Monday, March 21, 2016

IN THE HIGH COURT OF JUDICATURE OF STATE OF TELENGANA
                      AND STATE OF ANDHRA PRADESH
                                  AT: HYDERABAD
                          (ORIGINAL JURISDICTION)
                 COMPANY PETITION No. 72   OF 2016
                             CONNECTED WITH
               COMPANY APPLICATION No.   106 OF 2016
        IN THE MATTER of the Companies Act, 1956 (1 of 1956)
                                     AND
             IN THE MATTER OF SCHEME OF DE-MERGER
                              BETWEEN
1. Lakshmi Technosolutions Private Limited
(Transferor / Demerged Company)
AND
  2. M/s. Galven Techno Solutions Private Limited
(Transferee / Resulting Company)
                                               AND
THEIR RESPECTIVE SHAREHOLDERS
M/s.Lakshmi Technosolutions Private Limited
Rep . by its Finance Manager  Mr. SK Shariff Saheb,
                        .… Petitioner/ Transferor / Demerged Company


                                      NOTICE OF  PETITION

The above mentioned Petitioner Company filed a Company Petition bearing no.72/2016 on 4-3-2016 u/s. 391 and 394 of the Companies Act, 1956  for the Approval of the Scheme of De-Merger between M/s.Lakshmi Technosolutions Private Limited and M/s. Galven Techno Solutions Private Limited. The said Company Petition will be heard on 13-4-2016 by the Hon’Ble High Court. Any person  may send  objections to  the  Counsel of the Petitioner on or before 11-4-2016.  The copy of the Petition may be obtained from the Counsel of the Petitioner on payment of the expenses.


                                                K. PHANI KUMAR
                                           Counsel for the Petitioner
                                        Flat C, Sai Sadan, 11-13-459/1,
                               Road No.14, Alakapuri, Hyderabad-500102,T.S.       
                                                                          PHONES: 7702531120 & 9441407470 

NOTICE OF PETITION

IN THE HIGH COURT OF JUDICATURE OF STATE OF TELENGANA
                      AND STATE OF ANDHRA PRADESH
                                  AT: HYDERABAD
                          (ORIGINAL JURISDICTION)
                 COMPANY PETITION No. 72   OF 2016
                             CONNECTED WITH
               COMPANY APPLICATION No.   106 OF 2016
        IN THE MATTER of the Companies Act, 1956 (1 of 1956)
                                     AND
             IN THE MATTER OF SCHEME OF DE-MERGER
                              BETWEEN
1. Lakshmi Technosolutions Private Limited
(Transferor / Demerged Company)
AND
  2. M/s. Galven Techno Solutions Private Limited
(Transferee / Resulting Company)
                                               AND
THEIR RESPECTIVE SHAREHOLDERS
M/s.Lakshmi Technosolutions Private Limited
Rep . by its Finance Manager  Mr. SK Shariff Saheb,
                        .… Petitioner/ Transferor / Demerged Company


                                      NOTICE OF  PETITION

The above mentioned Petitioner Company filed a Company Petition bearing no.72/2016 on 4-3-2016 u/s. 391 and 394 of the Companies Act, 1956  for the Approval of the Scheme of De-Merger between M/s.Lakshmi Technosolutions Private Limited and M/s. Galven Techno Solutions Private Limited. The said Company Petition will be heard on 13-4-2016 by the Hon’Ble High Court. Any person  may send  objections to  the  Counsel of the Petitioner on or before 11-4-2016.  The copy of the Petition may be obtained from the Counsel of the Petitioner on payment of the expenses.


                                                K. PHANI KUMAR
                                           Counsel for the Petitioner
                                        Flat C, Sai Sadan, 11-13-459/1,
                               Road No.14, Alakapuri, Hyderabad-500102,T.S.       
                                                                          PHONES: 7702531120 & 9441407470 

Tuesday, April 1, 2014

" GANDHI AND THE LAW"





BY K. PHANI KUMAR,
Advocate
*********************
 

THE LAW forbids rich and poor alike to sleep under bridges, beg in the streets and steal loaves of bread and the rule of law is better than the rule of individual.

Laws are made by governments, specifically by their legislatures. The formation of laws themselves may be influenced by a Constitution and the rights encoded therein. The law shapes politics, economics and society in countless ways and serves as a social mediator of relations betweenpeople.

“ It is not true that Law defiles, it is not true that Law degrades. The Legal Profession has produced some of the finest and most independent characters whose names are imprinted on the scroll of history”.

GNDHIJI was trained in law in London. Gandhi became famous by fighting for the civil rights of Muslim and Hindu Indians in South Africa, using the new techniques of non-violent civil disobedience that he developed. Returning to India in 1915, he set about organizing peasants to protest excessive land-taxes.


Gandhiji said that “I had learnt the true practice of law. I had learnt to find the better side of human nature and to enter men’s hearts. I realized the true function of a lawyer was to unite parties riven as under. The lesson was so indelibly burnt into me, that a large part of my time during the twenty years of my practice as a lawyer was occupied in bringing about private compromises of hundreds of cases. I lost nothing thereby – not even money, certainly not my soul.”

