Month: August 2020

WEBIMPACT’S WEBINAR ON “THE FUTURE OF ARBITRATION IN INDIA” : REGISTER NOW!!!

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ABOUT

WEBIMPACT is an initiave by JLSR, JUS COMMUNE AND LAW COLUMN. It was started to educate law students through webinars.

WEBINAR DETAILS :

TOPIC : The Future of Arbitration in India

SPEAKER : Adv. Pallavi Pratap, Managing Partner of Pratap & Co.

DATE : 29TH August, 2020

TIMINGS : 5:00 PM

REGISTRATION LINK :

https://docs.google.com/forms/d/14rHQwtFbIPXlzQLarjQBEe6cmyXgH3BDZt7MU6Vi_I0/ edit

NOTE : CERTIFICATE OF PARTICIPATION FOR ALL THOSE WHO ATTEND THE SESSION AND FILL THE FEEDBACK FORM.

FOR ANY QUERY

Write to us at– communejus@gmail.com jflsrjournal@gmail.com

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SASFL’s Speaker Session on ‘Reopening of India’s Educational Institutions [September 14th]: Register by 13th September]

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About the Organisers

Students for Liberty (SFL) is an International libertarian non-profit organisation whose mission is to “educate, develop, and empower the next generation leaders of liberty.” Formed in 2008, SFL has since grown into a full organisation with various programs and a network of affiliated student groups in North America, Europe, Latin America, Africa, South Asia and the Asia-Pacific. Students for Liberty is the world’s largest law and academically market-oriented movement of students who have been deliberating and focusing on essential policy issues that our societies face

About the Session

The SASFL’s Speaker Session on ‘Reopening of India’s Educational Institutions’ is organised on Sep 14th, 2020, from 7 PM to 8 PM IST via Zoom.

Speakers
Dr. Amir Ullah Khan, Adjunct Professor MCRHRD Institute

How to Register?

Interested applicants can register for the session through https://us02web.zoom.us/webinar/register/WN_DgcFRHQ7QLRe_TQamMvng

Registration is free and compulsory.
If requested, a mail recognising presence in the event will be sent to attendees.
Registration Deadline
September 14, 2020

Contact
Ritik Kumar: rikumar@studentsforliberty.org (+918136841952)

Supreme Court finds no infirmity in the Judgment given by the High Court dismissing the application of the appellant.

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(The case discusses whether the appellant had the Locus to challenge the decree passed by the Trial Court.)

Petitioner’s contention:

 The plaintiff contends that the registered agreement dated 05.08.1992 should be barred due to the limitation in time, as it went beyond the time the contract should be declared as null and void, which makes it unenforceable and inoperative. The petitioner also contends that the registered agreement in the office of Sub Registrar Yelahanka Bangalore dated 31.10.1989 and an unregistered agreement dated 23.05.1988 both are barred by time. The petitioner claims that the court should grant a permanent injunction restraining the defendants and any agent acting on behalf of them not to interfere with the possession of the said property. He also claimed that the defendants would bear the entire cost of the proceedings. Learned counsel of the Petitioner had stated that there is no locus to challenge the decree passed by the Trial Court and stated that their application has been rightly dismissed.

Facts:

  • The suit property is an ancestral property and the plaintiffs of the case are the co-owners of the land.
  • Therefore the defendant had no right to execute the agreement of sale ignoring the interest of the plaintiff.
  • Hence the transaction that took place was not valid and became unenforceable.
  • The Trial decreed the suit of the Plaintiff and gave decisions favoring the contentions of the petition.
  • The Defendants claimed challenging the order given by trial court by filing a Writ petition in the High Court.
  • The Honorable High Court stated that the appellant/defendant do have an independent right which they have derived from the sale deed executed by the owner of the land.
  • High rejected the appellants leave to appeal.
  • As it was executed by the owners of the land, the nature of declaratory relief granted by the Trial Court won’t affect the interest of the Appellant.
  • The main question was whether the appellants had the locus to question the judgment passed by the Trial Court and whether the decision by the High Court was justified?

Respondent’s Contention:

The respondents were aggrieved by the decision of the trial court, so further claimed in High Court by filing a Writ Petition challenging the order passed by Trial Court.  The Appellant’s contention is that the judgment given by the Trial Court has affected their interests with the property as they are in possession with the property which is under the dispute.

Judgment:

Honorable Supreme Court after looking upon some of the important precedents held that the “appellant has failed to show that they were affected by the decree and their legal rights stand jeopardized which puts them within the ambit of the expression “person aggrieved” entitling them to maintain appeal against the decree.” Therefore the Court found no wrong in the judgment given by the High Court and thus dismissed the Appeal.

                                                                                  Reported by Karthi Shankar

Download the full text hereDownload

C.C.I. Chambers Co-op. Housing Society Ltd. v. Development Credit Bank Ltd.

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Case Number

184

Citation

AIR 2004 SC 184

Bench

R.C. Lahoti, Ashok Bhanu

Decided on

29 August, 2003

Relevant Act/Section

Section 23 of the Consumer Protection Act, 1986.

Brief Facts of the Case

In this particular case, the appellant had a savings bank account with the respondent bank. After few days, the appellant found out a certain problem at his account and on the basis of which he filed a complaint to the National Redressal Forum alleging deficiency of the services provided by the respondent and also submitted that the bank had mistakenly debited an amount of RS. 75,70,352 in the account of the appellant by honouring certain cheques as forged cheques i.e. fully fake and not appropriate and in some of the cheques that were submitted, the amount was wrongly tampered by someone. The photocopies of the fake cheques were submitted along with the complaint made. It came into notice that as many as around 72 cheques were issued on the same date when one of the persons who actually made the tampering at the cheque was found dead. The other one denied the signatures given and all such disputed signatures did not even tally the standard signatures of the complainant. The line of suspicion arose when the entire suspect went towards one of the employees of the bank who was suspected to be the main culprit of this entire scenario that happened. A complaint was filed in the police against that employee immediately and the case went to the Supreme Court of India at that instant. The court was entirely focusing on section 23 of the Consumer Protection Act, 1986 which talked about the Appeal with reference to subclauses of section 21 of the act. The court took help from the National Forum in order to have a detailed analysis of the case and therefore come into a conclusion so as to get the entire facts and to check whether the Respondents were actually guilty in this case or not. The court had given a detailed and equitable justice for the parties after looking into several other cases.

