Karnataka High Court: Neglecting to maintain wife and living with another woman is ‘Domestic Violence’ to wife

38513961-cmsThe obligation of the husband continues throughout the matrimonial life and the husband cannot get away with an excuse that for many years no request was made by the wife for the maintenance amount. The Court said while upholding maintenance awarded to a wife who filed petition for maintenance after 3 decades

The husband in this case raised his contention that for 30 years, his wife had no grievance about his second marriage and it is only after so many years that she filed the petition and hence, is barred by limitation.

Justice Rathnakala observed that the question of limitation raised by the husband cannot be mechanically accepted on the core point that the wife has filed this petition after decades of separation.

The Court further said: “Domestic violence” under Section 3 of the Act among others takes into its fold ‘economic abuse’ also. The omission of the husband in neglecting to maintain the aggrieved person, who is at the receiving end, falls within the description of Section 3 of the Act. The very fact that he has led life with another woman during the subsistence of his marriage with his wife and begot children from the second wife amounts to emotional abuse as contemplated by Section 3(a) of the Act.”

The Court finally held that the husband is guilty of the offence of domestic violence and limitation cannot be a ground for the husband to escape his liability and that the wife is entitled for the protection under the Domestic Violence Act.

 

Taruna Verma

Senior Associate

The Indian Lawyer

RISING MISUSE OF SECTION 498A INDIAN PENAL CODE: SUPREME COURT FORMULATES REMEDIAL MEASURES

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The Indian Penal Code (IPC) 1860, under Section 498A, provides for keeping a check on the acts of cruelty caused to married women by their greedy husbands and relatives, which is either likely to result in their death, grave injury or danger to life, health, etc, or cause harassment with a view to force them to meet their unconscionable and unlawful demands. Although this provision was enacted to safeguard and protect the interests of married women, but there has been a growing tendency amongst them to misuse this provision by filing false cases against their innocent husbands and families including parents of advanced age, minor children, siblings, grand-parents, etc, and thereby, causing them harassment and even arrest without any verifiable evidence of physical or mental injury. Such false cases and allegations may also hamper the possibility of reconciliation between the married couple.

In light of the aforesaid issue, various high courts have issued guidelines to curb the instances where false cases are lodged under Section 498A IPC and human rights of innocent families are violated. The Supreme Court has also, in Rajesh Sharma & ors vs. State of U.P. & Anr. 2017, laid down certain directions to deal with this menace and to ensure that the working of a penal provision is not rendered unjust, unfair or unreasonable:

  1. Constitution of one or more Family Welfare Committees in every district by the District Legal Services Authorities, who will look into the complaints received by the police under Section 498A IPC and interact with the parties involved. A report may be prepared by this Committee within one month from the date of receipt of such complaint and until such report is received by the police, no arrest may be made.
  2. Only a designated Investigating Officer appointed for an area within one month from the date of this judgment (27 July, 2017) may investigate the complaints under Section 498A IPC.
  3. In the event that the parties involved in such dispute reach to a settlement, the District and Sessions Judge or any other senior Judicial Officer nominated by him in the district may dispose of such proceedings.
  4. While dealing with the bail applications filed, various aspects may be carefully considered and weighed including the prima facie truth of the allegations, any requirement of further arrest and interest of justice, etc.
  5. In respect of persons ordinarily residing out of India confiscation of passports or issue of red corner notice should not be a routine.
  6. The District Judge or a designated senior judicial officer nominated by him may club all connected cases between the parties, arising out of their matrimonial disputes in order to enable him to take a holistic view.
  7. The trial court may allow either personal appearance or appearance by video conferencing of all family members for conducting the trial.

 

The Supreme Court has held that these Directions will not apply to the offences involving tangible physical injuries or death and that the aforesaid arrangement may be tried for at least 6 months or till 31.03.2018, after which the National Legal Services Authority will have to submit a report to the Court about the need for any addition, alteration or modification of these Directions.