He further said that a true lawyer is one who put truth and service in first place and the law is not an intellectual legerdemain to make block appear white and white appear block and it is a ceaseless endeavour to enthrone Justice.

That stream of justice has to be kept clear and pure and no one can be permitted to take liberties with it by soiling its purity.

Gandhiji as a Lawyer was overjoyed at the success of his first case in South Africa and concluded that the whole duty of an advocate was not to exploit legal and adversary advantages but to promote compromise and reconciliation



           
The thoughts of the great Sardar Vallabhai Patel, and the great Jawaharlal etc., may be and can be respected…. but it is very difficult to ignore the thoughts of our GANDHIJI… who never compromised with his believes and principles….  and even after the death , Kasturiba’s  soul might felt proud of non-compromising attitude of his husband “ MOHAN DAS KARAM CHAND GANDHI.

Albert Einstein said about GANDHIJI that "Generations to come, it may well be, will scarce believe that such a man as this one ever in flesh and blood walked upon this Earth.”, he further said that he believed  that Gandhiji’s views were the most enlightened of all the political men in their  time., and  We should strive to do things in his spirit.
THE WAY that can be find…the problem… that also can be solved….but lack of interest towards  holy object….and it is certainly not that because of Gandhiji is vegetarian but for values, believes of crores of people of this country …..Killing cow is an offence in Nepal.. why they made this law ? “Why Hon’ble Punjab and  Haryana High court made an order prohibited  the sale possession, consumption and purchase of non-vegetarian food items in the holy towns of Kurukshetra and Pehowa”.----- why Andhra Pradesh and other states in India do not have such kind of law ? first of all why there is no  Central Law to that extent all over the India ?

Although GANDHIJI  experimented with eating meat upon first leaving India, he later became a strict vegetarian. He wrote books on the subject while in London, having met vegetarian campaigner Henry Salt at gatherings of the Vegetarian Society. The idea of vegetarianism is deeply ingrained in Hindu and Jain traditions in India, and, in his native land of Gujarat, most Hindus were vegetarian. He experimented with various diets and concluded that a vegetarian diet should be enough to satisfy the minimum requirements of the body. He abstained from eating for long periods, using fasting as a political weapon.
An increasing proportion of population is vegerarian, and even more do not eat vegetarian food, because they believe that it is morally wrong to rear and kill animals to eat, when it is possible to live in good health without doing so., and they believe that a vegetarian diet is healthier( whether it may be true or not).

Govt.of India  appears a peace loving country, but in fact it runs its own slaughter houses and fish killing farms, but not interest in making a law to that extent that the non-veg. food is illegal.May be because not all Indians are of the same religion – we  have Hindus, Jains, Buddhists, Muslims, Christians, Jews, Sikhs and probably a few more minority religions and also because neither all Hindus are vegetarians, nor  all Buddhists are vegetarians , and nor  all Muslims are not vegetarians, and  Jains might be all vegetarians and so on…and  most visitors  to India are not vegetarians  Ofcourse People have the right to  choice over what they eat - it is immoral to dictate someones., and India is not a totalitarian state. In a democracy, the people are expected to make their own choices., and the members of parliament and state assemblies have their own choice to make laws to that extent for various reasons ,…. Not based on moralities, values, religious views, and customs etc.. Lokpal bill passed after so many years… Women Reservation bill has also pending for so many years…..so the Govt. makes new  law  for not specific purpose, but “ for various reasons “.

 The Non-Vegetarian food can be banned atleast in Holy towns… and in the land related to God… and religious believes, like Tirupathi, Srisailam, Bhadrachalam, Vijayawada,  and Sri Kalahasthi  etc..,  … instead of making such laws, the point is raised that … in every town or city there is a famous temple… how can ban non-vegetarian in all such towns ?  before this question, I wish to ask a question them that atleast …and Iam not using the phrase “ Cut and Throw”, Iam herewith stressing the word “ atleast”,…whether they started to think in that direction ? if they start to think , a possible solution can be find… but our govt. not interested in values of spiritual and religious etc…. first of all there is no temple for Lord Sri Rama in Ayodhya… where Lord Sri Rama  took birth…..

One friend argues that India is a democratic ---- I agree and he continues - making non vegetarian food illegal would be an infringement on the rights of its people and also a totalitarian, authoritarian, Stalinesque move of unparalleled idiocy…. I do not deny the fact that India is a democratic country…and I know that “ force is not always right course”. But what I wish to suggest the  people or government to start thinking towards the saying of Gandhiji…

Ofcourse  GANDHIJI is still alive in the hearts of people of India, but still we have no law to that extent to prohibit the Non-Vegetarian food atleast in Holy towns.

 Yes there is GANDHI in India and no LAW.

But there is a confident feeling in the minds of crores of people towards that Hon’Ble Judiciary… one day … and on one fine morning  will take the initiatives and a Leader …. Coming to rule this country … just for the values and for the benefit of the people… also may take positive steps… towards the direction of the people’ thoughts…and that initiative will be in good books of crores of Indians.
“ Yes! Please believe me that there is a solution for every problem… and what is the difficulty( but not too difficult and impossible ) is that the pattern…the situation…the type of solution….