Issues

  1. Whether crime was committed by the respondents by tampering the cheques?
  2. Whether it was a case under section 23 of the Consumer Protection Act, 1986?
  3. Whether it was the case of NCDRC?

Judgement

The Judges of the particular case made a quite detailed judgement by analysing the matter quite properly with each and every issue being studied deeply. The complaint was filed under section 23 of the Consumer Protection Act. The main issue which arose over here was about determining the flora and fauna of the commission. The court had held that it cannot be denied that fora at the National Level, the State level and at the District level have been constituted under the Act with the avowed object of providing a summary and speedy remedy in conformity with the principles of natural justice, taking care of such grievances as are amenable to the jurisdiction of the fora established under the Act. These fora have been established and conferred with jurisdiction in addition to the conventional courts. The principal object sought to be achieved by establishing such fora is to relieve the conventional courts of their burden which is ever-increasing with the mounting arrears and whereat the disposal is delayed because of the complicated and detailed procedure which at times is accompanied by technicalities. The court took cognizance of landmark cases like Dr. J.J Merchant & Ors. v. Srinath Chaturvedi, [2002] 6 SCC 635, Indian Medical Association v. V.P. Shantha and Ors., [1995] 6 SCC 651 and Amar Jwala Paper Mills (India) and Am. v. State Bank of India, [1998] 8 SCC 387. In each of the cases, the judges had a really different opinion on the basis of the exact flora and fauna of the commissions and the hierarchy in which it actually works. Like for supposing in the case of Amar Jwala Paper Mills (India) and Anr. ‘s case the Court had set aside the order of NCDRC relegating a complainant to a Civil Court in spite of the complexity of the matter because the hearing had almost concluded before the Commission. Therefore, after looking into the arguments advanced, issues raised and also a detailed study of the entire case, the court had held that the decision that was given by the NCDRC was a premature opinion. The entire commission seeks to have issued a particular notice to the respondents and which was taken as pleadings. Only when pleadings for both of the parties were available, the commission at that instant should have formed an opinion on the basis of nature and also the scope of the enquiry which means whether all the questions that arose in the light of the proceedings of both the parties were actually detailed and even a complicated nature of the investigation was made into the facts which were not at all capable of being taken in a speedy manner. The commission then could have formed justifiably an opinion which could have been proved a lot useful for removing the complaint to the civil court. It was just a complicated nature of the entire facts and also the law for the decision which could not be decisive at all. The appeal was allowed and the decision of the National Commission was set aside. The case was again sent back to the commission for fresh hearing and fresh study of nature and then taking a final decision.  There was no order made with respect to the costs of the case. Thus, the court made and equitable decision which was quite relevant too because the commission did not perform their job nicely. They should have studied the entire case deeply and then they should have decided whether this case actually had a proper judgement or not. 

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CALL FOR BLOGS: LEX INSIGHT

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About Lex Insight

Started in 2018, Lex Insight is a double peer-reviewed law journal and our blog has been consistently rated as one amongst the Top 50 blogs in India. The 1st and 2nd issue of our flagship journal can be accessed by clicking here. The blog publishes original articles written by Law students, Lawyers, and other academicians.

Lex Insight operates with a Free Access policy. Lex Insight do not charge money for any publications and all articles on the site are free to be accessed.

Call for Blogs

Lex Insight is currently accepting submissions for the blog on a rolling basis. Topic suggestions: Criminal Law, Civil Law, Public Policy, Corporate Law, ADR. Contributions must be based on recent topics and must-have contemporary relevance. General write-ups are not encouraged.

Submission Guidelines

Authors willing to contribute shall conform to the following guidelines:

  1. The article should address current issues in the field of Criminal, Civil, Corporate or Public Policy Laws in India.
  2. Articles should be in between 800-2000 words, Font: Times New Roman, Size: 12, Line Spacing: 1.5, Text: Justified
  3. Articles should have ‘END NOTES’ only.
  4. Receipt of submissions shall be sent within 02 days and review shall be conducted expediently within a week from the date of submission.
  5. All submissions shall undergo a double review whereby inputs may be sought from authors at any stage and final acceptance shall be communicated at the last stage.
  6. Submissions must be made in .doc/.docx format only.
  7. Any submission made for the blog shall undergo a strict plagiarism check and, the author submitting shall ensure the same to be unpublished and original.

How to Submit?

Entries should be mailed to lexinsight2018[at]gmail.com with the subject “Submissions for Blog”.

For more information visit the website https://lexinsight.wordpress.com/submission-guidelines/

Call for Papers: NLIU’s Journal for Labour and Employment Law

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About JLEL

The NLIU-Journal for Labour and Employment Law [JLEL] is a peer-reviewed annual labour and employment law journal which aims to create meaningful debate and discourse to build a fair and equitable regime of workspace laws and to study the dynamic confluence of the academic and the human resource represented by such laws.

Theme

Journal for Labour and Employment Law [JLEL] welcomes original, genuine and unpublished contributions from students, academicians and practitioners for the Journal.

The Journal is accepting submissions under the broad theme of “Labour and Employment Laws” including inter alia industrial disputes, discrimination, gig economy, exploitation, minimum wage, restraint of trade, and whistleblowing. However, the submissions must be of contemporary relevance.

