Mentoassociates.com – Legal Articles

INTRODUCTION: –

 Choosing between a declarative suit and an injunction suit can often be confusing, as these remedies serve distinct purposes and also differ in their scope and impact.

 A declarative suit seeks a formal declaration from the court regarding the legal rights and obligations of the parties involved. It is not intended to grant damages or enforce any particular course of action. Rather, it clarifies the existing legal relationship, bringing certainty and preventing misunderstandings in the near future. This clarity can avoid the need for lengthy and potentially expensive litigation, saving time and money.

In contrast, an injunction suit seeks a court order to direct a party to either perform or refrain from performing a specific act. It is a proactive remedy, temporary or permanent in nature, intended to prevent ongoing or imminent harm. Compared to declaratory judgment, injunction is often seen as more powerful remedy but its success depends on proving the potential for immediate and irreparable harm.

METHOD

The method used in this research paper is by reviewing a case by the Honorable Supreme Court of India, Anathula Sudhakar v P. Buchi Ready (Dead) by Lrs & Ors dated 2005 March, 2008, (2008) 4 SCC 594.

CASE FINDINGS

In Anathula Sudhakar v P. Buchi Ready (Dead) by Lrs & Ors the Honorable Supreme Court observed the following regarding Bare Injunction, Possession and declaratory reliefs.

In the para11 of the above referred judgment the Honorable Supreme Court held as follows

The general principles as to when a mere suit for permanent injunction will lie and when it is necessary to file a suit for declaration and/ or possession, with injunction as a consequential relief, are well settled. We may refer to them briefly:

1. Where a plaintiff is in lawful or peaceful possession of a property and such possession is interfered or threatened by the defendant, a suit for an injunction simpliciter will lie. A person has a right to protect his possession against any person who does not prove a better title by seeking a prohibitory injunction. But a person in wrongful possession is not entitled to an injunction against the rightful owner.

• Where the title of the plaintiff is not disputed, but he is not in possession, his remedy is to file a suit for possession and seek in addition, if necessary, an injunction. A person out of possession, cannot seek the relief of injunction simpliciter, without claiming the relief of possession.

• Where the plaintiff is in possession, but his title to the property is in dispute, or under a cloud, or where the defendant asserts title thereto and there is also a threat of dispossession from defendant, the plaintiff will have to sue for declaration of title and the consequential relief of injunction. Where the title of plaintiff is under a cloud or in dispute and he is not in possession or not able to establish possession, necessarily the plaintiff will have to file a suit for declaration, possession and injunction.

In para17 of the above referred judgment the Honorable Supreme Court summarizes its findings and held that:

1. Where a cloud is raised over plaintiff’s title and he does not have possession, a suit for declaration and possession, with or without a consequential injunction, is the remedy. Where the plaintiff’s title is not in dispute or under a cloud, but he is out of possession, he has to sue for possession with a consequential injunction. Where there is merely an interference with plaintiff’s lawful possession or threat of dispossession, it is sufficient to sue for an injunction simpliciter.

• As a suit for injunction simpliciter is concerned only with possession, normally the issue of title will not be directly and substantially in issue. The prayer for injunction will be decided with reference to the finding on possession. But in cases where de jure possession has to be established on the basis of title to the property, as in the case of vacant sites, the issue of title may directly and substantially arise for consideration, as without a finding thereon, it will not be possible to decide the issue of possession.

• But a finding on title cannot be recorded in a suit for injunction, unless there are necessary pleadings and appropriate issue regarding title. Where the averments regarding title are absent in a plaint and where there is no issue relating to title, the court will not investigate or examine or render a finding on a question of title, in a suit for injunction. Even where there are necessary pleadings and issue, if the matter involves complicated questions of fact and law relating to title, the court will relegate the parties to the remedy by way of comprehensive suit for declaration of title, instead of deciding the issue in a suit for mere injunction.

• Where there are necessary pleadings regarding title, and appropriate issue relating to title on which parties lead evidence, if the matter involved is simple and straight-forward, the court may decide upon the issue regarding title, even in a suit for injunction. But such cases, are the exception to the normal rule that question of title will not be decided in suits for injunction. But persons having clear title and possession suing for injunction, should not be driven to the costlier and more cumbersome remedy of a suit for declaration, merely because some meddler vexatiously or wrongfully makes a claim or tries to encroach upon his property. The court should use its discretion carefully to identify cases where it will enquire into title and cases where it will refer to plaintiff to a more comprehensive declaratory suit, depending upon the facts of the case.