 

Harini Daliparthy

Legal Associate

COMPANIES AMENDMENT BILL PASSED IN LOK SABHA

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The Lok Sabha on 27th July, 2017, passed the Companies (Amendment) Bill, 2016, which was introduced in March 2016. The Bill will now go to the Rajya Sabha.

The Bill amends more than 40 provisions of the Companies Act, 2013 moved by Arjun Ram Meghwal, Minister of State for Finance and Corporate Affairs. The Bill was introduced based on the suggestions received from various stakeholders on the Companies Law Committee Report, which was published in February 2016 suggesting certain reforms to the Act to remove complexities and improve ease of doing business, strengthen corporate governance standards and prescribes strict action against defaulting companies.

FEATURES OF COMPANIES AMENDENT BILL, 2016

The Bill simplifies the private placement process under Section 42, which currently prohibits an issue while an older one is pending, thus allowing companies to keep more than one issue of security open by simultaneously offering different kind of securities.

The amendments raise the threshold for the easy compliance scheme to Rs 100 crore from Rs 20 crore, making more companies eligible for the simple compliance regime. The Bill seeks also to ease rules for private placement of securities and fix an eight-year limit on reopening of past accounts against no limit in the earlier regime.

It further removes restrictions on layers of subsidiaries and investment companies which is currently limited to two.

Another interesting feature is that the Bill allows unrestricted object clause in the Memorandum of Association dispensing with ‘detailed listing of objects, self-declarations to replace affidavits from subscribers to memorandum and first directors’. While this amendment will allow operational freedom to companies, on the flip side, it may be detrimental to the interests of investors and creditors since the object clause defined and indicated the scope and extent of the main business activity of a company.

Another important change is the replacing of Central Government approval under Section 197(1) of the Act with special resolution approval of shareholders in case the managerial remuneration crosses the prescribed thresholds.

Provisions relating to forward dealing and insider trading from the Act have also been omitted, since they only apply to listed entities which are already covered under regulations promulgated by SEBI.

Taruna Verma

Senior Associate

The Indian Lawyer

GOVERNMENT’S EFFORTS TO TACKLE THE STRESSED ASSET SITUATION IN INDIA

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According to the Reserve Bank of India (RBI), in the recent times, the amount of stressed (non-performing, restructured or written-off) assets in the banking system has been significantly high. Stressed assets are loans where the borrower has defaulted on repayment, or are loans which have been restructured. A Report of Credit Rating Information Services of India Limited (CRISIL) has stated that the stressed companies are largely from the metals, construction and power industries and they account for nearly half of the total non-performing assets (NPAs) in the banking sector as in the end of March 2017. Also, that the total non-performing loans in the banking system amounted to Rs. 7.29 lakh crore (approx.), or 5 percent of India’s gross domestic product, as in the end-March 2017. This has resulted in reduced profits to lenders, slow credit flow to industry, etc.

Therefore, the Government of India has taken the following initiatives to resolve the menace of stressed assets in the economy:

1. The RBI’s internal advisory committee has identified 12 large stressed cases for proceedings under the Insolvency and Bankruptcy Code 2016, of which the National Company Law Tribunal (NCLT) has already admitted bankruptcy proceedings against five such companies.

2. The Government has introduced the Banking Regulation (Amendment) Bill, 2017 in the Lok Sabha which will empower the RBI to tackle the situation of mounting bad loans and stressed assets that have clogged the banking system.

3. By virtue of this Bill, the RBI may be empowered in the following manner:

i) The RBI may direct a banking company to initiate insolvency proceedings against companies having stressed assets and give directions to the banks for its timely resolution.

ii) The RBI may monitor bank accounts of big defaulters of loans. The Government may direct the RBI to carry out inspection of lenders.

iii) A committee may be set up to oversee companies that have been the biggest defaulters of loans so that a bank may be barred from extending loans to such defaulting persons, in order to curb NPAs.

iv) Various schemes were introduced by the RBI such as corporate debt restructuring, formation of joint lenders’ forum, flexible structuring for long-term project loans to infrastructure, strategic debt restructuring scheme and sustainable structuring of stressed assets to check the menace of NPAs.

v) The Government and the RBI may also come up with a one-time settlement scheme for top defaulters before initiating stringent steps against them.

vi) The RBI is planning to set up a ‘bad bank’ and has also floated two models, i.e. Private Asset Management Company (PAMC) and National Asset Management Company (NAMC) for the orderly resolution of stressed assets.

