien on goods.
2. Right to retain subsequent advance: The Pawnee has the right to retain the pledged goods, including money lent by him, after the date of the pledge if there is no agreement contrary to it.
3. Right to Unordinary Expense: According to section 175, the pawnee has a right to claim the extraordinary expenses incurred by him in preserving the goods. He does not have the right to lien over these goods but can approach the court for recovery.
4. Right against true owner: According to Section 178A, if there is any defect in the title of pledgor to the pledged goods that makes the contract voidable, the pawnor still has the right to acquire good title to the goods if it is in good faith.
Duties Of the Pawnor
The duties of a pawnor in the case of the contract for the pledge are explained below.
To compensate for the expenses, – The pawnor must compensate all the ordinary and extraordinary expenses incurred by the pawnee for maintaining the well-being of the pledged goods.
To repay the entire amount along with interest, – It is the responsibility of the pawnor to repay the amount due to the pawnee. This amount could be the principal amount or the interest that has occurred during the contract.
To disclose the faults in the goods: Before entering into the contract, the pawnor must state all the material facts and faults in the goods to the pawnee. If the pawnor does not disclose the faults and the pawnee suffers losses, the pawnor must cover all the damages.
Duties of the Pawnee
A few of the important duties of the pawnee are stated below.
To take reasonable care of the goods under consideration, the pawnee must take reasonable care of them and pledge them as his own. He should take care of the goods as his personal belongings. If any losses are incurred due to irresponsibility or negligence in the case of the pawnee, then he is liable to cover all the damages.
To use the goods only for the authorized purpose, the pawnee must use the goods only for the purpose that has been stated in the contract. If the pawnee uses the goods for unauthorized purposes, the pawnee must compensate for the damages.
Return the goods: When the purpose of the contract of the pledge is fulfilled, the pawnee must return the goods to the pawnor. The goods should be returned to the pawner as per his instructions.
Return the profits arising from the goods. During the contract of pledge, if any profits have been incurred on the pledged goods, then the pawnee must return the profits to the pawner.
To keep the goods separate, the pawnee must keep the pledged goods separate from the pawnor’s goods. If the pawnee mixes his goods with the pawnor’s goods, then the pawnee is liable for the expenses of the separation of goods.
PLEDGE BY NON-OWNERS
Pledge by a Mercantile Agent: A mercantile agent is one who, in the usual course of business, has the authority as such an agent either to sell or consign goods for the purpose of sale, to buy goods, or to raise money on the security of the goods. A mercantile agent can create a valid pledge of the goods if such goods are already in his possession (that too with the consent of the real owner) or even by the endorsement of the relative document to the title to the goods, but only while acting as a mercantile agent in the ordinary course of business, despite the fact that he is not the true owner of the business. Pledgee accepts the pledge in good faith, having no knowledge about the agent and having no authority of the real owner.
Pledge by seller or buyer in possession of the goods after the sale: A seller who has possession of the goods after the sale and a buyer who obtains possession of the goods with the consent of the seller before the sale thereof can create a valid charge of pledge on such goods.
Pledge by a person in possession of the goods undera voidable contract: A person who has obtained possession of the goods under a voidable contract can also create a valid pledge, provided the following two conditions are fulfilled: 1. The contract had not been rescinded by the person who had the option to do so before the creation of such a pledge; and 2. The pledgee had acted in good faith and without notice of any defect in the title of the pledgor in respect of the pledged goods.
Pledge by a co-owner in possession of the goods: Even one of the co-owners of the goods, by virtue of being in sole possession thereof, can create a valid pledge of these goods, but only with the consent of all the remaining co-owners.
Pledge by a person having limited interest (sec. 179): in case a person having only limited interest in the goods pledges them, such a pledge is valid, though only to the extent of his own interest therein. Accordingly, a pledgee may create a further charge of pledge in regard to the same goods to the extent of the amount he has advanced against them. Example: A finds a cycle on the road, gets it repaired for Rs. 500, and pledges it with B for Rs. 1000. The real owner can get the cycle with a payment of Rs. 500
Difference Between The Contract Of Bailment And Pledge
A few of the common differences between the bailment contract and the pledge are discussed below.
Basis
Contract of Bailment
Contract of pledge
Meaning
When goods are transferred from one party to the other for a specific purpose, this is regarded as a contract of bailment.
When goods are transferred from the pawnor to the pawnee as a security against a debt, this is called a contract of pledge.
