This Article is written by Aditya Das pursuing B.Com LLB (Hons.) 2^nd Year from NEF Law College, Guwahati, Assam. In this article, he has tried to explain the Classification of Company Securities and the allotment and transfer of securities.

INTRODUCTION

In laymen’s language Securities refers to an investment made by an individual that is to be freely traded in the market (share market) and provides a right or claim on an asset of the issuing company and all future cash flows generated by that asset.

In Legal language as per Securities Contracts Regulation Act, 1956, “securities include shares, scripts, stocks, bonds, debentures, debenture, stocks or other marketable securities of a like nature in or of any incorporated company or other body corporate.”^[1]

Company Securities

Company or corporate securities are the documentary media for mobilizing funds by joint-stock companies. The main motive of the company to issue such securities arises in the following two situations:

Establishment of the business –at the initial stage.
Growth of business – expansion (sudden flow of funds).

These are of two classes:

(a) Ownership securities, and

(b) Creditorship securities.

Share Capital:

Company Securities (Shares) – Share capital is not a necessary condition of incorporation, also a greater number of Companies are registered with it than without it. In case share capital is thought necessary[2], the memorandum of the company under the Companies Act 2013 must state the amount of capital with which the company is desired to be registered and the number of shares into which it is to be divided.[3] The authorised share capital for the nominal capital means such capital is authorised by the memorandum of a company. Section 2(8) The meaning of share capital was explained by the Kerala High Court in SNDP Yogam, Quilon, re:^[4]

Under this case an application was presented under section 397 of the Companies Act 1956 against “yogam” the raised question was whether the company was with or without share capital. Despite the memorandum of the association the liability of the members was limited and each member what’s required to take at least one share, but there was no authorised capital mentioned.^[5]

Classification

Capital must be divided into shares of a fixed amount and all the shares may be of only one class for may be divided into two different classes of securities. For this purpose securities means securities defined in Section 2 (h), Securities Contracts (Regulation)Act,1956 Section 2(81) and includes “hybrids”.

The act permits only two kinds of shares that are to be issued :

1.Equity share capital,

2.Preference shares

The Companies Act 2000 introduced some other categories of share:

I. Derivative includes—

1. security derived from a debt instrument, share, loan, whether secured or unsecured, risk instrument or contract for differences or any other form of security;

2. a contract which derives its value from the prices, or index of prices, of underlying securities;

II. Hybrid – it means any security which has the characteristics of more than one type of security including their derivatives.

1. Equity Share Capital:

As per the Companies Act, 2013 all share capital which is not preference share capital is called Equity share capital. Equity shareholders are those shareholders who are paid after the payment of preference shareholders. Even on the winding up of the company equity shareholders or to be said the ordinary shareholders are paid at last after the settlement of the preference shareholders is completed. Equity shares were proposed to be issued against preference share on the ground that no dividend was paid. There was no material to show that equity shares represented the fair value of dividend claimed. The court cancelled the proposal.^[6] ^[7]

2. Preference Share Capital ( Section 43) :

Preference share capital which fulfils the following conditions-

During the lifetime of the company, it is assumed of payment of dividend at a fixed rate for a fixed amount before anything is paid to equity shareholders. The preferential dividend may consist of a fixed amount for example rupees 70000 in one year payable to the preference shareholder to be calculated at a fixed rate for example 7% of the nominal value per share.
In the event of winding up of the company, it carries a preferential right to be repaired the amount of capital paid up before anything is paid to equity shareholders.

Types

Cumulative and non-cumulative

Cumulative preference shareholders have the rights to receive a dividend that was have been missed in the past that goes on accumulating unless it is paid. If there are no profits in one year and the arrears of the dividend are to be carried forward and paid out of the profits of subsequent years the preference shares are said to be cumulative. Whereas in case of non-cumulative preference shares the shareholders get nothing if no profit is available in any near moreover one cannot claim unpaid dividend in any subsequent year. Foster v Coles, Foster and Sons Ltd.^[8]

Participating and non-participating:

In case the company makes a surplus profit in a given year the participating preference shareholders have the right to participate in the surplus profit after the dividend has been paid to equity shareholders vice versa in case of non-participating.Will v United Lanket Plantations Co Ltd.^[9]

Redeemable and non- redeemable:

Under the Companies Act, 2013 a company has the power under Section 55 to issue share known as redeemable preference shares in the articles of the company may choose to pay the holders of such shares the pain back of these is referred to as redemption but there are also restrictions in regard to the fund out of the shares that are to be redeemed.

Redeemed shares must be fully paid.
The redemption must be made from the profit.
A sum equal to the amount paid on redemption shall be transferred to a reserve fund to be known as capital redemption reserve account.

Whereas, according to Section 55 of the Companies Act 2013 no company can issue any irredeemable preference share.

Allotment of securities

The allotment of the securities is made on the application forms which are to be supplied by the company. The application once accepted, it is an allotment.[10]Termed as the first allotment is generally not more no less than acceptance by the company of the offer to take shares.[11]Broadly speaking it is an appropriation by the directors of shares to a particular person.[12]it is an appropriation out of the previously unappropriated capital of the company.[13]Consequently where forfeited shares are issued it is not the same thing as an allotment. A valid allotment has to comply with the requirements of the act and principles of the law of contract relating to the acceptance of offers.^[14]

General principles as to allotment

Firstly, the allotment is to be made by a proper resolution of the board of directors and allotment is a duty primarily following up on the directors and this duty cannot be delegated to others if otherwise mentioned in the articles of association.