Thus, the Government has been taking such initiatives to address the issue of stressed assets created in the banking sector of India.

 

Harini Daliparthy

Legal Associate

NO ARREST UNDER SECTION 498A BEFORE REPORT FROM FAMILY WELFARE COMMITTEE

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The Apex Court has issued an important decision to temper action in sexual harassment cases that there will be no arrests under Section 498A of the Indian Penal Code unless the District Family Welfare Committee report vets domestic violence by family members. The decision comes as a big relief to men and their families who have suffered untold harassment due to false cases filed by women.

There will be Family Welfare Committees, set up at the district level, comprising paralegal volunteers, social workers, retired persons, wives of working officers or other citizens who may be found suitable and willing to review complaints filed under Section 498A and interact with parties involved in such cases. The Committee will prepare a report of the case and submit it to the relevant authority.

The cases under 498A should only be investigated by designated Investigating Officers of that area. It has also been left open to District and Sessions Judges to dispose of criminal proceedings should the parties arrive at a settlement. Judges will also have the power to club all connected cases between the parties arising out of matrimonial disputes so that a holistic view is taken by the Court.

Relatives will be allowed to appear for hearing via video conferencing, their personal appearance is not mandatory. In addition, impounding of passports and issuance of Red Corner notices for people staying abroad should not be a routine.

 

Sanchayeeta Das

Legal Associate

The Indian Lawyer

 

CHALLENGE AGAINST CONSTITUTIONALITY OF THE GOVERNMENT’S AADHAAR PROJECT

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The Government of India has linked the 12- digit unique identification number, i.e. Aadhaar to various centrally sponsored schemes including Pradhan Mantri Ujjwala Yojana (provision of free LPG connection to below poverty line people), Pradhan Mantri Jan Dhan Yojna (universal access to banking facilities), Janani Suraksha Yojana (promotion of institutional delivery among poor pregnant women), etc.

A number of petitions have been filed in the Supreme Court questioning the move of the Government to make Aadhaar mandatory for availing benefits of social welfare schemes. They have challenged the constitutional validity of the Aadhaar Scheme and have alleged that parting of Aadhaar and biometric details of citizens to access welfare and benefits would violate their fundamental right to privacy as it may probably result in data breaches, etc.

In two of the Supreme Court’s earlier decisions in M. P. Sharma and Others vs. Satish Chandra 1954 (eight-Judge Bench) and Kharak Singh vs. the State of U. P. & Others 1963 (six- Judge Bench), it has held that right to privacy was not a fundamental right.

This Court has also recently upheld the validity of Section 139AA of the Income Tax Act, 1961 which provides for mandatory linking of Aadhaar with permanent account number (PAN) by income tax assessees as it is the only robust method of de-duplication of PAN database and it may ensure that one person does not have more than one PAN card or a person is not able to get PAN cards in assumed/fictitious names.

Therefore, the Supreme Court has decided to set up a nine-judge bench to decide and settle the issue about whether right to privacy can be declared as a fundamental right under the Constitution of India.

 

Harini Daliparthy

Legal Associate

INDIA – ISRAEL: BROADEN COMMERCIAL TIES

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Mr. Narendra Modi becomes the first Indian Prime Minister to visit Israel, after the end of three day visit in Israel, both the countries expressed interest in building a broad economic base, rather than merely a contractual exchange based around defence.

A total of seven Agreements were signed in sectors ranging from agriculture to water conservation and space as they sought to deepen ties beyond high-priced defence deals.

The two leaders presented a series of Agreements between India and Israel for cooperation on satellite technology, water and agriculture, as well as the creation of a $40 million innovation fund.

The Agreements are part of efforts to extend relations in civilian areas between both countries, with Israel already selling India an average of $1 billion per year in military equipment.