Speaking truth is not impossible…which is a part of the process of finding solution to the problems…and there is no necessary to have selfishness…leads to hiding truth…leads to cheating etc..for solving problems…instead of that Yes! Instead of that we can use the power of love… by believing others.. by speaking truth..by telling the facts…the problem may be solved…. Of course , I agree this will be happen when all or major part of the society practice…but one step will be followed by two.. two thousand… two lakhs… two crores.. and so on…
                                                                                                                                                        
Gandhiji said “ that Fear and love are contradictory terms. Love is reckless in giving  away, oblivious as to what it gets in return. Love wrestles with the world as with itself and ultimately gains a mastery over all other  feelings. His daily experience, as of those who are working with him, was that every problem would lend itself to solution if we are determined to make the law of truth and non-violence the law of life. For truth and non-violence, are to him, faces of the same coin”.

Yes Bapuji is hundredpercent correct that love dominates over all other feelings…a poor can love.. a rich can love…a king can love… a devotee can love the God..and with the love, we can avoid the solutions by violence, hiding the truth, selfishness.., and causing injustice to others… but the solution with love and affection leads to ““No Winner and No Looser".

BAPUJI further said that Whether mankind will consciously follow the law of love I do not  know. But that need not perturb us. The law will work, just as the law  of gravitation will work whether we accept it or no.

 And just as a scientist will work wonders out of various applications of the laws of  nature, even so a man who applies the law of love with scientific precision can work greater wonders. For the force of non-violence is  infinitely more wonderful and subtle than the forces of nature, like for instance electricity. The man who discovered for us the law of love was a far greater scientist than any of our modern scientists. Only our explorations have not gone far enough and so it is not  possible for every one to see all its workings.... The more I work at  this law the more I feel the delight in life, the delight in the scheme of this universe. It gives me a peace and a meaning of the  mysteries of nature that I have no power to describe”.

It is truly said by Gandhiji .. yes when we are believing the “Law of Gravitation, we have to believe the “ Law of Love”… Iam confident that the Truth, Love will win with out doubt…  a revenge needs to kill the enemy…but final result is that the killer will have to loose the total love and affection of their family, friends..and society’ love…
Ofcourse.. there is Indian Penal code and Code of Criminal procedure., domestic violence Act.. etc.. those can punish the wrong doer ,  but Law of Love works as a precautionary…  a husband  may be punished under the provisions of the “ Domestic Violence Act”, but only after .. the great misunderstanding… Quarrel… etc.. are happening.

“ HAD THE SAID  HUSBAND USED THE LAW OF LOVE TOWARDS HIS WIFE, HE WOULD HAVE NOT BEEN PUNISHED BY THE PROVISIONS OF EITHER INDIAN PENAL CODE, CODE OF CRIMINAL PROCEDURE, DOMESTIC VIOLENCE ACT..ETC.”.

Such kind of persons who believe the Law of Gravitation, but  do not believe the ‘Law of Love”,Have to  believe the Law of Crimes and Punishment.

Violence means not only murders , and attempt  to murders, etc.., no need to talk about section 102 of Indian Penal Code,.... but it may be by a daughter to her parents, it may be  by son to his parents.... a daughter may create violence in the minds of her parents, and a son may be a cause for the mental agony for his parents... through their wrongful acts...those acts, according to their parents.. are certainly wrongs... arguments may be continued... and difference of opinions may take place... but ultimately.. who are the better judges ? whether parents or  children ? ...egos....immaturity......  
GANDHIJI's Non-Violence means... that we can understand ... peace ..not only in the society but also in the families ... families are certainly the part of the society... Law of Love is not enough...

AND  the responsibility of the children towards the parents .. in a situation and when the situation demands and requires... is also an important matter with regard to the non violence in the lives of the parents ....

The state of Himachal Pradesh  was the first state in the country to have a law for the maintenance of aged parents by implementing the HP Maintenance of Parents and Dependents Act, 2001.

HP Maintenance of Parents and Dependents Bill was passed by the Vidhan Sabha and was assented by the President of India on 8th  September, 2001. The only change that was made by the Centre was that it would not be applicable to Muslims in the state. 
But it is very interesting that not a single case has been registered in Himachal Pradesh by any senior citizen for payment of a maintenance allowance.

The Constitution of India, Directive Principles, Article 41--- The State shall , within the limits of its economic capacity and development , make effective provisions for … old age, sickness and disablement,, and in other cases of undeserved want.Code of Criminal Procedure (Chapter IX, Section 125(1)(2)) --- requires persons who have sufficient means to take care of his or her parents if they are unable to take care of themselves Hindu Adoption and Maintenance Act, 1956 Requires Hindu sons and daughters to maintain their elderly parents when parents are unable to maintain themselves.

Now we will compare it with . Himachal Pradesh Maintenance of Parents and Dependents Act, 2001
Applicants must be below poverty line, parents and grandparents wife, minor son, unmarried daughter,and widow if all not able to maintain themselves; not applicable to Muslims.