Categories of Submissions

The submission can be made under any of the following categories:

  • Articles (4000 to 8000 words): The article must be a comprehensive and in-depth analysis of the problem(s) or idea(s) dealt with by the author and should include references to a range of sources and contributions in the form of alternatives and suggestions.
  • Essays (2000 to 4000 words): The essay must be an analysis of the problem(s) or idea(s) dealt with by the author and should include references to a range of sources and contributions in the form of alternatives and suggestions.
  • Case Comment (2000 to 5000 words): The comment must be a critical analysis of a recent judgement, bringing out its relevance in light of development of laws, view expressed in the judgement and views of the author(s).
  • Book Review (1000 to 3000 words): The review must be a crisp account of a recently published book including the issues explored and the related arguments of the author.
  • Legislative Comment (2000 to 4000 words): The comment must analyse a recent legislative enactment. It must examine the objective of the legislation and the legal impact the same is expected to have. The word limit is inclusive of footnotes but exclusive of abstract.

Submission Guidelines

  • All original submissions must be accompanied by an abstract not exceeding 300 words, which should be included within the document of the manuscript itself.
  • The abstract must expressly include the novelty and usefulness of the idea that the author wishes to put forth and must categorically mention the specific contribution of the submission, beyond the existing available literature, the practical utility of their recommendation.
  • All submissions must be in MS Word format (.doc) or (.docx), with Times New Roman font (body: size 12, line spacing: 1.50; footnotes: size 10, line spacing: 1.00).
  • The Journal uses only footnotes (and not endnotes) as a method of citation. The footnotes must follow the Oxford Standard for Citation of Legal Authorities (OSCOLA, 4th Edition).
  • The submissions must be accompanied by a cover letter with details regarding the name of the author(s), email address, contact number and name and address of the institution, academic qualifications/affiliations of the author(s), title of the manuscript.
  • The author(s) must provide a declaration of originality with regards to their submission in the body of the email.
  • The manuscript itself must not contain any information as to the name(s) of the author(s), the institution, address or any other information that may reveal or indicate their identity.
  • Co-authorship is permitted for up to 2 authors. However, co-authorship is not allowed in case of Case Comment, Book Review and Legislative Comment.
  • Submissions are accepted for publication on the condition that they do not infringe the copyright or any other rights of any third parties.
  • Submissions made should be on an exclusive basis i.e., the submission should be unpublished and should not be under any concurrent consideration.

All submissions must be made to jlel.nliu[at]gmail.com before 23:59 hours, 30th September 2020.

Call For Paper PDF File

Contact Information

E-mail ID: jlel.nliu[at]gmail.com

Mobile Number: +91 94737 32626

For more information visit this website https://cll.nliu.ac.in/nliu-journal-for-labour-and-employment-law/

World Cyber Security Forum’s Online Acuity Youth Parliament 2020

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World Cyber Security Forum

World Cyber ​​Security Forum (WCSF) is an internationally renowned cyber consultancy and web community that improves cybersecurity awareness and acts as a source of techno-legal information for professionals, students and adolescents around the world. We are sharing Cybersecurity expert guidance and insight, in-depth analysis, and news.

Online Acuity Youth Parliament

Acuity Youth Parliament is a path to questioning, decision making and solving the problems that prevail in society. The creation of which is to embody the delegates with spirit of education, diplomacy as well as substantive excellence. Moving towards its First Youth Parliament, this event focuses to create global cooperation as well as national cooperation.

The questions will be formulated and answers will be made, making the Acuity Youth Parliament a torch in the dark. Our mission is to bring together and train the next generation of leaders in international and national affairs – and, indeed, to bring together and train students who are already exceptional leaders.

Acuity Youth Parliament have taken an initiative to provide internships to our registered delegates in many companies and organisations with the support of Alacrous.

Speakers

  • Hon’ble Chief Guest: Mr. Salman Khurshid, Senior Advocate, Supreme Court of India, Fr. Minister of External Affairs, India.
  • Mr. Okoyo Gabriel, Cyber Security Program Officer, iLabAfrica- Strathmore University, Kenya.
  • Mr. Raza Rumi, Policy Analyst, Journalist, Author, fellow at New America Foundation, Editor of Daily Times, Pakistan.
  • Mr. Shikhar Tandon, Founding Partner, R&T Legal Attorneys, Delhi, India.
  • Ms. Shaheen Sayyed, Human Rights Activist, Kuwait and many more.

There will be many more opportunities for the delegates, in order to avail all, please register fast.

Committees and Agendas

Lok Sabha

  • Modern Implication of Technology in India
  • Development in Environmental Sector

All India Political Parties Meet

  • Indo China Disputes
  • Examining growing pseudo-secularism and communal hatred in India with special emphasis on Hindutva ideology

UN General Assembly

  • COVID-19 and World Health Crises
  • Cyber Terrorism

Prizes

Worth Rs. 15,000 including Trophies

Important Dates

  1. Priority Round 1: 20th August 2020
  2. Priority Round 2: 3rd September 2020
  3. Last Date to Registration: 3rd September 2020
  4. Windup of Allotment of Portfolios: 3rd September 2020
  5. Dates of Competition: 5th – 6th September 2020

Registration Details

For Delegate Registration: Click Here

Participation Fees

INR 400 for Indian Delegates

USD 6 for SAARC Countries Delegates or USD 12 for International Delegates

Payment Procedure

Payment can be made through

Paytm/Google Pay: +91 9569894344

Paypal: Singhanmol670@gmail.com

Through A/c Transfer:

  • A/c number: 1087101018082
  • Bank & Branch: Canara Bank
  • IFSC Code: CNRB0001087
  • Beneficiary Name: Akash Garg

Contact Information

For any query, please email us at info@worldcybersecurities.com, call or WhatsApp us on +91 95698 94344, 93150 49547.