Purpose
The main purpose of transferring the goods is to keep them in safe custody and for repairs.
The purpose is to create security against a claim.
Parties
The party who transfers the goods is the bailor. The party who receives the goods is the bailee.
The pawnor is the party who pledges the goods. The pawnee is the party who receives the goods.
Consideration
Consideration is mandatory in the case of a contract of bailment.
The presence of consideration is mandatory.
Right to sell
The bailee cannot sell the pledged goods.
The pawnee has the right to sell the goods.
Right to Use
The goods can only be used by the parties for the purposes mentioned in the contract.
The goods cannot be used by the pawnee.
Sections
The Indian Contract Act 1872 covers the contract of bailment in sections 148–171.
Sections 172 to 179 cover the contract of pledge.
BASIS OF DISTINCTION, PLEDGE AND MORTGAGE
1. Subject matter Movable property is the subject matter. Immovable property is the subject matter.
2. Use of goods A pledgee is not allowed to use the goods pledged. The mortgagee has the right to use the property.
3. Delivery of possession Delivery of possession is essential. The property in goods passes to the mortgagee, though possession remains with the mortgagor.
4.loan Only one loan can be taken at a time on the pledge of the same goods. On a mortgage of an asset, more than one loan can be taken.
5. Right of foreclosure A pledgee cannot impose the right of foreclosure on the goods pledged, with the exception of exercising his right to sell upon giving notice to the pledgor. In mortgages, that can happen under certain circumstances
Citizenship Act of 1955: The Citizenship Act of 1955 outlines the provisions related to acquiring and terminating Indian citizenship. The act underwent significant amendments in recent years, including the Citizenship (Amendment) Act of 2019, which introduced changes to the eligibility criteria for acquiring Indian citizenship.
Key Provisions:
Modes of Acquiring Citizenship:
By Birth: Persons born in India on or after January 26, 1950, but before July 1, 1987.
By Descent: Persons born outside India on or after January 26, 1950, but before December 3, 2004, with at least one parent being a citizen of India.
By Registration: Certain categories of persons can register for Indian citizenship.
By Naturalization: Foreigners who have resided in India for a specified period can apply for citizenship.
Termination of Citizenship:
Citizenship can be terminated by renunciation, termination, or deprivation under specific circumstances.
Citizenship (Amendment) Act, 2019:
This amendment provides for changes in the criteria for granting citizenship to certain categories of immigrants. It includes provisions for fast-tracking the citizenship process for specific religious minorities from Afghanistan, Bangladesh, and Pakistan.
National Register of Citizens (NRC) and Citizenship Amendment Act (CAA):
The NRC is a register maintained by the government that contains names of all genuine Indian citizens. The CAA and NRC were topics of significant public and political discourse, with concerns about their potential impact on citizenship status.
Rules and Regulations:
The implementation and operational details of the Citizenship Act are specified in rules and regulations framed under the act. Additionally, the government may issue notifications and guidelines to clarify various aspects of citizenship.
It’s important to note that the interpretation and application of these laws can evolve, and there may have been developments or amendments since my last update in January 2022. Therefore, for the most current and accurate information, I recommend consulting official government sources, legal databases, or seeking advice from legal professionals familiar with the latest developments in Indian citizenship laws.
Acquisition of Citizenship
The acquisition of citizenship refers to the process by which an individual becomes a legal member of a particular country and enjoys the rights and responsibilities associated with citizenship. The rules and procedures for acquiring citizenship vary from country to country. In the context of India, the acquisition of citizenship is primarily governed by the Citizenship Act of 1955.
Here is an overview of the various modes of acquiring Indian citizenship under the Citizenship Act:
By Birth (Section 3):
Persons born in India on or after January 26, 1950, but before July 1, 1987, are citizens by birth if both their parents are Indian citizens or if one parent is a citizen and the other is not an illegal migrant.
By Descent (Section 4):
Persons born outside India on or after January 26, 1950, but before December 3, 2004, are citizens by descent if one of their parents is an Indian citizen at the time of their birth.
By Registration (Section 5):
Certain categories of persons, including persons of Indian origin residing outside India, may register for Indian citizenship based on specified conditions and eligibility criteria.
By Naturalization (Section 6):
Foreigners who have resided in India for a minimum specified period and fulfill other conditions may apply for Indian citizenship through naturalization.
By Incorporation of Territory (Section 7):
When new territories are incorporated into India, the residents of those territories become Indian citizens as per the conditions specified in the law.