Maximum amount for maintenance Rs 5,000 per month. Amount of maintenance To cover basic amenities Enforcement of maintenance order If the person liable for payment is a government employee,maintenance may be deducted from his salary.
If applicant is unable to make an application, any member of his family, any person in whose care  he resides, any other authorized person by him, or maintenance officer may file application Provisions for maintenance order must be ‘just and equitable', and the respondent should be able to first provide maintenance for himself, his wife and children Tribunal must  consider manner in which the applicant spent his savings, and if applicant is justified  living separately.
  
Laws in Some Countries requires children to provide care for their parents and makes provisions for parents to obtain  maintenance from children; requires state to provide appropriate residential facilities to destitute elderly without children.
United States:
--------------------
 Older Americans Act of 1965Creates the Administration on Aging within the Department of Health, Education and Welfare; authorises grants to States for community planning,services for elderly, and research and training in the field of aging.
China:
---------
 Law of the People’s Republic of China on Protection of the Rights and Interests of the Elderly, 1996 Places responsibility on families to care for elderly; establishes a state-based old-age insurance system, increases legal protection of elderly with speedy court procedure.
South Africa: Older Persons Act  of 1996
----------------------------------------------------
Provides strict controls for registered old-age facilities; makes abuse of the elderly a criminal offense; creates social and cultural community-based services for elderly.
Canada (Saskatchewan & Manitoba): Parents Maintenance Act, 1978 & 1993 .
----------------------------------------------------------------------------------------------
Mandates children to pay maintenance to dependent parents up to $20 per week.
AND responsibility of the children towards the  feelings of the parents is also important to be a cause for or to avoid the violence in the hearts and minds of the parents.
                                                                                                                                                       
I wish to divide the law for this  specific purpose and just for a moment, into two parts: 
1. Justified Law
2. Unjustified Law
 and also Legal but unjustified , illegal but justified.

A girl after attaining the age of 18 years  can  marry any boy who get the age of 21 years.That marriage includes love marriage etc.,That marriage is legal, but I wish to state as under:

In order to safeguard the societal norms and social standing and the reputation,. and to avoid the cultural differences and more importantly to respect the feelings of the parents, who brought up their children from the day 1 to 18 years, I propose the law to that extent that a girl or boy when wish to marry after attaining the age of 18 years, the consent of the parents is mandatory and if the said girl or boy wish to marry with out consent of the parents, then the minimum age should be  23 years of girl and 25 years for boy.

It is no doubt , that there should not be feelings of untouchable in anywhere, even intercaste marriages are also to be  encouraged, but what I would like to stress that the feelings of the parents. Is it  not our responsibility to respect and recognize the feelings of the parents ?. Law is O.K., intercaste marriages , love marriages without consent of the parents  are legal in India. But what about the justification ? then why in PHILIPPINES there is a law that the parents consent is a mandatory for this kind of marriages, and also after some age parents advice is a mandatory. Is the  argument that since there is no similar law in other countries,  it is not necessary to have a such kind of law in  India , is valid ? O.K. if it is valid , can any one defeat one's opinion    that the parents feelings should be respected ? who talks about the social justice, and social reforms and what ever he wants to talk except the Justification of Law .
Just for reference :

The  rule on parental consent is found under Article 14 of the Family Code of PHILIPPINES . It states that in case either or both of the contracting parties are between the ages of eighteen and twenty-one, they shall exhibit to the local civil registrar, the consent to their marriage of their father, mother, surviving parent or guardian, or persons having legal charge of them, in the order mentioned. The parental consent shall be manifested in writing by the interested party, who personally appears before the proper local civil registrar, or in the form of an affidavit made in the presence of two witnesses and attested before any official authorized by law to administer oaths. The personal manifestation shall be recorded in both applications for marriage license, and the affidavit, if one is executed instead, shall be attached to said applications.

Non-compliance with the requirement of parental consent does not make the marriage invalid or void but merely annullable, which means that the marriage is valid until annulled.  As a result, a petition for the annulment of the marriage may be filed by the parents, guardian or person having substitute parental authority over the party seeking the annulment, in that order, unless after attaining the age of twenty-one, such party freely cohabited with the other and both lived together as husband and wife.

PARENTAL ADVICE
The rule on parental advice is found under Article 15 of the Family Code. It states that any contracting party between the age of twenty-one and twenty-five shall be obliged to ask their parents or guardian for advice upon the intended marriage. If they do not obtain such advice, or if it be unfavorable, the marriage license shall not be issued till after three months following the completion of the publication of the application therefor.
A sworn statement by the contracting parties to the effect that such advice has been sought, together with the written advice given, if any, shall be attached to the application for marriage license. Should the parents or guardian refuse to give any advice, this fact shall be stated in the sworn statement.

However, if the marriage license is issued within the said three months and the parties were able to get married on the basis of such marriage license, the said marriage is completely valid but will subject the parties to civil, criminal or administrative liabilities in accordance with Article 4, Paragraph 3 of the Family Code of the Philippines which states that:

“An irregularity in the formal requisites shall not affect the validity of the marriage but the party or parties responsible for the irregularity shall be civilly, criminally and administratively liable.”