For more information visit here https://www.lawctopus.com/wp-content/uploads/2020/08/ACUITY-YOUTH-PARLIAMENT-BROCHURE-2.pdf

Socio-Economic Offences in India

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This Article is Written by Manav Sony from Amity University, Kolkata. The Article talks about the Socio-Economic Offences and also gives a critical analysis of the two important reports under this terminology.

INTRODUCTION 

Socio-Economic Offences are considered normally as synonyms with the white-collar crimes but a deep analysis of this term gives out a provision that even though there is an intersection created between the socio-economic offences and also the white-collar crimes, but the latter i.e. socio-economic offences have a really narrow scope as compared to the former under quite a lot of aspects. White-collar crimes are defined as all those crimes which are actually committed by the upper sections of the society with respect to their occupations. One such example which can be applied over here is a big MNC found guilty of committing tax evasions. A pensioner who submits any fake return may not be committing any offence under white-collar crimes but the interesting fact which comes over here is that it is a socio-economic offence. Socio crimes are defined as those which actually results in the downward effect to the nation’s economy as a whole and even which affects the health and morality standards of a committee at large. Therefore, we can safely assume without any hassle that socio-economic offences are those offences that affect the economy of the country and also the societies material and health. In our country, the 29th Law Commission Report had suggested taking the Santhanam Committee Report, 1964 into deep consideration. The committee also observed clearly that the IPC does not deal with any sort of satisfactory matters along with acts which may be described as any social offences with regards to the special scenarios under which they all are committed and also have become a dominating figure of the powerful sections under the Indian Strata’s. in most of the aspects which were identified into two features that could be witnessed i.e. Economic Benefits and also Unjust Enrichments. Socio-Economic Offences were clearly enumerated in the leading case of Mak Data Pvt. Ltd v. CIT. In this particular case, the petitioner had tried to hide his income so as to get evaded from the taxes. After a cause notice was given to him, he decided to surrender himself to a particular amount so as to avoid litigation. It was in the end declared by the Supreme Court that the surrender of the sum which was done was actually done when the detection was made. If the intention of the appellant would have been good, he could have filed a return including the sum which was surrendered by him later on after the assessment of the proceedings. 

 The Santhanam Committee Report, 1964

In the year 1962, Lal Bahadur Shastri had appointed Santhanam so as to preside the operations of the committee based on anti-corruption. The committee earned an immense reputation almost everywhere because of the fact that they did a thorough investigation along with the recommendations that were actually needed in the workings. The committee came to be known as the Santhanam’s Committee on Anti-Corruption. In his CrPc,1976 he mentioned about the conduct of persons who are in the power, authority or in any position of the trust in our country as a whole. In this definition, he widely included all the Ministers, Members of the Parliament and also State Legislatures. There has to be no illegal usage of the position for any personal or family advantages and also no actions should be motivated by giving considerations of any party, religion, caste, creed or community and no unofficial type of dealings will be taken place with the businessmen or any hospitality or gifts will be accepted. This particular committee was credited with the formation of the Central Vigilance Commission in the Year 1964 and earned statutory status in the year 2003. This particular committee had their first-ever meeting on 10th September,1962 and till they completed their report with over 87 proceedings. The committee members had also visited Bangalore, Calcutta and Bombay so as to analyse the problems deeply regarding the corruption with relation to the undertakings made in public, import or export of controls, income tax, customs and excise duty and all places the representatives from other organisations and committees used to meet and discuss the aspects widely. In their first Appendix, the committee had mentioned about the witnesses who portrayed their ideas about the corruption problems at their state respectively. The witnesses included certain Cabinet Ministers, Members of Parliament and also some Famous Journalists. Soon after the few days of the formation of the committee, the Aggression with the Chinese took place and a National Emergency was declared in the entire country by the Honourable President. The committee then examined about certain provisions which came upon the basis of the Defence of India Bill and they also made some important recommendations from the maintenance of the integrity of in the public services point of view. All these aspects and detailed material were given up by the committee under Annexure I. In Annexure 11, the government has mentioned several important amendments made with respect to Article 311 which talks about services Government. The committee has made several groups of reports during the setup of Central Vigilance Commission on aspects like modification of government servants code of conduct rules and also changes in certain rules that related to disciplinary proceedings and a final report on the questions of the public servants. The government has not able to analyse each and every issue really deeply that actually concerned the integrity of the government servants and the removal of the corruption from public life. Four members are from the Lok Sabha and two from the Rajya Sabha who actually attended the work of the parliament and its committees. The committee was pleased to record their deep appreciation of their strenuous and able work. 

The 47th Law Commission India Report, 1972

This particular Report came into force in order to deal with certain questions that deal with the deep interpretation of certain acts. These offences are classified as social and economic offences. This report is known as TRIAL AND PUNISHMENT REPORT ON SOCIAL ECONOMIC OFFENCES. The Government of India had made a quite deep analysis in the basis of certain provisions for the benefit of the entire public in general and also there are certain sections and acts which are really anti-social in nature like Essential Commodities Act, Food Adulteration and Drugs Act, Import & Exports Act, Foreign Exchange Regulation Act etc. these particular acts leads to a pool of evasion of taxes and one question that actually arises in mind is that how strict and penal action can be taken in order to stop the evasion of these taxes and thus the taxes are paid to the government for the benefit of the general public at the instant. This report was really formed because of the fact that there are trial and punishment of the offences that lead to the evasion of the tax. There have been critical analysis made with respect to certain provisions that are lined up in a pile. 