Secondly, the allotment is to be made within a reasonable time period, if not done application labs there must be an interval to about six months between application and allotment.

Thirdly, the allotment of the shares must be communicated properly as well as address and stamped letter of the allotment can be defined as a communication even somehow the letter is delayed or lost in the course of post.

Lastly, the allotment must be absolute and unconditional and in accordance with the terms in the conditions of the application if mentioned.

Transfer of shares

When the joint-stock companies were incorporated the objective was the shares are to be easily transferable. Section 44 of the Companies Act 2013 states that the shares are debentures or other interest of a member in a company shall be movable property capable of being transferred in the manner provided by the articles of the company.[15]Regulations of the company may impose restrictions upon the right of transfer but in the absence of restrictions in the articles, the shareholder has by virtue of the statute the right to transfer his shares without the consent of anybody to any transferee even though he is a man of straw provided it is a bonafide transaction in the sense that it is an out and out disposal of the property without retaining any interest in his shares.^[16]

Conclusion

Through this article bringing the light upon the topic that is the classification of company securities. The entire article deals with the types of the corporate securities their meaning the way of allotment of the securities general way of allotment of shares and transfer of shares. Statutes followed in this article as follows: The Companies Act 1956; The Companies Act 2000; The Companies Act 2013; The securities contracts regulation Act 1956.

References:

^[1] Securities Contracts Regulation Act, 1956.

^[2] Avtar Singh, Company Law, Pg. no. 223, 17^th Edition.

^[3] S.4(1)(e).S.44 says that the shares or debentures or other interest of a member in the company shall be movable property transferable in the manner provided in the companies articles.

^[4] (1970)40Comp Cas 60:ILR 1969 Ker 516:(1970)1Comp LJ 85.

^[5] Avtar Singh, Company Law, Pg. No.223,17^th edition.

^[6] Tin Plate Dealers Assn (P) Ltd v Satish Chandra Sanwalka,(2016)10SCC 1: (2016)199Comp Cas205.

^[7] Avtar Singh, Company Law Pg. no. 225, 17^th edition.

^[8] (1906)22TLR 555.

^[9] (1912) Ch571:107 LT 360 (CA):1914 AC 11 (HL).

^[10] Sri Gopal Jalan and Co v Calcutta Stock Exchange Assn Ltd , AIR 1964 SC 250 ,251:(1963)33 Comp Cas 862.

^[11] Chitty J in Florence Land and Public works Ltd,re(1885)

^[12] Stirling J in Spitzel v Chinese Corpn Ltd,1899

^[13] Sarkar J in Shri Gopal jalan and Co vs Calcutta stock exchange association limited 1964 SC 250

^[14] Avtar Singh, Company Law, pg.no.141,17^th edition.

^[15] The requirements of the articles must be satisfied. Where are the articles required that transfer fee and the share certificates must be deposited in the office court did not compare the company to register a transfer which did not satisfy the requirements and held that depositing them in the court would not do. Malabar and Pioneer Hosiery(P)Ltd,re,1985

^[16] Avatar Singh Company Law Pg.no151 17^th edition.

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This article is written by Alok Kumar, a student at Maharaja Agrasen Institute of Management Studies, GGSIPU. This article basically deals with the topic of classification of corporate securities which includes the definition of securities according to the security contract act, 1956 and their various types.

WHAT IS SECURITIES?

Security, in business economics, written evidence of ownership conferring the right to receive property not currently in possession of the holder. The most common types of securities are stocks and bonds, of which there are many particular kinds designed to meet specialized needs. If we talk about kinds of securities then there are various types of securities available other than stocks and bonds Basically Securities allude to an investment that can be unreservedly traded in the market and gives a privilege or guarantee on an asset and all future cash flows produced by that asset.

ACCORDING TO SECTION 2(H) OF SECURITIES CONTRACT (REGULATION) ACT, 1956 :

SECURITIES INCLUDE – shares, scrip’s, stocks, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate.

CLASSIFICATION OF SECURITIES

Securities can be divided into government securities and corporate securities on the basis of source of the issue.

CLASSIFICATION OF COMPANY SECURITIES

CORPORATE SECURITIES

Organizations issue various kinds of shares to clean up assets from different investors. Before Companies Act, 1956 public companies used to give three sorts of shares, for example, preference Shares, Ordinary Shares and Deferred Shares. The Companies Act, 1956 has restricted the kind of shares to just two-Preference share and Equity Shares.

EQUITY SHARE

Equity shares, otherwise called ordinary shares or common shares speak to the proprietors’ capital in an organization. The holders of these shares are the genuine proprietors of the organization. They have a command over the working of the organization. Equity shareholders are delivered a profit in the wake of paying it to the preference shareholders. The pace of profit on these shares relies on the benefits of the organization.

PREFERENCE SHARES

As the name proposes, these shares have certain preferences when contrasted with a different type of shares. These shares are given two preferences. There is a preference for installment of profit. At whatever point the organization has distributable benefits, the profit is first paid on preference share capital.

Different investors are delivered dividend just out of the rest of the benefits, assuming any. The second preference for these shares is the reimbursement of capital at the hour of liquidation of the organization. In the wake of paying outside loan bosses, preference share capital is returned. Equity shareholders will be covered just when preference share capital is returned.