The marriage is very important stage in every one's life.. And   No parents cannot be forced to accept the marriage proposal of their children .
********************************************************************to be continued*******















Sunday, March 24, 2013

YES ! A FEMALE CAN BE A " KARTHA".

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The HonBle Supre Court gave a reason that  woman, cannot become a Karta,  because a Karta has to necessarily be a coparcener.


But now, with the amendment of 2005, Section 6 of the Hindu Succession Act, 1956 gives equal rights to daughters in the Hindu Mitakshara Coparcen ary property as the sons have.

Now   The Hindu Succession Amendment Act,2005 , conferred equal property rights on daughters as well sons.. Now the daughters by birth will acquire rights over coparcenary property.


Earlier women were not included as coparcenary members, and according to the Hindu sages only a coparcener can become a karta, and therefore they could not be the Karta.
Hence, since, a woman when acquire rights over coparcenary property, she can be a Kartha.

Saturday, August 25, 2012

Chief Justice of India S H Kapadia wondered

Asserting that the judges should not govern the country or evolve policies, Chief Justice of India S H Kapadia wondered what would happen if the executive refuses to comply with judiciary’s directives. He asked judges if they would invoke contempt proceedings against government officials for not complying with their decisions and disapproved a recent Supreme Court judgement which said “right to sleep” was also a fundamental right. “Judges should not govern this country. We need to go by strict principle. Whenever you lay down a law, it should not interfere with governance. We are not accountable to people. Objectivity, certainty enshrined in the basic principles of the Constitution has to be given weightage,” he said, delivering a lecture on ‘Jurisprudence of Constitutional Structure’ here at the India International Centre. Kapadia said judges should go strictly by the Constitutional principles which has clearly demarcated the separation of powers among the judiciary, the legislature and the executive. “Right to life, we have said, includes environmental protection, right to live with dignity. Now we have included right to sleep, where are we going? It is not a criticism. Is it capable of being enforced? When you expand the right, the judge must explore the enforceability. “Questions which judges must ask if it is capable of being enforced. Judges must apply enforceability test. Today if a judge proposes a policy matter, government says we are not going to follow, are you going by way of contempt or implement it?” he asked. The CJI said judges must abide by the principles of Constitution while dealing with Centre-State relations, federal policy etc in the wake of the recent scandals but clarified he was not mentioning the “coalgate” scandal.