Conclusion:

It is submitted that purposes of punishment stand in historical order and were given in different social backgrounds. The retributive theory had its source in the notion of private vengeance in the primitive society. When society developed further, and priesthood came to dominate it, the expiatory theory seems to have come into being. The preventive & deterrent theories came when the social organisation had grown stronger and the state had become powerful. In this way, through the various stages of development, the purpose of punishment went on expanding. In modern times, the researches in various fields of knowledge, new inventions and discoveries etc. have made a complete change in our look towards the concept of the society, the individual and the state. Now the main purpose of punishment is to ensure social security & welfare. It is in this background that the reformative theory came into existence. At present, a significant number of Economic Offences are not being reported to the enforcement agencies. Such rampant nonreporting of Economic offences has kept people unaware of the seriousness of the challenges posed by Economic Offences. In fact, the Researcher feels that under-reporting of crime is applicable to the general crime as well. As there are no two opinions about ill the effects of Economic Offences in particular and crime in general, it is felt that drastic steps will have to be taken to ensure a free registration of offences. A fire registration of offences will keep the professionals working in various parts of the Criminal Justice System and the policymakers informed about the true magnitude of the offences. One such solution is to separate the function of registration of offences from agencies pursuing an investigation of offences. Such a step will require a lot of political courage, matured response from all parts of the Criminal Justice System and the Media because the number of offences getting registered will increase substantially. As the investigation of all the registered cases will not be feasible, the success of such a system will depend upon the use of fair and rational criteria for selection of cases for in-depth investigation. In the opinion, the Researcher, the democratic institutions in India, at present, are not matured and strong enough to take this bold step. This solution, however, should be a long-term goal of policymakers and should guide all the professionals handling the ‘crime problem’.

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Auditing Concept

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This article is written by Tulip Das, currently pursuing BBA L.L.B(H) from Amity University Kolkata.

INTRODUCTION

An audit is an “independent examination of financial information of any entity, whether profit-oriented or not, irrespective of its size or legal nature when such an examination is conducted with a view to express an opinion thereon”. It even attempts to ensure that the books of accounts are properly maintained by the concern as required by law.

Auditing is the process of examining the financial statement and information of the entity. In this process, we examine whether the company is making a profit or not. It is a systematic method in which we analyse the economic condition and actions. Let us learn in more detail about it.

The International Federation of Accountants has given the following definition of an audit, “audit is an independent inspection of the financial information of any organization, whether profit-oriented or not profit-oriented, irrespective of its legal form, status or size when such examination is conducted with a way to express an opinion thereof”.

The one important thing to remember is that an audit is a close inspection of the books of accounts, but it does not absolutely guarantee error-free books. The auditor only expresses his opinion on the accuracy of the books, he does not give his opinion on the financial status of the company or predict its future.

Auditing in India- Origin and Development in India

In India, the Companies Act 1913 made an audit of company accounts compulsory. With the increase in the size and the number of the companies and the volume of transactions, the objective of audit shifted and the audit was expected to ascertain whether the accounts were loyal and fair rather than detective of errors and frauds.

Henceforth, the emphasis was not only on mathematical accuracy but also on a fair representation of the financial efforts the Indian Companies Act 1913 also prescribed for the first time the eligibility of auditors.

The previous developments in auditing pertain to the use of computers in accounting and auditing.

In conclusion, it can be said that auditing has come a long way from hearing of accounts to seeking the help of computers to examine digital accounts.

Features of an Audit

  • Auditing is a systematic process. It is a logical and scientific procedure to examine the accounts of an organization for its accuracy. There are rules and procedures to follow.
  • The audit is always done by an independent authority or a group of persons with the necessary qualifications. They have to be independent so their views and opinions can be completely unbiased. There should not be presence of any third-party in the process of auditing.
  • An audit is the examination of all the books of accounts and financial information of the company. So, it is essentially a verification of the final accounts of the organization, i.e. the profit and loss statement and the balance sheet at the end of the financial year.
  • Auditing is not only a review of the books of accounts but also the internal systems and internal control of the organization.
  • To conduct the audit, one needs the help of various sources of information. This includes vouchers, documents, certificates, questionnaires, explanations, and all other required evidence. One may scrutinize any other documents he deems fit like Memorandum of Association, Articles of Associations, vouchers, minute books, shareholders register etc.
  • The auditor must fully satisfy himself with the accuracy and authenticity of the financial statements. Only then can he arrive at the conclusion that they are true and fair statements. His opinion about his own self should never be questioned.

Classification of Types of Audits in India

There are many audit types in India, and all of them can be categorized into the following:

  1. Statutory audit:
    1. Statutory audits are conducted by the Indian government to check the financial state of the company/business. Qualified auditors, working as external or independent parties, take up the task of statutory audit. The Statutory audit report is made as per the directions and forms provided by the government.
  2. Internal audit:
    1. A company/business conducts an internal audit to check up on the financial health of the company. Internal audit is conducted by the internal staff or an independent contractor.

Statutory Audits in India

There are two common types of statutory audits that a company has to conduct each financial (fiscal year). They are as follows:

  1. Tax audits:
    1. Required under the Section 44AM of India’s Tax Act 1967, the tax audit is mandatory for every business with an annual turnover of over INR 1 Crore and for every professional who is earning more than INR 50 lakhs per year.

Tax audit report has to be filed in the prescribed format by September 30 after the end of the previous financial year. If the required person or the business fails to file that report, they have to face a penalty equal to 0.5 percent of turnover.

  1. Company audits:
    1. The details and provisions of company audits are explained in detail in the Companies Act, 2013. They state that every company, irrespective of its annual turnover or business type, has to get its financial accounts audited by a qualified professional (auditor). 

As per the company laws, you can appoint an auditor for the duration of 6 annual general meetings. If you are a partnership/sole proprietorship, you can’t have the same auditor for more than two terms.