DEFERRED SHARES

These shares were prior given to promoters or founders for administrations rendered to the organization. These offers were known as Founders Shares since they were ordinarily given to founders. These shares rank last so far as an installment of dividend and return of capital is concerned. Preference shares and equity shares have needed as to instalment of dividend.

These shares were by and large of a little division and the administration of the organization stayed in their grasp by temperance of their voting rights. These shareholders attempted to deal with the organization with proficiency and economy since they got dividend just finally.

NO PAR STOCK/SHARES

No par stock methods shares having no assumed worth. The capital of an organization giving such shares is partitioned into various determined shares with no particular category. The share endorsement of the organization basically expresses the number of shares held by its proprietor without referencing any presumptive worth.

The estimation of a share can be controlled by partitioning the genuine total assets of the organization with the absolute number of shares of the organization. Dividend on such shares is paid per share and not as a level of fixed ostensible estimation of shares.

SHARES WITH DIFFERENTIAL RIGHTS

“Shares with differential rights” means that shares issued with differential rights in accordance with section 86 of the Companies Act.

Section 86 of the companies Act, as amended by the Companies (Amendment) Act, 2000, provides that the new issue of share capital of a company limited by shares basically of two kinds namely:

EQUITY SHARE CAPITAL

With voting rights,
With differential rights as to dividend, casting a ballot or in any case as per such rules and subject to such conditions as might be recommended.

PREFERENCE SHARE CAPITAL

Sub-clauses (i) and (ii) in clause (a) above were inserted by the Companies (Amendment) Act, 2000 which came into effect on 13th December 2000.

Subsequently, section 88 of the Companies Act was precluded which restricted issue of equity shares to unbalanced rights.

Nonetheless, it must be noticed that the issue of shares with differential rights as allowed by the Companies (Amendment) Act, 2000 is associated with equity shares just and not the preference shares.

SWEAT EQUITY

The term ‘sweat equity’ signifies equity shares gave by an organization to its employees or chiefs at a markdown or for thought other than money for giving ability or making accessible rights in the idea of intellectual property rights (state, patent or copyright) or worth increments, by whatever name called.

The thought behind the issue of sweat equity is that a representative or executive works best when he has ‘feeling of belongingness’ and is plentifully remunerated.

One of the methods of rewarding him is by offering him portions of the organization at low costs, where he is working. It is named as ‘sweat equity’ as it is earned by difficult work (sweat) of employees and it is likewise alluded to as ‘sweat equity’ as employees become upbeat on the issue of such offers. The reason for sweat equity is to guarantee more dedication and support of employees.

DEBENTURES OR BONDS

An organization may raise long haul account through public borrowings. These advances are raised by the issue of debentures. A debenture is an affirmation of a debt. As per Thomas Evelyn.

“A debenture is a record under the organization’s seal which accommodates the instalment of a chief entirety and intrigue subsequently at ordinary interims, which is generally made sure about by a fixed or drifting charge on the organization’s property or undertaking and which recognizes a credit to the organization’s property or undertaking and which recognizes an advance to the organization”.

A debenture-holder is a loan boss of the organization. A fixed pace of intrigue is paid on debentures. The interest on debentures is a charge on the benefit and misfortune record of the organization. The debentures are commonly given a drifting charge over the benefits of the organization. At the point when the debentures are made sure about, they are paid on need in contrast with every single other creditor.

CONCLUSION

These are the types of securities of the government securities and corporate securities. As we have already understood that Government securities are bonds and securities given by the government towards meeting their budgetary shortages. These securities are considered as perhaps the most secure type of investment as sovereign assurances back these. Investors can purchase and offer these securities to procure capital gains and appreciate a steady premium instalment on the presumptive worth of their investment. On the other hand, the corporate securities can be as the- debentures, shares, loans from institution’s, public deposits. And all these for the purpose of making fixed capital, joint-stock organizations mobilize funds from the public in the form of ordinary or equity share or preference shares.

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This article is written by Anurag Maharaj, student of law at Lloyd Law School, Greater Noida. He has tried to define the sources and framing of the Indian Constitution in this article.

INTRODUCTION

Constitution is the system of basic principles which governs a country, state, company, or the like. It is the backbone of our country’s democracy. Indian Constitution is the longest written constitution in the world containing 395 Articles, 22 Parts and 12 Schedules. India’s constitution was drawn up by a Representative Assembly. The Assembly, under the chairmanship of Dr. B.R.Ambedkar, formed a drafting committee to create a constitution for India. The first meeting of the Assembly was on 9 December 1946. On 26 November 1949, the Indian Constitution was adopted and came into force on 26 January 1950.

After ransacking all the world’s major constitutions, the Indian Constitution was formed. The sources of the Indian Constitution are:-

1. United States of America

● Impeachment of president:- Article 61 of the Constitution calls for the President of India to be impeached. The President may be disqualified from office for breach of the Constitution by impeachment. Impeachment proceedings may be levied at any Parliament house.

● Removal of judges:- Article 124(4) of the Constitution allows the President to remove a judge for proven misconduct or incapacity if the parliament approves a majority of the total membership of each house for impeachment and not less than two-thirds of the members of each house present.

● Fundamental Rights: Articles 12 to 32 of the Constitution of India include all the fundamental rights:- Basic rights are the fundamental human rights given to the country’s people in order to ensure them of an equal place in society.