The court however clarifies that a prayer for declaration will be necessary only if the denial of title by the defendant or challenge to plaintiff’s title by the defendants or challenge to plaintiff’s title raises a cloud on the title of plaintiff to the property. A cloud is said to raise over a person’s title, when some apparent defect in his title to a property, or when some prima facie right of a third party over it, is made out or shown. An action for declaration is the remedy to remove the cloud on the title to the property. On the other hand, where the plaintiff has clear title supported by documents, if a trespasser without any claim to title or an interloper without any apparent title, merely denies the plaintiff’s title, it does not amount to raising a cloud over the title of the plaintiff and it will not be necessary for the plaintiff to sue for declaration and a suit for injunction may be sufficient. Where the plaintiff, believing that defendant is only a trespasser or a wrongful claimant without title, files a mere suit for injunction, and in such a suit, the defendant discloses in his defence the details of the right or title claimed by him, which raises a serious dispute or cloud over plaintiff’s title, then there is a need for the plaintiff, to amend the plaint and convert the suit into one for declaration. Alternatively, he may withdraw the suit for bare injunction, with permission of the court to file a comprehensive suit for declaration and injunction. He may file the suit for declaration with consequential relief, even after the suit for injunction is dismissed, where the suit raised only the issue of possession and not any issue of title.

CONCLUSION

The chosen case review provides us a great example of how the courts have distinguished between these remedies and assessed their suitability in the specific context. Choosing between a declaratory suit and an injunction suit requires careful consideration of the desired outcomes and the available evidence. Declaratory suits offer the clarity of a formal declaration of rights and obligations, removing uncertainty and paving the way for future action. They are particularly effective in a dispute where the legal relationships are unclear or  in the case of contested titles. However, they lack the immediate action or protection of an injunction. Injunction suits, on the other hand, are potent tools for preventing imminent harm or preserving the status quo. They can swiftly halt ongoing interference or potential future disturbances. However, in order for them to be successful they must make a convincing argument for immediate or irreversible injury. Ultimately, the choice rests on understanding the specific legal issue and the desired result.

REFERENCES

• SCC Online

Authored by

THOMAS K JOSEPH

SLCU, CHRIST DEEMED TO BE UNIVERSITY

Intern

MENTO ASSOCIATES

INTRODUCTION

The weaponization of domestic abuse allegations for one’s own benefit casts a shadow over the court system in India. The Protection of Women from Domestic Violence Act, 2005 (hereafter referred to as ‘Act’) is considered to be one of the most important legislations designed to protect women. It provides legal protection not only from physical abuse but also from emotional, sexual and economic abuse within their matrimonial homes. However, there have been concerns emerging regarding the misuse of the Act, leading to innocent people facing dire consequences from false accusations.

METHOD

This research uses both qualitative and quantitative approach. The qualitative analysis was done through an examination of Supreme Court judgments, High Court judgment, legal documents and scholarly articles and the quantitative analysis was done by referring to government reports and NGO on the misuse of the Act.

RESULTS

The quantitative analysis shows that since the law’s passage, the number of DVA claims submitted has significantly increased, but there has also been a rise in the number of cases that have been dismissed for lack of proof or misuse. According to estimates, between 5% and 10% of cases are rejected because of misuse. The misuse of the Domestic Violence Act by women was reported by various NGOs and conviction rate was around 2% in 2014, this was later informed to the Rajya Sabha by the Government stating that “Sometimes ” provisions of the Domestic Violence Acts were misused. The Madras High court Bench also observed that the Act suffers from inherent flaws which tempt women to misuse its provisions,  resulting in men to dread being prosecuted under the law without any reason or wrong. Recently the Bombay High court also raised its concern regarding the rise in trend of women misusing the Act in order to build pressure on their estranged husbands.