Internal Audits in India

There are several types of internal audits. So many in fact, that picking the most important among them is difficult. Therefore, let us give a brief introduction of some of the most common audit types of internal audit:

  1. Operational Audit: Operational audit is conducted to evaluate the efficiency of a particular aspect, function or department of a business. It doesn’t always require financial data, but the information about whether the department/function/aspect is performing its tasks properly or not.
  2. Compliance audit: There are many types of compliances that a company or any other type of business has to follow to stay in business. The compliance audit is therefore done to check whether the company/partnership/sole proprietorship is following the rules and regulations set up by the government.
  3. Financial audit: Financial audit is conducted to check the fairness, accuracy and reliability of the financial data. There are several companies that falsify their financial information to get a better PR. Financial auditing ensures that such fraudulent tactics don’t happen. Because accuracy and fairness are needed, independent contractors take up the task to conduct unbiased financial auditing.
  4. Investigative Auditing: Investigative audit takes place when there is some suspicious activity in the business entity’s finances. In other words, it’s done if there is something wrong in the financial details of the business. Another reason to do an investigative audit is to assess the risk factors of the business.
  5. Management Audit: Management audits are done by independent contractors who provide insight of the management structure of the business. Similar to operational audit, management audit is done to check the performance of business as a whole.

Legal Auditing

According to the National Association of Legal Fee Analysis (NALFA), legal auditing is a litigation management practice and a risk management mechanism, used by insurance and other consumers of legal services, to determine if hourly billing errors, abuses, and inefficiencies exist by carefully examining and identifying unreasonable attorney fees and expenses. Because the majority of the corporate law firms charge their clients on an hourly basis, base attorney promotion and compensation nearly entirely on the number of hours billed, rather than the results accomplished for clients, lawyers and law firms have much incentive to the bill as many hours as possible, and little incentive to work efficiently or to bill fewer hours. Legal audits have now become a necessity in all corporate law firms in order to keep business records.

Scope of an Audit

  1. Legal Requirements: The auditor can determine the extent of an audit of financial statements following the requirements of legislation, regulations or relevant professional bodies. The state can frame rules for determining the extent of audit work. In the same way, professional bodies can make rules to conduct audits.
  1. Entity Aspects: The audit should be organized to cover all aspects of the entity as far as they are relevant to the financial statements being audited. A business entity has many areas of working. A small entity may have few functions and a large entity has many functions. The auditor has to go through all the functions of the business.

The audit report must cover all the functions so that the reader may know all about the workings of a concern.

  1. Reliable Information: The auditor should gather reasonable assurance as to whether the information contained in the underlying accounting records and other source data is reliable and sufficient as the basis for the preparation of the financial statements.

The auditor can use various techniques to test the validity of data. All auditors while auditing, apply the compliance test and substance test. The auditor can show such information in the report as well.

  1. Proper Communication: The auditor should decide whether the relevant data is properly communicated in the financial statements or not. Accounting is an information system. Facts and figures must be so presented that the reader can easily get information about the business entity. The auditor can mention this fact in his report as well. 

The principles of accounting can be applied to decide the disclosure of financial information in the statements.

  1. Evaluation: The one who audits, assesses the authenticity and sufficiency of the data contained in the underlying accounting records and other source data by creating a study and evaluation of accounting systems and internal controls to determine the type, extent, and timing of other auditing methods.
  1. Test: The auditor evaluates the reliability and sufficiency of the information so obtained in the underlying records of accounting and other source data by carrying out other tests, inquiries and other verification procedures of accounting transactions and account balances as he considers appropriate in the particular circumstances.

There are compliance and substantive tests to examine the information. The vouching, verifying and valuation technique is also used.

  1. Comparison: The auditor determines whether the relevant information is properly communicated by comparing the financial statements with the underlying accounting records and other source data to see whether they properly summarized the transactions and events recorded therein.

The auditor compares the accounting records with financial statements to check whether the same has been processed for preparing the final accounts of a business concern or not.

  1. Judgments: The auditor decides whether the relevant information is well communicated by considering the judgment that management has made in preparing the financial statements, accordingly.

The auditor assesses the selection and consistent application of accounting policies, how the information has been classified and the sufficiency of disclosure.

Objectives of an Audit

There are two objects of an audit: (1) Primary objectives and (2) Subsidiary objectives

  1. Primary objectives: – 
  1. Examining the system of internal check.
  2. Checking arithmetical accuracy of books of accounts, verifying posting, casting, balancing, etc.
  3. Verifying the authenticity and validity of transactions.
  4. Checking the proper distinction between capital and revenue nature of transactions.
  5. Confirming the existence and value of assets and liabilities.
  6. Subsidiary objectives: – 

These objectives help in attaining primary objectives. They are as follows:

  1. Detection and prevention of errors: Errors are those mistakes that are committed due to carelessness or negligence or lack of knowledge or without having vested interest. Errors may be committed without or with any vested interest. So, they are to be checked carefully. Errors are of various types. Some of them are:
  • Errors of principle
  • Errors of omission.
  • Errors of commission.
  • Compensating errors.
  1. Under-or-over-valuation of stocks

Normally such frauds are committed by the top-level executives of the business. So, the explanation given to the auditor also remains false. So, an auditor should detect such frauds using skill, knowledge, and facts.

  1. Other objectives
  • To provide information to the income-tax authority.
  • To satisfy the provisions of the Companies Act.
  • To have a moral effect.

Advantages of Audit Program

  1. It acts as a permanent record or guide to the conduct of the audit work.
  2. The auditor can be assured that certain cardinal areas of audit works are covered.
  3. The progress of the work can be ascertained at any point in time and easy for auditing staff to carry on the work of another.
  4. It allows for budget and plan for staff allocation

Disadvantages of Audit Program

  1. It tends to stifle initiative and flexibility on the part of audit staff
  2. Audit staff may rush to complete a required schedule by placing “ticks” at programmes not yet covered hence errors and frauds may not be located.
  3. Client`s staff may exploit any loopholes in the conduct of the audit by committing fraud.
  4. Audit assistants may not be able to recommend amendments to the programs.