India is the world’s biggest importer of defence equipment and Israel has become one of its major suppliers, both the countries have committed to extending that relationship with a special emphasis on PM Modi’s “Make In India” campaign that asks foreign vendors to ensure the transfer of technology to Indian partners with the goal of reducing India’s dependence on foreign arms.

In April 2017, State-owned Israel Aerospace Industries (IAI) said India would buy nearly $2 billion worth of weapons technology, making it the military exporting giant’s largest ever defence contract.

The deal will see IAI provide India with an advanced defence system of medium-range surface-to-air missiles, launchers and communications technology.

Israeli equity crowd funding group OurCrowd just closed three deals with India, joining with Reliance Industries for a hi-tech incubator that helps to grow young companies in Jerusalem, bringing Israeli technology to India with Reliance Capital and collaborating with India’s Lets Venture to invest in start-ups.

 

Taruna Verma

Senior Associate

The Indian Lawyer

LAW FIRMS UNDER GOODS AND SERVICES TAX

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The Delhi High Court clarified that the Goods and Services Tax (GST) on all legal services provided by Lawyers or Law Firms would be paid on reverse charge basis by the client.

Reverse Charge basis means that the tax will have to be paid by the service recipient which will be litigants under the present circumstances.

 
Several queries were posed regarding the release issued by the Finance Ministry subsequent to the High Court’s order on 12.07.2017 asking the Government to clarify on which legal services the GST was to be paid on Reverse Charge basis.

 
While listing the matter for further hearing on 14.09.2017, the Interim Order on 12.07.2017 of not taking coercive action against Lawyers and Law Firms for non-compliance of the GST Law, shall continue and would also cover the Limited Liability Partnerships (LLPs).

The Court also said that till further orders, all the legal services provided by the advocates, including senior counsel, Law Firms and LLPs will continue to be governed by the Reverse Charge mechanism.

 

Sanchayeeta Das

Legal Associate

The Indian Lawyer

IMPACT OF GOODS AND SERVICES TAX ON CONSUMERS AND TRADERS IN INDIA

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India’s biggest tax reform since independence is expected to be positive for the fast-moving consumer goods (FMCG) companies and firms producing consumer durables. This historic tax reform will irrevocably impact consumers, traders, businesses as well as the revenue collection machines of the States and the Centre.

Goods and services tax (GST) is divided into five categories. i.e. 0, 5, 12, 18 and 28 percent. It must be clarified that the tax will be levied along additional cess. So the rates for different products may increase. For example, the luxury cars are placed in the highest slab of 28 percent but GST Council levied an additional cess of 15 percent which will add up to total 43 percent.

FMCG Sector will benefit from the GST due to current huge unorganised market. GST rate for products like hair oil, soaps and toothpaste has been lowered by 500-600 basis points from the previous rates. Companies such as Colgate-Palmolive, HUL, Britannia, Heritage Foods etc will benefit from the move.

Pharma and healthcare: Pharmaceutical products will see 12 per cent GST as against earlier rate of 10 per cent. The Healthcare Sector will remain exempt from the GST however the inputs by the healthcare sector will be taxed at 18 per cent leading to rise in the operating costs.

Airlines: Travelling in business class will become expensive as after the rollout of GST, tax rate will increase from 9 per cent to 12 per cent. However, GST on economy class is set at 5 per cent, lower than the previous 6 per cent. Aviation Turbine Fuel has kept outside the GST and the indirect tax structure will continue. As a result, aviation companies will now face two set of taxes, i. e. GST and indirect tax. Tax input credit under the GST is only available on input services for economy class travel. Lower tax rate on economy travel is positive for companies like InterGlobe Aviation, Jet Airways and SpiceJet.

Telecom- The Sector is facing severe pressure in the form of intense competition from Reliance Jio. Under the GST regime, telecom services will be taxed at 18 per cent as against 15 per cent earlier. There are expectations that it will work as a salt on the wound for the sector. Any price increase will further dampen the scenario. Bharti Airtel, Idea Celluar and Reliance Communication should be eyed on stock market.