It’s important to note that the Citizenship (Amendment) Act of 2019 introduced changes to the eligibility criteria for acquiring citizenship for specific religious minorities from Afghanistan, Bangladesh, and Pakistan. The act fast-tracks the citizenship process for Hindus, Sikhs, Buddhists, Jains, Parsis, and Christians from these countries who entered India before December 31, 2014. Additionally, the National Register of Citizens (NRC) was proposed as a register containing names of genuine Indian citizens to identify illegal immigrants. The NRC, along with the Citizenship Amendment Act (CAA), has been a topic of significant public and political discussion. The rules and regulations specifying the procedures for the acquisition of citizenship, as well as the documentation required, are detailed in the Citizenship Rules framed under the Citizenship Act.
Section 141 of the Indian Evidence Act, 1872 deals with leading questions. A leading question is one which suggests the answer or puts words in the mouth of a witness. It is a question that prompts or encourages a witness to give a particular answer.
Under the Indian Evidence Act, a leading question is defined in Section 142. According to Section 142:
“Leading questions are those that suggest to the witness the answer that the person posing the question desires. Leading questions are generally prohibited, but they are allowed in the cross-examination of a witness and in the examination of a witness who is declared hostile.”
In essence, leading questions are questions that guide or prompt the witness to answer in a specific way, often suggesting the desired answer. While they are generally not allowed during the examination-in-chief (the initial questioning of a witness by the party who called the witness), they are permitted in certain circumstances, such as during cross-examination or when a witness is declared hostile by the party who called them.
Under the Indian Evidence Act, Section 143 specifies the essentials for asking leading questions. According to Section 143:
“Leading questions must not, if objected to by the adverse party, be asked in an examination-in-chief or in re-examination, except with the permission of the Court.”
Therefore, the essentials for leading questions are:
Objection by the Adverse Party: If the adverse party objects to the asking of leading questions during examination-in-chief or re-examination, then the questions should not be asked unless the court grants permission.
Permission of the Court: The court has the authority to allow or disallow the asking of leading questions. If the adverse party objects, the party seeking to ask leading questions must seek permission from the court before proceeding.
In accordance with Section 141 of the Indian Evidence Act, 1872, the use of leading questions is subject to specific circumstances. Leading questions are permitted under the following conditions:
Examination of an Incapable Witness: Leading questions may be employed when examining a witness who is deemed incapable of providing a coherent response without the aid of such questions. This often includes individuals such as children or those with mental challenges, where the nature of their understanding requires guidance through leading queries.
Examination of a Hostile Witness: Another situation allowing the use of leading questions arises when dealing with a hostile witness. A hostile witness is one who demonstrates an adverse stance toward the party that called them a witness. In such instances, leading questions are permitted to extract information effectively.
Examination of an Expert Witness: Leading questions are generally admissible during the examination of an expert witness. This recognizes that experts possess specialized knowledge, and leading questions may be necessary to elicit precise and relevant information.
Certainly, here are a few examples of leading questions:
In a Criminal Trial:
Non-leading question: “Can you describe what you observed at the scene?”
Leading question: “Isn’t it true that you saw the defendant at the crime scene around midnight?”
In a Civil Dispute:
Non-leading question: “Please explain the events that led to the contract being terminated.”
Leading question: “Did the breach of contract by the other party force you to terminate the agreement?”
With a Child Witness:
Non-leading question: “What did you do after school?”
Leading question: “Did you go to the park after school, as your teacher told you to?”
In a Hostile Witness Situation:
Non-leading question: “Can you recall the details of your conversation with the plaintiff?”
Leading question: “Isn’t it true that you refused to cooperate during the conversation with the plaintiff?”
During Expert Testimony:
Non-leading question: “Can you explain the chemical properties of this substance?”
Leading question: “Would you agree that the substance’s volatility is a crucial factor in its chemical properties?”
Conclusion:
Leading questions are designed to guide or suggest specific answers, potentially influencing the response of the witness. It’s important to note that the permissibility of leading questions depends on the context, as outlined by Section 141 of the Indian Evidence Act. However, it’s crucial to note that in all other cases not falling under these specified circumstances, the use of leading questions is restricted during examination-in-chief or re-examination. This limitation is in place to prevent the questions from unduly influencing or shaping the testimony of the witness by suggesting answers. The aim is to maintain the integrity of the witness’s account and ensure a fair and impartial legal process.