CONCLUSION

I would like to conclude by saying that audits are the most effective when performed by qualified professionals who work together and are focused on clear objectives. Auditing tasks is the determination of compliance of facts with pre-defined specifications. Auditing is the review of an organisation`s quality system in order to achieve quality throughout the process.

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Role of Courts in Winding-up of Company

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This article is written by Shambhavi Shree, a student of KIIT School of Law, Bhubaneswar (4th year). In this article, I am dealing with Winding Up of a Company under the Company’s Act, 2013 and Insolvency and Bankruptcy Code, 2016.

Companies Act, 2013

Section 2(94A) of Companies Act, 2013 means winding up under this act or liquidation under the Insolvency and Bankruptcy Code, 2016. It states that the company is dissolved by the liquidator to pay off its debts. In this the assets are released, liabilities are paid off and the surplus is distributed among its members. A company can be Private Limited Company, Public Limited Company as well as a One-Person Company.

Companies Act, 2013 can be divided into four parts:

PART I-Section 270-303

PART II-Section 304-323 [Replaced by Insolvency and Bankruptcy Code, 2016]

PART III-Section 324-358

PART IV-Section 359-365 

  • A company can now be wound up under this act only by the Tribunal.

Reasons for winding up of a company

  1. The company’s objective for its establishment has been fulfilled.
  2. The company is incapable to carry business.
  3. Death of promoters.
  4. Bankruptcy.
  5. The company is unable to pay its creditors.
  6. The company disposes of its business to another company or an individual.

What are the grounds and circumstances in which company may be wound up by the Tribunal?

  • Compulsory winding up by the Tribunal under Section 271 of the Companies Act, 2013 can be applicable on five grounds-
  1. Special resolution
  2. Sovereignty and integrity
  3. Fraudulent activity
  4. The annual and financial return
  5. Just and equitable

Who can file a petition for winding up?

  • Section 272 of the Company’s Act, 2013 states that petition to be filed to National Company Law Tribunal (NCLT) by:
  1. Company 
  2. Contributory 
  3. Both or either
  4. Registrar of companies (ROC)
  5. A person authorized by the Central Government 
  6. Central Government or State Government

What are the powers of Tribunal?

  • Section 273 of the Company’s Act, 2013 states the tribunal to make decisions stated below within 90 days.
  1. Dismiss with or without cost.
  2. NCLT can make an order for winding up with or without cost.
  3. If the NCLT thinks fit, can go for an interim order.
  4. If NCLT thinks fit then he has the power to appoint a provisional liquidator to check the financial statements, assets, and liabilities, etc.
  5. Any other order as NCLT thinks fit.
  • Section 274 talks about the directions for filing the statement of affairs. Firstly the company is entitled to prepare the list of assets and liabilities and then gives details about books of accounts within 30 days.
  • According to Section 277 company has to establish a winding-up committee which is-
  1. Secured creditor 
  2. Official liquidator
  3. Professionals
  4. A liquidator has to submit a preliminary report to NCLT within 60 days as stated under Section 281. The preliminary report includes assets, liabilities, paid-up share capital, receivables, guarantees, intellectual rights, contracts, details of the fraud, viability, list of contributory, etc.

Who is a liquidator?

  • A liquidator is a person appointed by the Tribunal who manages the entire assets of the company when it is in a winding-up position. 

Powers and duties of a liquidator 

Section 290 of the Company’s Act, 2013 and Section 35 of the Insolvency and Bankruptcy Code, 2016 states the powers and duties of a liquidator:

  1. to carry business.
  2. pay creditors.
  3. sell assets.
  4. raise loans.
  5. execute deeds.
  6. approach NCLT.
  7. to protect and preserve the assets.
  8. if required can take help from adjudicating authority.
  9. obtain professional assistance.
  10. to deal with the legal heir of deceased contributory.
  11. and to perform such other functions.
  • Section 292 states that if the liquidator is not calling a meeting then 10% of the creditors and 10% of the contributor consults the liquidator to call for a mandatory meeting. 
  • Section 292(4) states that any aggrieved person may apply to the tribunal against the liquidator. 
  • If there is a need to end the corporation or to dissolve the company then the liquidator is entitled to give application to NCLT as per Section 302 of the Company’s Act, 2013.
  • Section 329 refers to the situation when the transfer is not in good faith then the liquidator informs the tribunal and the tribunal takes all such assets into their custody.
  • If an officer of a company at the time of winding-up sells the assets then he shall be liable with a minimum imprisonment of 3 years which may extend to 5 years and with fine ₹1 lakh-₹3 lakhs which may further extend to ₹3 lakhs-₹5 lakhs.
  • Section 356 of this act states that the tribunal has the power to declare dissolution of a company void within 2 years of dissolution. In case the Registrar of Company thinks fit then they can regenerate the company.
  • Any creditor who is not satisfied with the liquidator can apply to the Central Government under Section 364.
  • Section 365 states that the dissolution of a company has to be consented by the Central Government and the tribunal.

Insolvency and Bankruptcy Code, 2016 

It received the assent of the President of India on 28th May 2016 was established in October 2016 and its headquarter is in New Delhi.