● Judicial independence:- The idea of judicial independence is that the judiciary should be separate from other government branches.

● Preamble:– The Preamble is an introduction to the Constitution. It guarantees justice, freedom, equality for all Indian citizens, and fosters fraternity among the people.

● Judicial Review: The Judicial Review provision gives the judiciary an upper hand in interpreting the Constitution. Therefore, the judiciary can annul any order by the legislature or executive if that order conflicts with the country’s constitution

● Functions of president and Vice president:- The President of India, is the head of state of and the commander-in-chief of the Indian Armed Forces.

● Article 63 of the Indian Constitution states that “There shall be a Vice President of India.” The Vice President shall serve as President in the absence of a President by reason of death, resignation, impeachment or other circumstances. India’s vice president is now ex officio secretary of Rajya Sabha.

2. The United Kingdom

● Single citizenship:- India’s constitution grants the country’s residents single citizenship. The residents of the country are all citizens regardless of the states or territories in which they live.

● Legislative procedure:– Legislative proposals shall be brought in the form of a bill before either Parliament House of India. A bill is the draft legislative legislation that, when passed by both parliamentary houses and approved by the President, becomes a parliamentary act.

● Rule of Law: This essentially states that a State is governed by the laws of that country, not by the representatives or the citizens and it states that everybody is equal before the law; including the ones who make it. Article 14 of the Constitution of India codifies the rule of law

● Cabinet system:- A group of persons appointed by a head of state or a prime minister to head the government’s executive departments and serve as official advisers.

● Parliamentary form of government:- The President is the head of state, and the head of government is the Prime Minister. In such a form of government, a cabinet of ministers, headed by the Prime Minister, governs the country. The Parliament consists of two houses – Lok Sabha and Rajya Sabha.

3. IRAN

● Directive Principle of State Policy:- The Directive Principle of State Policy is stated in Part IV of the Indian Constitution, and it explicitly states that it is the State’s responsibility to follow certain principles in the law-making process. There are three major types of these concepts – Democratic Guidelines, Gandhian Guidelines and Liberal Intellectual Guidelines. Ireland is also borrowing the process for appointing members to the Rajya Sabha

● The method of the election of the head of the state i.e the President

4. Australia

● Article 108:- The joint sitting of both the houses in some cases.

● Concurrent list:- It includes the power to be considered by both the union and state government.

● Freedom of trade and commerce:– Trade and commerce freedom within the nation and between States. Sections 301 to 307 of the Indian Constitution set down the same provisions

5. France:- The Indian preamble borrowed from the French Constitution its principles of liberty, equality and fraternity. In the tradition of France’s Constitution, the Indian state came to be known as the ‘Republic of India.’

6. Canada

● Federal system with a strong central government.

● Power-sharing between the central government and state governments

● The advisory jurisdiction of the Supreme Court

● Appointment of State governors by the Centre

7. Soviet Union (USSR)

● A Constitutionally appointed Planning Commission to supervise the economic growth.

● The Fundamental Duty, given in Article 51 A(g):- Mentions the duty of the citizen to protect the environment.

8. South Africa :- Gave us the provisions of the amendment process and the election of Members of Rajya Sabha

9. Germany:- Gave us an immediate clause for the suspension of the fundamental rights.

10. Russia:- Idea of Social, Economic, and Political Justice in Preamble.

11.Government of India Act 1935

● Federal Legislature: The act stated that there should be two houses of the legislature, i.e. the Council of States and a Federal Assembly

● Provincial Autonomy:- Federal Legislature: The act stated that there should be two houses of the legislature, i.e. the Council of States and a Federal Assembly

Framing of the Constitution

India’s Constitution was adopted by a Constituent Assembly formed under the 1946 Cabinet Mission Plan. The Constituent Assembly formed 13 commissions to frame the Constitution. A draft Constitution was drafted by a seven-member drafting committee under the chairmanship of Dr B R Ambedkar on the basis of the reports from these committees. In January 1948, the drafting Constitution was released and citizens were given eight months. After the citizens, the press, the provincial assemblies and the Constituent Assembly had debated the draft in the light of the suggestions received, the same was finally adopted on November 26, 1949, and signed by the President of the Assembly. Thus it took 2 years, 11 months and 18 days for the Constituent Assembly to complete the task. And as I have discussed above the Indian Constitution is borrowed Constitution. The legislative system, common citizenship, rule of law, Directive state policy etc. all are borrowed features of the Indian Constitution. The Constitution of India incorporated the best features of a number of existing constitutions.

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This article is written by Ritesh Das, a student at Symbiosis Law School, Hyderabad.

INTRODUCTION

In general words, the term contract is a legally binding agreement that acknowledges and regulates the rights and obligations of the parties to that of the agreement. A contract is lawfully enforceable if it meets the essential criteria and requirements along with the assent of the law. The contract is breached when either of the parties fails or repudiates to perform his promise under the contract. The section Section 37 of the Indian Contract Act, 1872 explicitly defines that the parties to the contract are obliged to carry out or offer to perform their respective commitments or promises under the contract, unless they are exempted or excused under the terms of the Indian Contract Act or any other statute. Section 39 of the Indian Contract Act draws out further clarification of this concept by stating that if one party has failed to carry out or deterred itself from executing its commitment in its entirety, the other party may terminate the contract unless that other party has explicitly or impliedly consented to the continuation of the contract. The ramification of breach or repudiation of the contract is elucidated under section 73- 75 of the Indian Contract Act.