Thursday, August 23, 2012

AN EFFECTIVE CONTRANCT

“A contract shall be structured in such a way that the purpose behind it is lawfully positioned, performed, and protected!” An effective contract is not only a reflection of the parties’ intention to get into a legal relationship, but clearly lays out the respective obligations of the parties with necessary safeguards and efficacious remedies. Today’s world is economized by trade, domestic and international, and this trade is facilitated through contracts (domestic or international) entered into by the parties. A domestic contract is one where both the parties operate their business from the one and the same country, whereas an international contract is one where both the parties operate their business from two different countries. Accelerated globalization has almost removed the disparity of required terms between the domestic and international contracts, and thus, most of the corporates follow the same principles while drafting and/or reviewing the domestic and international contracts. This is, to an extent, evident and eased by standard terms provided by GAFTA, FOSFA, and Incoterms (1). Even then, sloppy and careless drafting and/or review of contracts have hurt the corporates all over. A contract is not a compilation of standard terms, but a considerate replication of the understanding of the parties with regard to the purpose of the agreement, nature of services, form of performance, kind of consideration, and type of industry. So, the structure of the contract in general, the hierarchy and the construction of the terms will differ and depend on parties, purpose, services, industry, location, and law. Having said the above, certain basic rules govern the drafting and/or review of contracts which keep on progressing with change in the law and practices. To ensure a successful contract, before initiating drafting and/or review of a contract, these questions shall be answered: • Who has drafted or will draft/review the contract? • What is the purpose of the contract? • Whether it is a domestic or an international contract? • Are all boilerplate terms effectively injected in the contract? • Are all important terms carefully inserted in the contract? • The construction of the contract – whether lengthy, bulky, or difficult to understand? • Is there a correct arbitration clause in the contract? While answering these questions, one must keep in mind the following: Section A – Who has drafted or will draft/review the contract? ` 1. The skill, expertise, background, and experience of the person drafting and/or reviewing the contract are very important for the effective and successful execution of the contract. Most of the corporates designate this work to the respective departments, which may or may not comprise of experts [legal], but only technical assistance. The development and management of contracts with compliance of good, accepted and established practices is required for an effective speaking contract. In this regard, legal professionals are considered the safest bet for drafting and/or review of a contract, for they are not only well-versed with the applicable law but being a part of the day to day legal happenings even know the construction and interpretation of certain terms that call for disputes. 2. The one, who reviews the contract drafted by the other party, shall have knowledge of its own standard terms and practices. Most of the corporates, with the help of experts, formulate a check-list that guides the reviewer to ascertain whether the terms of the contract are in conformity or deviate with the check-list (standard terms and practices). It is the deviations which call for negotiations later on. Such check-list will be different for different kind of contracts and will be based on the role the party proposes to play in a contract. This kind of practice is best suited for confidentiality agreements, licensing agreements, work contracts, supplier contracts, and hotel related franchise or management agreements, among others. 3. In this way, by availing the services of the right person for drafting and/or review of a contract, a corporate not only secures its own interest in the contract but can even save huge amounts of money which might come into picture by way of a dispute resulting from careless or faulty drafting and/or review of the contract. Section B – What is the purpose of the contract? 1. The purpose or the object of the contract is instrumental in the construction of the contract. The purpose defines the scope, design, and requirement of the terms to be included in the contract. For example: a franchise agreement shall have the terms related to duration of franchise, area restriction of franchise, royalty, and intellectual property etc.; a supplier agreement shall have the terms related to delivery of goods and services, price payment schedule, quality standards, indemnity, rejection and re-delivery of goods, and dispute resolution mechanism etc.; a confidentiality agreement shall have the terms related to definition of confidential information, duration of confidentiality, exceptions to confidentiality, and breach of confidentiality etc.; an arbitration agreement shall have the terms related to reference to arbitration, appointment of arbitrator(s), choice of arbitration law, and fees of arbitrator(s) etc. 2. The purpose, if illegal or opposed to public policy will render the contract void. The purpose of a contract is said to be illegal if it is against any law for the time being in force, or it is fraudulent in nature. For example: a. An agreement in restraint of marriage is void (2). b. An agreement by which any one is restrained from exercising lawful profession, trade or business of any kind is void (3). Though this has exceptions, but such exceptions have to be exercised judiciously and reasonably. c. A proper agreement for transfer of immovable property (sale deed etc.) is a valid contract, but if such contract is made with intent to defeat the creditors of the transferor then it is voidable at the option of such creditor (4). d. In an agreement for formation of a company, the name of the proposed company is very important. Such name shall not be unlawful or immoral or against public policy. For example: The company name cannot be “Prostitutes Ltd.” or “The Rape, Inc.” so, where A and B enter into an agreement to form a company C, the name of which itself is immoral or barred by law – such an agreement cannot take effect. e. An agreement to commit a crime is void. For example: A enters into an agreement with B to kill C for a consideration of Rs. X. Such an agreement is illegal and void. 3. Thus, it is imperative that before drafting and/or review of a contract the purpose of such contract is examined. Section C – Whether it is a domestic or an international contract? 