The Qualitative analysis was done by reviewing case laws and documents related to the Act. Various courts after looking at the misuse of the Act issued few guidelines to be followed by magistrates while dealing with cases that fall under this Act. The Punjab and Haryana HC declared in the case Jaspal Kaur v State of Punjab (2011 SCC Online P&H 14859) that it is not necessary to send notice to all the respondents under section 13 of DV Act especially when it comes to distant relatives, In such cases the Magistrate is expected to carefully think about and consider all the information in regards with the case and then decide whether to send a notice to them or not. In the case of Mohd. Hussain v Shabnam Ara (CRM(M) No.714/2022) wherein the High court of J and K declared that if the magistrate feels the evidence is insufficient then the Magistrate can dismiss the proceedings of the case. In a recent case of the High court of Karnataka (Pramod R S v Lakshmi M R, Criminal Petition No.1511 of 2023), the court declared that if a DV case is filed by the wife after the filing of divorce by the husband in such a scenario the DV case won’t be of much importance but dismissing it would lead to the defeat of the Act. So in order to prevent injustice the DV case will be allowed to proceed but only based on the facts and circumstances of the case. In a similar case by the High court of Karnataka (Nagesh Gunddayal v State of Karnataka, Criminal Petition No. 1511 of 2023) it was stated that the case would lose its significance due to fact that the complaint is made, after receiving the divorce notice from her husband.

CONCLUSION

The Protection of Women from Domestic Violence Act (PWDVA), 2005, is a landmark legislation in India created with the sole purpose of shielding women from domestic abuse. The Act includes verbal, economic, emotional, and physical abuse in its broad definition of domestic violence. It offers a number of remedies, such as monetary compensation, residency orders and protection orders. However, since its inception, the Act has faced a number of objections and challenges, raising concerns about its validity and legitimacy. Due to personal motivations, this has resulted in instances when women use false charges, severely harming the wrongfully accused both financially and emotionally. Although the Act was created with the goal of protecting women, it is sometimes utilized to harm innocent people.

It’s time to stand up for those falsely accused under domestic violence laws. Those who make false claims, fueled by malicious intent, must face consequences. Amending the Act to include specific penalties for false accusations is crucial. We need to hold the misusers of these laws accountable for the financial and emotional damage they inflict on the wrongly accused.

It’s not uncommon for petitioners to include the husband’s entire family in their complaints, solely to inflict pain and suffering. To combat this unnecessary litigation and protect the accused, time-bound trials should be made mandatory under all domestic violence laws. This will provide much-needed relief to those wrongly accused and prevent them from enduring prolonged torment.

Let’s ensure justice for all. Let’s protect the wrongly accused by holding the false accusers accountable.

REFERENCES

• Live Law
• The Hindu
• SCC Online
• https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4768593/
• Swapan Kumar Das v. State of W.B., 2023 SCC Online Cal 242
• Bare Text of The Protection of Women from Domestic Violence Act, 2005
• High court of Karnataka
  
  

Authored by

THOMAS K JOSEPH

II Year SLCU

Intern

MENTO ASSOCIATES

• Adoption of child under Juvenile Justice Act 2015:

1. First obtain Adoption order issued by the District Magistrate.

2. The birth certificate will be issued within 5 working days on the receipt of application by registration authorities in the state, from the specialized adoption agency or adoptive parents after the receipt of order issued by the District Magistrate Court.

• Adoption of child under Hindu Adoption and Maintenance Act 1956:

1. Adoption is valid based on registered adoption deed executed and registered by both the parties’ i.e. biological parents and adoptive parents.

2. The birth certificate will be issued on the receipt of application by registration authorities in the state to issue birth certificate from adoptive parents after the receipt of registered adoption deed.

3. Exception: In case of adopted child is more than one year old and his /her birth is not found registered earlier, then as per prescribed procedure of section 13(3) of the Registration of Birth and Death Act, 1969 (amended in 2023), an order of District Magistrate or Sub-Divisional Magistrate or by an Executive magistrate authorised by the District Magistrate should also be obtained before filing an application to registration authorities in the state to issue birth certificate.

• Ref: Circular bearing No. 2037376/2023/CARA dated 03-11-2023 issued by Ministry of Home Affairs, Govt. Of India.

Authored by:

Adv. Shirin Yusuf

FOR MENTO ASSOCIATES

Advocates

The era of digitization gave birth to entirely new markets which deal with the collection, organization, and processing of personal information, whether directly or as critical component of business. The outburst of Covid-19 and the lock-down has led to several challenges in various sectors regarding data privacy and protection; hence protection of data and privacy plays a much important role now, as there are several loopholes in which data can be breached and its security is at major risk.