Generally, the breach of contract is broadly classified under 4 categories: Minor breach, Material breach, Actual breach and Anticipatory breach of contract. This article will scrutinize and uncoil the concepts and consequences of actual and anticipatory breach of contract.

ANTICIPATORY BREACH OF CONTRACT

Anticipatory breach of contract is the failure of either of the parties to conduct their part of the contract prior to the actual due date of the performance of the contract. In simple essence, an anticipatory breach of the contract refers to the lack or absence of intention of either of the parties to fulfil his obligations under the terms of the contract. An anticipatory breach of contract gives birth to the right of claiming damages and compensation to the aggrieved party under section 73-75 of the Indian Contract Act. Broadly there are two kinds of anticipatory breach of contract which are addressed below:

Explicit repudiation

Under explicit repudiation, the party has expressly breached the contract by clearly refusing or being reluctant to carry out its part of the contract prior to the actual date of the contract.

Implicit repudiation:

Under implicit repudiation, the party does not clearly refuse to carry out its obligation; rather the failure to perform the promises prior to the due date under the contract is insinuated from his words or actions.

Disposal of the breached contract

The event of anticipatory breach of contract generally calls for two alternatives to dispose of the breached contract by the aggrieved party:

After the execution of anticipatory breach of contract, the aggrieved party can rescind or quash the contract and can file a suit for damages without waiting until the due date for the performance of the contract.
The second alternative is to wait for the due date set for the performance of the contract and then file a lawsuit against the defaulting party for the breach of the contract.

Determination of anticipatory breach of contract

There are two main criteria that are deemed crucial to determine the case of anticipatory breach of contract:

When the party has rendered clearly regarding his non-performance or non-fulfilment of the part of the duty and the performance is the core of the contract, then the renunciation or failure to execute the contract cannot be subject to any circumstances or conditions. The reluctance would then be absolute.

In determining the magnitude of appropriate refusal of performance of the duties according to the contract, the perspective of a rational and prudent person would be considered while determining the position of the aggrieved party and also the decisions regarding the refusal to be clear and absolute…

SUPPORTED CASE LAWS

The issue of anticipatory breach of contract has been grappled under many cases by the Indian Judiciary. Some of the landmark cases highlighting and elucidating the concept of anticipatory breach of contract are discussed below:

In the case of Food Corporation vs J.PKesharwani^[1], it was held by the Supreme Court that if one party made unilateral changes without intimation of the other side and then terminated the contract, this amounted to a breach (repudiation). It may also be clearly argued that any type of contract can be deemed to be breached if the party is reluctant or refuses to comply with their respective promises of the contract regardless of when the performance is scheduled to occur. Such unconditional denial or refusal is known as a repudiation to enter into a contract.

In the case of Aslhing v. S. John^{^[2]}, the respondent was a party to a subsisting contract with the Government to widen the route and wrote a letter to the Executive Engineer concerned indicating that the contract had been terminated. The appellant argued that the content of the letter had no effect on the termination of the contract. It was argued that the content of the said letter had no effect on the termination of the contract. However, it was quite evident from the details of the letter that the contractor unilaterally dismissed the contract and informed the department concerned, and also resigned from the list of contractors of PWD Manipur. Thus, following this message, the contract was repudiated and recognition by the authority of the message was insufficient for the termination of the contract, although the breach may give rise to suit for damages.

ACTUAL BREACH OF CONTRACT

Actual or present breach of the contract alludes to the inability to meet the duties and obligations set out in the contract; implying the actual happening of the failure of performance of the defaulting party rather than mere anticipation. A party may breach a contract in innumerable ways from non-compliance with contractual deadlines to semi-performance or non-performance. Fortunately, choices are available to support the aggrieved party seeking reasonable redress or compensation for his injuries or damage.

In the case of a breach or infringement of the contract, the aggrieved party or both the parties may opt to accept and enforce the terms and conditions of the contract or seek redress for the financial damage arising from the infringement. The matter of conflict over the contract is taken to the court in case of failure of negotiations or informal attempts for solving the conflict. The lawsuit is not the sole choice for businesses and personnel engaged in commercial conflicts. Parties may agree to hire a mediator to review a contract dispute or to use binding arbitration.

Types of Actual Breach of Contract

Actual breach of contract due to the late performance: It occurs if either of the parties fails to meet the contractual duties and obligations within the specified time period for conformance; the other party is not obligated to fulfil its obligations and can hold the defaulting party liable for the breach of contract. However, the defaulting party may express his or her willingness to proceed in the performance of the contract. In such a scenario, the decision of allowing the defaulting party to execute the contract would depend on the factor whether the time or duration was the crux of the contract. If time is indeed a key element, failure to perform contractual obligations by the prescribed time limit shall be regarded as a breach of contract, whereas if time is just a trivial element, if time is not an essential condition, the aggrieved party may accept performance and claim damages for late performance.

Actual breach of contract during the course of performance: It involves the failure or refusal of the party to fulfil its contractual obligations during the course of its performance. It also arises if the party fulfils its obligations but refuses or fails to conform to the essential terms and conditions of the contract.