Insolvency and Bankruptcy Code, 2016 is divided into five parts-

PART I-Preliminary (Section 1-3)

PART II-Insolvency of corporate forums (Section 4-77)

             i) Resolution insolvency process

             ii) Liquidation insolvency process

             iii) Fast track insolvency process

             iv) Voluntary insolvency process

PART III-Insolvency and individual partnership (Section 78-187)

PART IV-Insolvency entities (Section 188-223)

PART V-Miscellaneous provisions (Section 224-255)

  • A company can be wound up under this code in two ways: 
  1. By court 
  2. Voluntary winding up

Advantages of Insolvency and Bankruptcy Code, 2016

  1. Sick Industrial Companies Act (SICA) is removed and solvency was taken by Insolvency and Bankruptcy Code.
  2. There are two phases of the insolvency:

a) Resolution process (Section 6-32)

              i) Interim Resolution Professional (IRP)

              ii) Resolution Professional (RP)

b) Liquidation process (Section 33-54)

3. The control is with the Committee of Creditors (COC). If COC gives 66% voting rights then only is passed.

4. It pronounces insolvency of all different persons that is individuals, firms, corporate, etc.

5. There are two types of creditors:

a) Financial Creditor (FC)

b) Operational Creditor (OC)

6. It establishes a central database which is Information Utility (IU) for complete transparency during insolvency.

7. Courts

Composition 

  1. 1 Chairperson
  2. 3 members from Central Government 
  3. 1 person nominated by Reserve Bank of India (RBI)
  4. 3 members nominated by Central Government 

Eligibility (Regulation 5)

  1. He/she passed the Limited Insolvency Exam (LIE) in the last 12 months.
  2. He/she has completed a pre-registration educational course from an Insolvency Professional Agency (IPA).
  3. He/she has completed any of the following:

a) 10 years experience as a Chartered Accountant (CA), Company’s Secretary (CS), and Certified Management Accountant (CMA) or

b) 15 years experience in management after receiving a bachelor degree or

c) Completed National Insolvency Programme (NIP) or

d) Completed Graduate Insolvency Programme (GIP).

  • The minimum amount of default under section 4 of Insolvency and Bankruptcy Code, 2016 is ₹1 lakh and can be extended by the Central Government up to ₹1 crore.
  • Section 7, 9, and 10 of the code states that the financial creditor, operational creditor, and the company itself can file an application known as initiation date to NCLT. The tribunal within 14 days has to appoint Interim Resolution Professional (IRP) and the date in which it is appointed is known as the commencement date.

Powers of Interim Resolution Professional (IRP)

Section 17 of the Insolvency and Bankruptcy Code, 2016 states the powers of IRP:

  1. Manage the corporate debtor business.
  2. Exercise powers of the board of directors or management of corporate debtors.
  3. Reporting of business.
  4. Instructions to the Financial Institution (FI) like banks.

Duties of Interim Resolution Professional (IRP)

  1. To collect information about a corporate debtor.
  2. To constitute Committees of Creditors (COC).
  3. To monitor assets of the corporate debtor and manage its operations.
  4. To perform duties specified by Insolvency and Bankruptcy Board of India (IBBI).
  5. To control assets of corporate debtors.

Who Applies before NCLT for Insolvency?

  • Section 7 states that the financial creditor along with the other financial creditors gives application to adjudicating authority along with the necessary documents. Now adjudicating authority will identify if there is any default and whether there is pending of disciplinary proceedings within 14 days of receipt. If there is any default then adjudicating authority will reject by giving notice to the financial creditor within 7 days of receipt of the notice. But in case there is no default then within 7 days of application adjudicating authority will intimate it to the applicant and the corporate debtor (defaulting person).

CASE STUDY

  • British Water Gas Syndicate V. Notts Derby Water Gas Co. Ltd. (1889)[1]

If members of the company want to wound up then they can do so by passing a special resolution. 

  • West Hills Realty Private Ltd. and Ors V. Neelkamal Realtors Tower Private Ltd. on 23rd December 2016[2]

The Hon’ble High Court stated that the petitions which are at the pre-admission stage and have not been served on the respondent will be transferred to the Tribunal.

  • Allan Ellis (Transport and packing) Services, Re (1989)[3]

If a voluntary liquidator of three companies failed to fulfill the requirements or court orders were disobeyed under section 551 of the Company’s Act, 2013 then they shall be liable with 3 months of imprisonment. 

  • Bidyut Baran Bose V. Official Liquidator 535(1980) 151 Cal[4]

In this, the property of the company was sold and the possession was delivered within 1 year of the commencement of winding up of the company. The transaction and the deed were not done in good faith therefore it was held that the transaction is void ab initio under Section 531 A and 536(2) of the Company’s Act, 2013.

  • Pabna Dhanbhandar Co. Ltd., Re (488 1936)6 CC 425 (Cal)[5]

In this case, it was held that the maintenance of a bank account is an integral part of carrying on liquidation.

  • Madras Provincial Co-operative Bank V. Official Liquidator, South Indian Match Factory (1944)14 CC 228[6]

The bank in which the liquidator deposits the cheque then that bank shall have the notice of liquidators duty. If there is any negligence on part of the liquidator then the bank is liable to pay the loss.

REFERENCE

  • https://indiankanoon.org/doc/51057115/
  • http://mca.gov.in/SearchableActs/Section336.htm
  • https://www.lexology.com/library/detail.aspx?g=88950cdd-4eaf-4a32-b09c-332c67255739
  • https://www.supremecourt.gov.sg/rules/court-processes/civil-proceedings/other-civil-proceedings-and-processes/company-winding-up-proceedings
  • http://www.legalservicesindia.com/article/1319/Winding-Up-of-a-Company.html#:~:text=It%20is%20the%20mode%20of,process%20of%20voluntary%20winding%20up.
  • https://lawtimesjournal.in/winding-up-of-company-under-company-law/

[1] British Water Gas Syndicate V. Notts Derby Water Gas Co. Ltd (1889)

[2] West Hills Realty Private Ltd. And Ors V. Neelkamal Realtors Tower Private Ltd. on 23rd December 2016

[3] Allan Ellis (Transport and packing) Services, Re (1989)

[4] Bidyut Baran Bose V. Official Liquidator 535(1980) 151 Cal

[5] Pabna Dhanbhandar Co. Ltd., Re (488 1936)6 CC 425 (Cal)

[6] Madras Provincial Co-operative Bank V. Official Liquidator, South Indian Match Factory (1944)14 CC 228

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