Section 2 (o) of Information Technology Act,2000 defines “data” which means a representation of information, knowledge, facts, concepts or instructions which are being prepared or have been prepared in a formalized manner, and is intended to be processed, is being processed or has been processed in a computer system or computer network, and may be in any form (including computer printouts, magnetic or optical storage media, punched cards, punched tapes) or stored internally in the memory of the computer.

Data protection is the process of safeguarding important information from corruption, compromise or loss. Through the landmark judgment of Justice K.S Puttaswamy vs Union of India (AIR 2017 SC 4161), the Hon’ble Supreme Court held right to privacy is declared as a fundamental right under Article 21 of Indian Constitution. This judgment made general public realize that their data is intrinsic, important and therefore worthy of protection.

At present India does not have specific legislation in regard to data protections and privacy, although a Personal Data Protection Bill, 2019 was introduced in Lok sabha. There are many ambiguities as to the implementation of this bill, but there are some important enactments which focuses and governs privacy protection and personal data
• Information Technology Act, 2000.
• The Right to Information Act,2005
• Information Technology (Guidelines for intermediaries and digital media ethics code) Rules, 2021

Section 43A of the IT Act 2000 provides that whenever a corporate body possesses or deals with any sensitive personal data or information, and is negligent in maintaining a reasonable security practices and procedures and thereby causes wrongful loss or wrongful gain to any person, then such body corporate shall be liable to pay damages to the persons so affected.

Section 72A of the IT Act 2000 provides that any person (including an intermediary) who, while providing services under the terms of a lawful contract, has secured access to any material containing personal information about another person, with the intent of causing or knowing that he is likely to cause wrongful loss or wrongful gain discloses, without the consent of the person concerned, or in breach of a lawful contract, such material to any other person, shall be punished with imprisonment for a term which may extend to three years, or with fine which may extend to five lakh rupees, or with both.

Section 8 (1)(j) of Right to Information Act – This section provides that the authorities are under no obligation to provide information to citizens regarding inter alia information which relates to personal information, the disclosure of which has no relationship to any public activity or interest, or which would cause unwarranted invasion of the privacy of the individual unless the Central Public Information Officer or the State Public Information Officer or the appellate authority, as the case may be, is satisfied that the larger public interest justifies the disclosure of such information.

The Information technology (Guidelines for intermediaries and digital media ethics code) Rules, 2021 have been passed under sections 69A(2), 79(2)(c) and 87 of the Information Technology Act, 2000. Rule 4(2) provides that a significant social media intermediary providing services primarily in the nature of messaging shall enable the identification of the first originator of the information on its computer resource as may be required by a judicial order passed by a court of competent jurisdiction or an order passed under section 69 by the Competent Authority as per the Information Technology (Procedure and Safeguards for interception, monitoring and decryption of information) Rules, 2009. This rule is clearly a major threat to the privacy of the users and this was challenged by Whatsapp in Delhi High Court to quash a new government rule which is against right to privacy.

CONCLUSION:
India has gone more digital in this covid-19 pandemic era, than ever before. In this digital era, data is a valuable resource that needs to be protected and regulated. Right to privacy cannot be exercised effectively unless data is protected through a legal regime; therefore implementation of personal data protection bill becomes very important.

Authored by

RAMYA C N
Associate

1. Introduction

These rules apply to all goods and services bought or sold over any digital or electronic network. These even apply to an e-commerce entity, not established in India, but systematically offers goods or services to consumers in India.

According to these rules, an e-commerce entity,  means any person who owns, operates or manages a digital or electronic facility or platform for electronic commerce, but does not include a seller using the said platform.

An inventory e-commerce entity is an e-commerce entity which owns the inventory of goods and services and sells such goods or services directly to the consumers.

A market place e-commerce entity is an e-commerce entity which provides an information technology platform on a digital or electronic network to facilitate transactions between buyers and sellers.

2. Duties of E-Commerce Entities:

1. An E-commerce entity shall be a company incorporated under the Companies Act 1956 or the Companies Act 2013 or a foreign company covered under clause (42) of section 2 of the Companies Act, 2013 or an office, branch or agency outside India, owned or controlled by a person resident in India.

• E-commerce entities shall appoint a nodal person of  contact who is resident in India, to ensure compliance with provisions of the Consumer protection Act, 2019 or the rules there under.

• Every e-commerce entities shall provide its legal name, principal geographic address of his headquarters and all branches, names and details of its website, email address and mobile numbers of customer care and grievance officer on its platform.