SUPPORTED CASE LAWS

Bishamber Nath Agarwal v. Kishan Chand

In the case of Bishamber Nath Agarwal v. Kishan Chand, ^[3]It has been held that when an arrangement specifies that a particular act relating to the contracts is to be completed within a given period or manner, it should be performed in that manner or period and the parties don’t have the ‘ right to of performing it in their own way or time.

Haryanan Telecom Ltd. V. Union of India

In the case of Haryanan Telecom Ltd. V. Union of India^[4], it was held that one of the provisions of the contracts stipulated that exchanges made beyond the duration of delivery stipulated did not disenfranchise the party of the right to recover liquidated damages, the analysis of all the clauses unveiled that time was the essence of the contract.

REMEDIES OF BREACH OF CONTRACT

There are many penalties for the breach of contract, such as awarding damages, specific performance, recession, injunction and compensation. The award of damages is the primary relief in courts with limited jurisdiction.

Recession

If there is a breach or termination of the contract, the innocent party can claim the contract as rescinded and deny further performance. For such a situation, he shall be released from all his obligations and commitments under the contract. Example-R promises S to deliver 5 bags of candy on a particular day. B agrees to pay the price on receipt of the goods. If R failed to supply the goods, then S shall be released from the liability to pay the agreed sum.

The Court may issue a rescission–

If the contract is voidable by the plaintiff

If the contract is unlawful or unconstitutional on the grounds that it is not evident on its face and the defendant is more to blame than the plaintiff.

Suit for damages

The term ‘damage’ refers to injuries and the term ‘damages’ means monetary compensation for the loss sustained by the aggrieved party for the infringement of the contract. The primary aim to award damages for breach of contract is to put the affected party in the same financial condition as if the contract had been executed properly.

Suit of Quantum Meruit

The expression of ‘Quantum Meruit’ means ‘as much as earned.’ A right to sue a quantum meruit arises where a contract partially executed by one party has been terminated by a breach of the contract by the other party. The right is founded on an implied promise by the other party arising from the acceptance of a benefit by that party.

Suit for Specific Performance

Specific performance “means the actual execution of the promise. In certain cases, in violation of the contract, the Court may direct the party to the actual fulfilment of the promise, exactly in accordance with the terms of the contract.

Suit for Injunction

The injunction is an order of the Court of Justice which either directs the defendant to act in a positive manner or restricts the commission or continuation of a Prohibitory Act (To alleviate the injury or loss to the plaintiff).

ANTICIPATORY V. ACTUAL BREACH OF CONTRACT

ANTICIPATORY BREACH OF CONTRACT	ACTUAL BREACH OF CONTRACT
Anticipatory breach of contract occurs when a party to the contract expresses his incapability or refusal to perform his part of the contract before the due date of the contract.	Actual breach of contract occurs when a party on the date of the performance of the contract fails or refuses to perform his part of the obligations specified in the contract.
In anticipatory breach of contract, the entire contract is repudiated or terminated.	In an actual breach of the contract, the breach can be of condition, warranty or an innominate term.
In anticipatory breach of contract, the aggrieved party can rescind or quash the contract and can file a suit for damages without waiting until the due date for the performance of the contract or can wait for the due date set for the performance of the contract and then filing a lawsuit against the defaulting party for the breach of the contract.	In an actual breach of contract, the aggrieved party can only seek redressal by filing a law suit.

CONCLUSION

A contract is the source of a specific compendium of rights and duties of the parties that would be of no benefit if there is no contractual provision for redress for damages or injuries suffered by the aggrieved party. Chapter VI of the Indian Contract Act, 1872 allows for the recourse to be rendered to the aggrieved party by means of restitution for damages or injuries suffered by the breach of the contract by the other party. It also allows for compensation for actual damages or injuries suffered by the party in infringement of the contract. Reasonable liquidated damages shall be compensated without evidence of loss. It also provides that in the event of a breach, the contracting parties must agree that the defaulting party shall pay the agreed amount to the other party or may agree that, in the event of a breach by one party, any sum paid to that party shall be relinquished. If it is not a valid pre-estimation of the loss, but a sum expected to ensure the execution of the contract can be considered ‘penalty.’ However, the simple stipulation does not grant the right to compensate through penalty, the evidence must be provided for injuries or damages incurred by a breach of contract.

^[1] Food Corporation vs J.PKesharwani, 1994 Supp (1) SCC 531

^[2] Aslhing v. S. John, (1984) 1 SCC 205

^[3] Bishamber Nath Agarwal v. Kishan Chand, AIR 1990 All 65

^[4]Haryanan Telecom Ltd. V. Union of India, AIR 2006 Delhi 339

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Common-Law Admission Test is not just an examination but its a gateway to 22 National Law Schools. If you are on this page u must be aware of the importance of this examination.

CLAT is a national level examination that means one will have to race against the aspirants all over the country desperate to find a way to enter in NLUs. More than 50 thousand students will try their luck in CLAT 2020 But the competition level of this examination can be made easier by following a perfect plan of action and strategies. In this article I will tell you about some of the tips & strategies that can make you crack this exam easily.

Take Your First Step

Know exactly where you stand and what do you need to get through”Am I ready?” Once you are mentally and physically prepared, you need to know basic things about the examination like eligibility criteria, exam pattern is competing and important dates of examination.

Plan your Strategy Professionally and Meticulously

Analyze your shortcomings and strengths to plan your strategy. Accumulate your strategy and utilize them efficiently for best results. It requires strategic pl hard work, careful guidance and loads of practice.