1. Although, with each passing day the terms of the domestic and international contracts are finding common ground, nonetheless, the geographical nature of the contract may attract some different construction of both. Where a domestic contract attracts certain fixed language for boilerplate clauses, an international contract attracts some ground work which may include serious negotiations. While drafting and/or review of an international contract, specific attention/modification shall be given to the following clauses: a. Language: The parties shall decide upon the language that controls the contract. For example: A, a Chinese entity enters into a contract with B, an American company will both want to control the transactions arising out of the contract in their own native languages, and so, it will be important to arrive at a mutually decided language and inserted into the contract. b. Location of Performance: Parties belonging to different countries shall clearly word out the terms with regard to performance of the contract and the services contained therein. Certain other clauses too may be inserted or modified depending upon the location of performance of a contract. For example: A, an American company enters into a contract with B, a Pakistani entity and the location of performance of contract is Pakistan. In such a case, certain other clauses like security and confidentiality of information, force majeure, and governing law etc. shall be suitably constructed. c. Payment Currency: Different countries have different currency and so it is advisable to insert in the contract the currency in which payment shall be made. In other words, regard has to be given to the current exchange price and it is best to mention in the contract itself the exchange price, desired payment and the applicable currency – to avoid any future differences or disputes. For example: A, an American entity enters into a contract with B, another American company. A has its office branch in India and the performance of the contract has to be achieved by A’s Indian office in India. B has a subsidiary in India, which has to make payment to A’s Indian office. In such a case, where A and B agree to define the consideration of the contract in American Dollars ($), it is also important to agree and insert in the contract the exchange price per $ in Indian Rupees i.e. it shall be clearly written in the contract that 1$ = Rs. X for payment purposes. This is because the rate of rupee per dollar changes every day, and a party may stand to lose due to this uncertainty. For example: If the consideration of the contract is $3000, and the parties agree that 1$ = Rs. 45 for payment purposes, then the payment to be made under the contract shall be Rs. 135000 irrespective of the exchange price of dollar per rupee at the relevant time. d. Governing Law: Each party will try to impose its country’s law into the contract. This could be challenging for both the parties, but a consensus has to be drawn in arriving at the governing law of the contract. In most cases, preference is given to the law of the country where the contract is to be performed. This is also the reason why some corporates prefer to do business only in those countries where they already have an office branch or a sister concern. In other cases, a small fish simply gives in to the demands of the large fish. Here, it is required of the person drafting and/or reviewing the contract to shell out the pros and cons of accepting the other country’s law as the governing law. For example: Where the contract refers any dispute to arbitration, it is important to confirm whether the countries of both the parties to the contract are reciprocating countries for the purposes of the enforcement of the arbitral award. Where they are not reciprocating countries, an enforceable award in one country will just have evidentiary value in the other without any direct enforceability rights. Contracts that are silent on the governing law, any dispute is then guided by the accepted principles which are: a. The place where the contract is made; b. The object of the contract; c. The place where the contract is to be performed substantially; and d. The place of business of the parties e. Court Jurisdiction: Usually the country who’s law is the agreed governing law; its courts only have the jurisdiction to entertain the disputes arising out of the contract. Nonetheless, it is important for the parties of two different countries to know which appropriate court to approach in case of a dispute. Reference to arbitration is an exception where the parties can decide a particular country as location of the arbitral tribunal but chose the arbitration law of some other country to govern the arbitral proceedings. 2. Thus, domestic and international contracts may influence the drafting and/or review of the contract to a great deal. Section D – Are all boilerplate terms effectively injected in the contract? 1. Boilerplate clauses are the standard terms and conditions which a party inserts in almost all its contracts. These clauses could be assignment, governing law, arbitration, force majeure, severability, counterparts, entire agreement, termination, indemnity etc. Though standard, these clauses cannot be used mutatis mutandis in all contracts, and so, while drafting and/or review of a contract it is necessary to understand the usage of these clauses in the context of the contract. For example: a. Termination could be contingent, without any reason or at convenience, with or without any limitation. Also, if the contract has a renewal clause then the wording of the termination clause will depend on it. A contract can be for a fixed tenure, evergreen, or renewable – all these have a bearing on the construction of the termination clause. Effects of termination form an essential part of the termination clause. b. Indemnity clause could be an essential part of the contract or may be just included as boilerplate, but it has an important objective. In an indemnity clause, either or all parties agree to indemnify and hold harmless each other from all claims, losses, damage etc. arising out of the contract. The extent of indemnity may be limited or unlimited as the language of the clause suggests. Further, the indemnifier may cap its liability to a pre-determined maximum amount. Most contracts include this clause to indemnify the party from third party claims. An erroneous construction or a miss may take away the safeguard of the party to seek indemnity in case of losses or claims arising without fault. For example: A, a music director enters into a contract with B, a film producer to give music for a particular film. Once the music of the film is released, a pop-singer C files a suit for copyright infringement against B alleging that the music of a particular song in B’s film is lifted from C’s composition. As a result, B pays Rs. X to C as compensation. B can claim the amount of this compensation from A only if there is an “indemnity clause” in the contract between A and B. Smart drafting or reviewing will ensure that the indemnity clause includes attorney fees and expenses apart from losses and damages – this will entitle B to claim not only the amount of compensation but also the expenses of litigation, if any, B had with C. 2. Thus, even if the boilerplate clauses form a standard part of the contract, their careful drafting and/or review is of utmost importance to safeguard the interest of the parties. Section E – Are all important terms carefully inserted in the contract? 1. Apart from the boilerplate clauses, there are various other terms which require deep introspection and interpretation. It is already discussed above how international contracts require certain additional terms. The purpose and the nature of the contract determine the terms essentials for that contract (refer to Section B 1. for examples). 2. The terms of the contract shall be clear with regard to: a. Parties: Name and complete address of the parties. b. Duration of the contract: Whether the contract is for a fixed term, or is renewable. If renewable, then how many times and for how many years in each time. c. Payment of price: Whether it is contingent on delivery of goods/services or a particular date. The payment has to be one time or in installments? Payment to be made in which currency and mode i.e. by check, cash, draft, account transfer etc. For contracts related to complex or huge projects, it is advisable not to enter into fixed-price contracts because there are greater chances of hold, delay, fluctuation in prices of construction materials etc., and so, such unforeseen circumstances shall be taken care of. d. Defect removal: In case one party fails to perform an obligation under the contract, is there any time provided for defect removal or rectification? e. Payment of interest: If the work is not completed on time or the payment is not made in time, is there a provision for payment of interest on such defaulted amount? In construction or building contracts, there is usually a provision that where a customer defaults on payment of any installment or where the builder does not give possession to the customer on time, an interest provision is inserted to deal with such defaults. f. Intellectual property: What is licensed, and to what extent? The purpose of such license, and the remedy in case of infringement? g. Confidentiality: What is confidential, and what is not-confidential? h. Territorial restriction: Is there any restriction as to the area for the operation of the contract? If yes, then the duration and exceptions, if any? i. Implied and express warranties: Which party is responsible for what? This includes the obligation of any party to pay any taxes, fines etc. arising out of the contract. 