• Every e-commerce entity shall establish an adequate grievance redressal mechanism and shall appoint grievance officer for consumer grievance redressal and shall display his name, contact details, designation etc.

• Grievance officer shall acknowledge the receipt of any complaint within forty-eight hours and redresses the complaint within one month from the date of receipt of the complaint.

• E-commerce entity cannot impose cancellation charges on consumers, cancelling after confirming purchase, unless they incur similar charges if they cancel the purchase.

3. Liabilities of marketplace e-commerce entities

1. To require sellers through an undertaking to ensure that descriptions, images etc pertaining to goods or services on their platform is accurate.

• To provide the details about the sellers offering goods and services including the name of their business, geographic address, customer care number, any rating or feedbacks etc and they shall provide such information to consumer on request.

• They shall provide ticket number for each complaint lodged, through which the consumer can track the status of the complaint.

• They shall provide all information relating to return, refund, exchange, warranty, guarantee, delivery, shipment, modes of payment, and grievance redressal mechanism.

•  They shall also provide information on payment method, security of such payment methods, any fees or charges payable by users, the procedure to cancel regular payments and the contact information of payment service provider.

4. Duties of sellers on marketplace e-commerce entity

1. Sellers cannot refuse to take back goods or withdraw or discontinue services purchased or refuse to refund consideration, if such goods or services are found to be defective, deficient or spurious, late delivered etc.

• They shall have a written contract with the respective e-commerce entity in order to undertake or solicit such sale.

• They shall appoint grievance officer for consumer grievance redressal, who shall acknowledge the receipt of any consumer complaint within forty-eight hours and redresses the same within one month.

• They shall ensure that the advertisements for marketing of goods or services are consistent with the actual characteristics, access and usage conditions of such goods or services.

• They shall provide the e-commerce entity their legal name, principal geographic address of their headquarters and all branches, the name and details of their website, their e-mail address, customer care contact details, GSTIN, PAN etc.

• The seller shall further provide the following information to the e-commerce entity:
• Price of goods and services with the breakup price, together with delivery charges, handling charges, conveyance charges, applicable tax etc.
• Expiry date of goods being offered for sale.
• Details of country of origin of goods.
• Name and contact details of grievance officer
• Name and details of importer and guarantees of the imported products.
• Information related to terms of exchange, returns, refund, delivery, shipment, guarantees, warranties etc.

 5.  Duties and liabilities of inventory e-commerce entities:

1.  They shall provide accurate information regarding return, refund, exchange, warranty, guarantee, delivery, shipment, mode of payments and grievance redressal mechanism in a clear and accessible manner.

• They shall also provide information regarding payment methods, procedure to cancel payments, fees or charges payable by users, charge back options etc.

• They shall provide a ticket number for each complaint lodged through which the consumer can track the status of complaint.

• They shall provide total price in single figure of any  goods and services along with the  breakup price for the goods and services.

• They shall ensure that advertisements of goods and services are consistent with actual characteristics, access and usage conditions of such goods or services.

• They shall not refuse to take back goods or discontinue services or refuse to refund consideration, if such goods or services are defective, deficient etc.,

A person with Overseas Citizenship of India (OCI) can live and work in India indefinitely. However unlike an Indian Citizen, he cannot vote, have no right to hold constitutional offices, and no right to buy agricultural properties. He is also exempt from registration with the Foreigners Regional Registration Officer (FRRO) on his arrival in India.

An OCI is allowed to set up a proprietorship concern in India, on non-repatriation basis. The money to conduct the business should come from Indian Bank accounts in INR. The OCI should have a PAN Number and Indian Valid Address proof (ideally Aadhaar). The OCI can also buy/rent/ lease immovable property in India for the purpose of his business, except agricultural land.

If the OCI intends to put in any money at any point in time in the business from an overseas account, such a transfers qualify as an FDI and FDIs are not permitted in Sole Proprietorship.

The basic licenses/registrations required are registration under the Shops and Establishment Act and GST Registration.

Important documents required are Passport, Aadhar, PAN and address proof for the business establishment.

1. A minor is a person below the age of 18 years. The Reserve Bank of India, on May 6, 2014, issued a notification regarding the opening and operating minors’ accounts.

2. A minor of any age can open a savings/fixed/recurring bank deposit account through his/her natural or legally appointed guardian.