Plan your Preparation Well

Make a proper schedule for your preparations and divide it well enough into small milestones. Try to do as many precise things as you can and star concentration. Have a time scheduled for each subject. Divide the preparation instead of random preparation. This process is called as helps us focus on all the topics and subjects.

Keep a Break on Your Anxiety

Most of the aspirants’ dreams are washed away by their anxiety. Replace your anxiety with curiosity and channelise your excitement in a positive direction. If possible meditate whenever you get anxiety attacks. This will help you eradicate the mind and you’ll be able to focus much clearly.

Face Your Fears

The biggest obstacle between you and your success is FEAR. According to most of the successful people who have common law admission test, the best way to tackle your fear is to face your fears. Keep practising the topics that scare you till you become master of those topics. The first step this endeavour is the toughest though the rest can be covered easily!

Always Go for the Basic

Students must clear their basic first rather than anything else because most of the twisted questions can only be solved with the help of basic concepts. To strengthen your basic concept go for coaching notes of subjects provided to you nothing else can give you a sound knowledge of basics in case you have not done coaching try to clear your concept through books that contain exact information about the law.

Syllabus Check

A lot of students study everything even if it is not in entrance examinations’ syllabus. Keep the syllabus of examination on the study table. Check it before you begin and after you end your studies to know how much you need to cover this day.

Do a Systematic Study

After having managed your time for each subject, it is important to read the topic subject wise. Instead of reading here and there, a systematic fashion will help you to understand complex topics easily. If we understand the fundamental concepts first, it becomes easy to understand further advanced concepts.

Memorise the celebrity cases

Mnemonics (tricks to memorize easily), can be highly useful to remember long essays, derivations, formulas and other fact-based concepts. A lot of books are available in the market, which teaches mnemonics. This reduces the time for preparation and increases the memory power try creating mnemonics for the provisions of the law dealt in that particular case so that u can save your time in the examination if any direct question is there.

Avoid Skipping Topics

It’s very important that the students must study each and every topic and understand the syllabus well. Never try to think that this might not get a place in the question paper, always remember CLAT or AILET exams can ask any topic from the syllabus that they have prescribed.

Have Group Discussions

Group discussions are a boon in the preparation for law entrance exams. This works very easily, each one from a group knows something and has a unique skill set. While participating in group discussions, everyone shares the knowledge he knows. This small share, in turn, helps all the participants to understand all the topics, which were discussed in group discussion and the chances of making mistake also decreases after this in the final war.

Test and motivate yourself

It’s important to test your understanding and skills from time to time. This makes sure that you are at the right path and figures out your weak points. You can take mock test papers from online portals. In this website like Lexpeeps.in will prove you of great benefit. Once you get a good score in these tests, award yourself. This may be anything as per your wish like going to a movie, playing half an hour video game or reading your favourite comics. This not only recharges your mind but also motivates you to do better next time, but remember not to lose the flow u already have.

Practice the max

Our concept here is the practice as much as possible. Let me quote you an example if you want to learn swimming you need to practice that in water rather than reading on how to do the swimming. Taking the lesson from here it is important that how much you have practiced1. Don’t Just Shoot Well-begun is half done, so start professionally, with a cool head. Read the question properly and try to understand it. If you have understood the intricacy of the questions, then half of the job is done. The paper which starts well ends well too. Never try such questions in which you are not sure of the right choice because there is negative marking in the examination.

Increase speed and accuracy

Practice, practice and practise is what you need. There are no shortcuts to success. All you have to do is practice. Study but an objective approach to the subject is mandatory nowadays. Have a clock on your table and try to solve the sample paper in the given time. Learn to coordinate with the clock. If you are serious about entrance examination, act like you are. Raise hand Always ask your doubts to your teachers and other senior persons, never be feel ashamed in asking the doubts. If you carry on your studies with doubts in your mind then you are surely going to have a lot of stress in your mind which will finally start to deviate your mind from the study. So, don’t keep any doubt in your mind, if you have any then clear the same immediately.

Fill the empty spaces

Try to fill the empty spaces i.e. read, recite, and memorize the concepts/formulas while eating, waiting and travelling etc. Breathing exercises should be included in this regime in order to relieve the stress and be ready for intellectual challenges. Food is also a very important aspect that needs to be taken care of when preparing for entrance examinations. Stay away from fried, fatty and high sugar foods and eat more fresh fruits and vegetables. Drink water or energy drinks as much as you can.

Never lose your heart: If you find the question paper is not up to your expectations, do not just give away. Put all your acumen and energy to get the best out of it.

CLAT-Peeps! An initiative by Lexpeeps.in

This article is written by Madhur Rathaur, Founding Director of Lexpeeps.in. He has talked about the core areas to focus and revealed some untalked things that are not usually revealed by the successful candidates.

WRITE TO US FOR ANY QUERY, ADMISSION COUNSELLING OR MENTORSHIP.

This article is written by Sharat Gopal, pursuing BA.LL.B from GGSIPU. This article discusses about “Burden Of Proof” and its application in the Indian Judicial system with case laws.