3. Thus, it is important that all relevant terms suitable to the particular contract shall be included and constructed in a way so as to facilitate the purpose of the contract and the smooth completion of its performance by the parties. Section F – The construction of the contract – whether lengthy, bulky, or difficult to understand? 1. A contract shall be clear, unambiguous, clean, and easy to read and understand. 2. It shall not be too bulky unless required for the need of a particular industry. For example: Hospitality related contracts and Government contracts are usually lengthy and bulky. An effort shall be made to see that the length of the contract does not kill the purpose of the contract. 3. The contract shall be to the point and unnecessary references or language shall be avoided, but it shall be structured in such a way so as to give solutions for all issues arising out of the transaction. 4. There shall not be repetitions in a contract. At the same time, the language of the terms shall not contradict each other. For example: A contract shall not have an arbitration clause along with another clause which gives exclusive rights to a civil court to exercise its jurisdiction over all disputes arising out of the contract. 5. The contract shall be adequately titled so as to give the reader a preliminary sense of the object of the agreement. For example: Confidentiality Agreement, License Agreement, Technical Services Agreement, Arbitration Agreement, Hotel Operating Agreement etc. 6. As far as possible, the terms in a contract shall be adequately and appropriately titled and also numbered into sections and sub-sections, articles and sub-articles, or just plain numbers and sub-numbers. This will help the parties not only to identify the clauses with their titles, but also to refer them with the help of their numbering. 7. Special caution shall be taken in using defined terms, and undefined words shall not be inserted in capital letters. 8. Every contract shall go under proof-reading and/or review by an expert before final execution. Section G – Is there a correct arbitration clause in the contract? 1. In today’s world, almost all contracts include a clause to refer the disputes to an arbitrator for adjudication. The idea behind such an inclination is to avoid the substantive rules, processes and delay involved in courts. The arbitration provision not only provides an effective, binding and efficacious remedy to the parties but even gives them freedom to decide on the appointment of the arbitrator, location of arbitration, law (rules) to follow, and the say in arbitral proceedings. So, it is equally important to draft and/or review the arbitration clause in its true perspective. 2. The arbitration clause shall be constructed in such a way that it reflects a clear intention to settle disputes by means of arbitration. As per Indian law on arbitration (5), an arbitration clause which forms part of the contract is treated as an agreement independent of the other terms of the contract i.e. it survives even if the contract frustrates or expires, and so, the arbitration clause shall in itself be sufficient to answer all questions with regard to the institution of arbitration. 3. The arbitration clause shall clearly provide the composition of the arbitral tribunal (6), the time for appointment, the location of arbitration, the language in which arbitral proceedings will be conducted, and the arbitration law that shall be followed by the arbitral tribunal. 4. There shall be a clear reference of disputes to arbitration. It shall be noted that the use of phrases “disputes under the contract” and “disputes arising out of the contract” will change the scope of the arbitration. The earlier will limit the scope whereas the latter will increase the scope to include all disputes arising out of the contract. 5. Special care shall be taken while using any word or phrase in the arbitration clause. Use of phrases “unless otherwise provided in the contract” and “except where otherwise provided in the contract” shall be effectively used where the intention is to limit the applicability of arbitration. 6. The arbitration clause shall use such language which envisages the claims that are arbitral. Criminal matters, fines and custodial sentences are some claims that are out of the arbitral claims. Thus, the arbitration clause shall be drafted and/or reviewed in the light of the intention of the parties for reference of disputes. It shall be complete and not evasive. To conclude, a carefully drafted and/or reviewed contract not only saves substantial manpower and hours but even results in the growth of the corporates. A contract is a mirror of the corporates’ horizon, modernity, awareness and its interest in the economy and fulfillment of the trade. A corporate shall never hesitate to approach or rope in experts to draft and/or review all of their contracts and negotiations. Some investment in contract management has the potential to save lot of money and embarrassment, and assure lot of protection and advancement to corporates. ENDNOTES (1) GAFTA: The Grain and Feed Trade Association (GAFTA) is a London based trade organization consisting of professionals, operators, traders and transporters in the international grain trade; FOSFA: The Federation of Oils, Seeds and Fats Associations (FOSFA) is a professional international contract issuing and arbitral body concerned exclusively with the world trade in oilseeds, oils and fats with over 960 members in 78 countries. These members include producers and processors, shippers and dealers, traders, brokers and agents, superintendents, analysts, ship-owners, and others providing services to traders; Incoterms: Export transactions generally involve international sales contracts, whose clarity of terms is crucial to avoiding disputes between parties. To ensure consistent interpretation, the International Chamber of Commerce created a set of standard trade “Incoterms”. Incoterms cover “Who does what / who pays for what / when risk in the goods passes from seller to buyer/when delivery occurs, as well as issues such as insurance, export and import clearance and the division of other costs pertaining to the delivery of goods”. (2) Refer to section 26 of the Indian Contract Act, 1872. (3) Refer to section 27 of the Indian Contract Act, 1872. (4) Refer to section 53 of The Transfer of Property Act, 1882. (5) Refer to section 16 (a) of the Arbitration and Conciliation Act, 1996. (6) Refer to section 10 Arbitration and Conciliation Act, 1996. The number of arbitrators shall not be an even number. ________________________________________ KPKUMAR@LAWSERVICES *Corporate Laws * Law relating to sale , mortgage, pledge, hypothecation. * Expert Opinions and Title Opinions. * Merger & De-merger and Reduction of Share Capital. * Creditors winding Up and Voluntary Winding Up Visit KPKUMAR@LEGALAWARENESS( in Google )