3. Minors above the age of 10 years may be allowed to open and operate savings bank accounts independently, if they so desire. Banks may, however, fix limits in terms of age and amount up to which minors may be allowed to operate the deposit accounts independently.

4. Banks can also decide, in their own discretion, as to what minimum documents are required for opening of accounts by minors. Usually Pan Card details of the parent/ guardian are required. Also, the parent/guardian should have an account in the bank where they wish to open the minor’s account.

5. On attaining majority, the minor should confirm the balance in his/her account and if the account is operated by the natural guardian/legal guardian, fresh operating instructions and specimen signature of the erstwhile minor should be obtained and kept on record for all operational purposes.

6. Banks are free to offer additional banking facilities, such as, internet banking, ATM/debit card, cheque book facility etc., subject to the safeguards that minor accounts are not allowed to be overdrawn and that these always remain in credit.

7. The interest earned on the amount saved in minor bank accounts is taxable. Usually, the interest from a minor account is clubbed with the parent/guardian’s income and is considered taxable. Any income that accrues or is paid to a minor is added to the parent’s income under section 64(1A) and the parent will be taxed just like if it were their own income. However, if the interest earned is less than Rs. 1,500, then a tax exemption equal to the amount of interest earned is granted. If both the mother and father are earning, the income of the minor is added to the income of that parent whose income is greater.

Due to the over 60-day lockdown demanded by the Covid-19 pandemic, several businesses, especially the MSMEs, have suffered humongous monetary loss. In a developing country like ours, a res integra situation of the like, will only hamper and dampen the growing economy, leading to various disturbances amongst the people. Therefore, with a view to revive and strengthen the MSMEs, which are often regarded as huge contributors to the Indian economy, the President of India, promulgated The Insolvency And Bankruptcy Code (Amendment) Ordinance, 2020, on the 5th day of June, 2020. Prior to the instant Ordinance, the Union Finance Minister, Ms. Nirmala Sitharaman, announced an economic package of 20,000 crores for the MSMEs and also a breather by the way of suspending Sections 7, 9 and 10 of The Insolvency and Bankruptcy Code, 2016. In furtherance of the same, the instant ordinance was promulgated by the President of India.
The instant Ordinance adds to The Insolvency and Bankruptcy Code, 2016, a new section, viz. Section 10A. This section states that no application can be made or preferred to initiate corporate insolvency resolution process against a corporate debtor, for a default which arises on or post the 25th day of March, 2020, for a term of six months or more, but not exceeding one year. It also states that corporate insolvency resolution process can never be initiated against a corporate debtor for his default which occurred during the said period. It insulates the corporate debtors, completely. This Ordinance does not apply to defaults or corporate debtors which arose prior to the 25th day of March, 2020. Therefore, financial and operational creditors can file applications thereby initiating corporate insolvency resolution process against the corporate debtor, only if the default arose before the said date.
Also, vide the instant Ordinance, a sub-section has been added, viz sub-section (3) of Section 66 of The Insolvency and Bankruptcy Code, 2016. This provision states that a resolution professional cannot file an application with respect to the default that arose after the 25th day of March, 2020.

Authored by:
Vishnu P.V
Advocate

In an economy wherein, transactions between suppliers and buyers are several and numerous, an instance might occur wherein the buyer of the goods or services, does not pay the agreed upon consideration or value of the goods or services availed by him, to the supplier. To insulate such a supplier, and also reprimand the buyer defaulting with his payments, an authority, namely, the “Micro and Small Enterprises Facilitation Council” was brought in by the Micro, Small and Medium Enterprises Development Act, 2006.

According to Section 15 of this Act, when a supplier, who is registered as a micro or a small enterprise, supplies any goods or renders any services to a buyer, the buyer must make the payment for the said goods or services, as the case maybe, on or before the date which is agreed to in writing by the parties, or if there is no such agreement, then before the appointed day, which is within 15 days from the day of acceptance or the day of deemed acceptance of the goods or services, as the case may be. Such period agreed to by the parties in writing, must not exceed 45 days from the day of acceptance or the day of deemed acceptance.

Section 16 of the Act states that, if the buyer fails to make payment of the amount to the supplier, as mandated under Section 15 of the Act, the buyer shall, irrespective of what is contained in any agreement between the supplier and the buyer, or in any law, be liable to pay compound interest with monthly rests to the supplier on that amount from the appointed day, or as the case may be, from the date immediately following the date agreed to, at three times the bank rate notified by the Reserve Bank of India.