Let us understand this with an illustration as B is booked for theft for stealing A’s gold chain. B denies this accusation and claims that he was attending his friend’s wedding, but for proving this in court, B must provide sufficient evidence to the court which proves that he was at the wedding. If B won’t provide sufficient evidence in court, B will be convicted for theft. This legal burden placed on B’s shoulder is known as “burden of proof”. Burden of proof is more of the time on the person who brings the claim in the dispute. “ necessitas probandi incumbit ei qui agit” is a legal maximum which states that the necessity of proof always lies with the person who lays charges.

EVIDENCE

Evidences are the major factor that decides the faith of a case. Cases are won and lost on the bases of evidences provided. Law of Evidence is an important piece in the court proceedings, as on the basis of evidences, cases are decided. Judgments of cases are totally depended on the evidence provided in court.

The term “Evidence” is defined in section 3 of the Indian Evidence Act 1872. It states that “Evidence” means and includes:

All the statements that are permitted in court or statements which are required to be made by the witnesses, in relation to the matter of fact which is under enquiry. These statements are called oral evidences.
All documents including electronic records produced for the inspection of the court. These are called documentary evidences.

This is the definition of evidence explained under section 3 of the Act. It states that there are 2 types of evidence, oral and documentary evidences. These 2 types of evidence must be produced before the court for proving or disproving their arguments. The court analysis these evidences for giving a fair and just judgement.

BURDEN OF PROOF

“Burden of proof”, in simple terms means the duty places on one to prove or disprove a fact which is in question. As it is explained in the above example, where B had the burden to prove that he was at his friend’s wedding when the theft happened. In criminal cases, it is normally the prosecution who has the burden of proof, but in some cases it is shifted to the defendant as in the explained example, to prove his innocence. In civil cases, the burden is usually on the plaintiff to prove the claim, but in some, in some cases, it shifts to the defendant.

Burden of proof works on 2 principles, “Onus Probandi” and “Factum Probans”. “Onus Probandi”, in simple terms means the obligation of a party to provide sufficient proof for their position in a dispute. “Factum Probans”, means a fact or a statement of facts which are offered in as evidence as proof of another fact.

“Onus” is the liability and burden which can shift between parties in different circumstances.

Sections in the Indian Evidence Act covering the concept of Burden of proof-

Section 101- it states that any person who wants the judgement to be given in his favour for any legal right or liability, on basis of the facts he provides, he must prove that those facts exist. When the person is bound to prove the facts that he provided in court, it is known as the burden of proof.

In the case of Jarnail Singh Vs State of Punjab [AIR 1996 SC 755], it was held that in all criminal cases, the prosecution has the responsibility to prove the crime committed by the accused beyond all reasonable doubts. It can’t depend on the evidence brought by the accused for defence. The prosecution cannot rely on the evidence brought by the accused, and it must have its own evidences.

Section 102- This section talks about the person on whom the burden of proof will lay.

It states that the burden of proof will lay on the person who will lose if no proof or evidence is provided in the dispute. Eg, A and B were in contract with each other. B goes to court demanding that, A had obtained B’s consent by fraud. Here B will have the burden to prove the fact that, A fraudulently took B’s consent. If B will not prove this fact, the B will lose the case.

In the case of Dinabandhu Mondal v. Laxmi Rani Mondal [AIR 2019 Cal 232], the high court held that the plaintiff failed to provide any evidence to support their charge and the burden of proof was on the side which will fail in evidence is not provided. The court also said that the respondents had imposed the allegations of fraud against the appellants, hence the burden of proof was on them to prove them negative.

Section 103- this section on Burden as to a fact. It states that the burden of proof of any particular fact lies on the person who wishes the court to believe in its existence until it is provided by any law that proof of fact shall only lie on any particular person.

In the case of Kovvuri Venkata Rama Reddy Vs Mandru Ganga Raju [Criminal Revision Case No.704 of 2018], the Andhra High Court held that the plea of alibi is concerned; the burden heavily rests on the accused to prove it.

Section 104- This section talks about the burden of proving a fact so that the evidence provided can be admissible in court. Eg, A wishes to prove the dying declaration of his father. In order to prove this, first A must prove the death of his father.

Section 105-this section talks about the burden of proof in cases where accused comes with exceptions. According to this section, a person is accused of any offence and there are general exceptions in the case, then it is the burden of the accused to prove those exceptions. The court shall presume that there are no such exceptions present until the accused proves that there are exceptions. Eg, A did a murder, but he was unsound minded at the time for the crime. The burden of proof here lies on A.

Section 106-this section talks about the burden of proving facts which are especially within knowledge. If any fact is especially within the knowledge of the person, the burden of proving that fact is on that person.

In the case of Eshwaraiah And Anr. vs State Of Karnataka (1994), a man and a women were found hiding under the bedroom of a person who died with grievous injuries. Here the burden of proof was on the woman and man that why were hiding there.

There are other sections too which talk about the burden of proof in specific cases like that in section 107 which talks about the burden of proving the death of a person who was alive within 30 years, section 108 talks about the burden of proving person alive who has not been heard for 7 years, section 114 A which states that if women assert that it was non-consensual sex, then the court will honour the claims of the women, etc.

CONCLUSION

The burden of proof simply states that whoever has to make a claim before the court must have sufficient proof to prove it for having the judgement in their favour. For making claims, a person must have sufficient evidence to prove the facts in his favour. And this duty is passed to both the parties as the circumstances are. It strengths the judicial system of our country as it lay down general rules that must be followed by all while bringing a matter to court. This helps to provide justice and equality while giving judgements on the cases.

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