Automobile and auto ancillaries- The GST rates are mostly expected to be neutral to the Auto Sector except for the hybrid cars which will be taxed at the 28 per cent GST +15 per cent cess. Most other vehicle categories will not see significant change from the current tax structure. Tractors category will be taxed at 12 per cent against current 6-7 per cent which will be negative for the tractor companies. Demonetisation and Bharat Stage (BS) III norms have already hurt the Sector during the first half of 2017. Under the GST, input tax credit will not be available for the dealers for the stocks existing before 1st July hence companies are offering discounts on their vehicles. Stocks such as Exide Industries, Minda Industries and Amara Raja Batteries should be watched by investors.

Real Estate- The effective GST rate on under-construction real estate projects will be 12 per cent only and not 18 per cent as there will be abatement for land cost. Brokerage firm Edelweiss in a research note said, “We believe impact on property prices under GST will be driven by cost structure and extent of input credit available under GST passed to buyer.”

HOW WILL TRADERS BENEFIT FROM GST?

  • Traders below Rs 20 Lakh annual turnover are exempt under GST as compared to the current threshold of Rs 10 Lakh in indirect taxes.
  • Traders manufacturers and restaurants with up to Rs 75 Lakh turnover can go for the Composition Scheme and pay 1, 2 and 5 per cent tax respectively. Such businesses though will not get input tax credit but will have to file only one quarterly return.
    Rest of the traders will have to file three returns every month out of which two will be auto-populated.

The input tax credit under Central Value Added Tax (CENVAT) credit will be carried forward into the new regime.

Integrated GST (IGST) and GST Compensation Cess would be levied on cargo arrived on 1st July 2017. Cargo arrived up to June 30 would not attract IGST and compensation cess even though the clearance may happen after 1st July 2017. However, additional duty of customs would continue to be levied for imports of petroleum and tobacco products.

It is mandatory for all importers/ exporters to declare GST Registration Number (GSTIN) along with Import Export Code (IEC) in the bills of entry, shipping bills and courier forms. Provisional IDs issued by Goods and Services Tax Network (GSTN) also be declared during the transition period. Input tax credit of IGST would be available based on GSTIN declared in the bill of entry.

Exports are zero-rated under GST. Exporter would be entitled to refund of IGST paid on exports or refund of accumulated tax credit on inputs used towards exports. Refund of IGST for exports would be based on GSTIN declared in the shipping bill.

 

 

Taruna Verma

Senior Associate

The Indian Lawyer

IMPACT OF GOODS AND SERVICES TAX ON EASE OF DOING BUSINESS IN INDIA

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The Government of India has successfully implemented the long awaited Goods and Services Tax (GST) regime across the country on 1st July 2017. The GST is a comprehensive tax to be levied upon the manufacture, sale and consumption of goods and services with value addition at every stage of supply i.e. from the level of the service provider up to the level of retailer where the end consumer would bear the tax. The GST may impact the tax structure, tax computation, tax compliance, etc and thereby, affect various aspects of business operations including pricing of goods and services, accounting, inter and intra state transport of goods and services etc.

According to a US ratings agency, Moody, GST may increase the revenues of the Indian Government through improved tax compliance, reduction of costs of compliance from levy of uniform and simplified taxes across the country and ease of compliance through use of a common information technology (IT) infrastructure between the Centre and the states.

The new GST structure has ensured that the small and medium enterprises are not much affected by the tax reforms and that they are encouraged to set up business in India. The Composition Scheme under the GST regime has provided that business enterprises trading in certain goods and services, whose aggregate turnover in the preceding financial year has not exceeded Rs.75 lakh, have to pay a GST ranging between 0.5% or 1% or 2.5%, as the case may be.

A uniform and less complex system of levy and payment of taxes may also help in attracting private and foreign business investors to set up business in India as it may result in easier movement of goods within the country as well as overseas at economical costs; increased productivity gains; automated procedures for various compliances such as GST registration, returns, refunds, tax payments, checking input tax credits online, etc.  Therefore, the aforesaid system of levy and payment of GST may ensure that India continues to be an investment destination.

 

 

Daliparthy Harini

Legal Associate