Section 18 of the Act states that, any party to a dispute can make a reference to the Micro and Small Enterprises Facilitation Council. The mode of settlement to be employed by the Facilitation Council shall be conciliation, an amicable method of Alternative Dispute Resolution. The Facilitation Council can either conclude the conciliation by itself or refer it to a suitable institution for the same. If the process of conciliation goes in vain, the Facilitation Council, shall then employ arbitration as the method of settlement of the dispute in hand. The arbitration proceedings can either be concluded by the Facilitation Council itself or referred to a suitable institution for the same. Such references of disputes by parties to the Facilitation Council, shall be adjudicated and decided within 90 days from the date of making such references.

Section 19 of the Act states that, if an order or decree, delivered in a dispute, by the Facilitation Council, either by way of conciliation or arbitration, is challenged by the aggrieved party (not being the supplier) by making an application to the Court, he must first deposit with it 75% of the amount decided by the Facilitation Council, in its order or decree. The Court shall order a percentage of such amount to be paid to the decree-holder, which shall depend on the facts and circumstances of the case.

Sub-rule (iv) of Rule 3 of the Karnataka State Micro and Small Enterprises Facilitation Council Rules, 2018, states that, the State Government may specify any fee and for processing charges paid while filing application.

Sub-rule (i) of Rule 7 of the Rules, provides that, an aggrieved Micro or Small Enterprise unit can move a reference to the Facilitation Council which has jurisdiction of the area, in the format provided as Schedule-1 of these Rules. The said reference must contain the Udyog Aadhar Memorandum (UAM) number, mobile number and e-mail address of the aggrieved Micro or Small Enterprise unit as provided in Schedule-1.

The Micro and Small Enterprises Facilitation Council is of much relief to the micro and small enterprises in our country, as it helps them to avoid the long delays and huge Court fees, in case they had to approach an ordinary Court of law, for the recovery of money.

Authored by:
Adv VISHNU P.V
Associate,
MENTO ASSOCIATES

Non-Performing Asset or NPA, is a term which is used to refer to a situation when the banks or financial institutions are unable to retrieve the principal or interest from the advances or loans made by them to the borrowers. The term was used extensively in the case of Dr. Vijay Mallya, as he could neither pay back the principal amount nor the interest accrued on the same, to the banks and financial institutions, which he had borrowed from. Let us now study the concept of a Non-Performing Asset (NPA) in brief.

Non-Performing Asset (NPA) is a kind of a loan wherein the principal amount or the interest amounts are paid late or have not been paid by the borrower to the lender. In other words, if the customers do not repay the principal amount and the interest amount, for a certain period of time, then such loans are considered as Non-Performing Assets (NPAs). Non-Performing Assets (NPAs) are Non-Performing Loans. For an asset to be classified as a Non-Performing Asset (NPA), it takes a period of 90 days for the banks to do so, in India. Until 2004, the stipulated period for classifying a regular or standard account as a Non-Performing Asset, was 180 days. The said period was modified from 180 days to 90 days, keeping in mind the international norms and rules on the concept of classifying a regular account as a Non-Performing Asset (NPA).

Non-Performing Assets (NPAs) are classified into four types, depending on the possibility and probability of their recovery, namely,
1) Standard Assets: These are a kind of performing assets which create continuous income and repayments as and when they become due. They carry a normal risk and are not Non-Performing Assets (NPAs) in the real sense. No special provisions are needed for standard assets.
2) Sub-Standard Assets: These are loans which are in the nature of Non-Performing Assets (NPAs) for a period of 12 months.
3) Doubtful Assets: Assets which are non-performing for a period of over 12 months, fall under this category.
4) Loss Assets: Assets which are incapable of being recovered by the lending institutions, fall under this category.

When the defaulter or borrower pays to the bank the sums due from his end, whether it is the interest accrued on the advance or the principal amount itself, the bank will modify or convert such a Non-Performing Asset (NPA) back to a regular or standard account. Therefore, for a Non-Performing Asset (NPA) to become good or a regular account, all the dues must be paid by the borrower to the bank. This concept of regularisation is an incentive, since it encourages the borrowers to clear their dues with the banks, and restore their advances as regular accounts.

Authored by:

Advocate VISHNU PV

Associate