TIP #18

Director Identification Number

14/01/2007

Section 253 if the Companies Act as been amended & provides that no company shall appoint or re-appoint any individual as a director of the company unless he has been allotted Director Identification Number.

Any individual intending to be appointed as a director of a company shall obtain Director Identification Number from the central government.

Every director appointer before the commencement of company amendment Act -2006 shall apply, within 60 days for Director Identification Number.

Every existing director within 1 month of receiving Director Identification Number shall intimate to the company.

Every company within 1 week shall inform to the registrar the receipt Director Identification Number.

Every person or company shall quote Director Identification Number in all the returns information or particulars which are required to be furnished under the Company’s Act.

Any violation of there Director Identification Number provisions, is punishable for Rs.5000/- fine.

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TIP #19

Micro, Small and Medium Enterprises Development (Recovery of dues with compound interest)

1. Under Micro, Small and Medium Enterprises Development Act, the National Board for Micro, Small and Medium Enterprises would be established within its head office at New Delhi for examining and making recommendations for promotion and development of Micro, Small and Medium Enterprises.

2. Under the said Micro, Small and Medium Enterprises Development Act, the Government may from time to time for promotion and development and enhancing the competitiveness of such enterprises, upgradation etc., they specify such programs, guidelines, instructions etc.

3. Further, the policies and practices in respect of credit in such enterprises shall be progressive to minimize the incidence of sickness.

4. Under this law any buyer who buys goods or avails any services shall make payment as agreed otherwise within 45 days to the supplier, failing which the buyer shall become liable with compound interest at monthly rest at three times the bank rate notified by RBI.

5. The State Government may establish Micro, Small and Medium Enterprises Facilitation Council.

6. That for recovery of amounts due, any enterprise can make reference to the Facilitation Council then on such references the Council shall conduct Conciliation or shall refer it to Conciliation.

7. If the Conciliation fails, the dispute shall be taken up for Arbitration by Council itself or refer it to Arbitration. The reference shall be decided within 90 days.

8. No application for setting aside any award, order made in such Arbitration shall be entertained by any court unless the Appellant deposits 75% of the Award amount. Out of such amount deposited, the court shall order that such percentage of amount deposited to be paid to the Supplier Enterprise.

9. Under Section 22 of the Act it requires every defaulting buyer should specify unpaid amount with interest in the Annual Statement of accounts. If such buyers violate this provision, they shall be liable to be penalized with fine amounting to Rs. 10,000/-.

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Tip #20

THIRD PARTY MOTOR VEHICLE INSURANCE (ACCIDENT BENEFITS)

1. Under section 146 of the Motor Vehicle Act no motor vehicle can step on the road without insurance.

2. U/S 196 of the M. V. Act driving uninsured vehicle is a punishable offence with imprisonment or fine or both.

3. The necessity of compulsory motor vehicle insurance is made to cover risk against third parties, in case the motor vehicle is involved in accident and causes injury or death to any person/s . It also covers limited liability in respect of damage to any property of third party.

4. Whenever an accident occurs because of a motor vehicle which is covered under third party's insurance, then the motor vehicle owner shall be protected by the insurance company, against the claim for damages/ compensation by the accident victim.

5. Further the accident victim who has suffered bodily injury/ death has a right to claim compensation from the motor vehicle which caused the accident

6. Hence the vehicle owner/ driver is not liable to pay any money in case of accident from his pocket.

7. Further the accident victim who has suffered injuries, etc need not proceed for claim of compensation by spot settlement or otherwise, because he can lodge a complaint and then claim for damages / compensation against the insurance company which has insured the vehicle with third party insurance.

8. That most of the time it appears people are not aware of their rights under the insurance policy. Most motor vehicle owners are not aware that their liability, on occurrence of accident is indemnified by the insurance policy. Therefore the vehicle owner/driver is not liable to pay any compensation. Similarly majority accident victims are not aware that if the accident is reported to the police, it helps in tracing the owner and the insurance company, for claiming damages/ compensation from the insurance company.

Hence every accident must be reported to police with accurate vehicle number.

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TIP #21

ALIMONY (MAINTENANCE)

1.Under the Hindu Marriage Act of 1955, both husband and wife can claim interim or permanent alimony/ maintenance.

2.Under the Special Marriage Act of 1954, only wife can claim interim or permanent alimony/ maintenance.

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TIP # 22

REGISTERED SALE AGREEMENT

1. Any document containing contract to transfer, for consideration, any immovable property shall be registered, if the purchaser/transferee has taken possession of the property under the sale agreement / contract.

2. If such sale agreement is not registered as required U/s 17 (1-A) of the Indian Registration Act, 1908, in such case the purchaser shall not be entitled for protection of his possession of the property. Therefore, the purchaser without registered sale agreement shall not be entitled to seek relief of injunction in respect of possession of the property.

3. Section 17(1-A) was introduced with effect from the year 2001.

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TIP #23

TIME LIMIT FOR SUITS (OPEN AND CURRENT ACCOUNT)

1. Suit for recovery of the balance due on a mutual open and current account can be fled within three years of the financial year in which the last item or entry in the books of account is admitted or proved - Article 1 of the Limitation Act.

Illustration:-

(i) Where 'A' realizes rent of the property of 'B' and independently defrays from his own pocket, the expenses of 'B' each party has demands against the other and that article would apply.

(ii) Where a customer of a bank is allowed to overdraw his current account and the account is sometimes in credit and sometimes in debit, it is a mutual account and a suit by the bank to recover the balance due to it, is governed by this Article.

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TIP #24

TIME LIMIT FOR SUITS (AGENCY)

Suit against an agent of a particular description styled a 'factor', i.e., an agent who is entrusted in the possession of goods for sale on account of the principal, can be filed within three years from the time when the account is demanded and refused; or when the agency terminates - Article 2 of the Limitation Act.

Suit by a principal against his agent for movable property including money received by the agent which is not accounted for, can be filled within three years from the date on which the account is demanded and refused; or when the agency terminates.

All suits by principals against agents for neglect or misconduct in the conduct of the business of the agency, can be filed within three years from the day when the neglect or misconduct becomes known to the principal/plaintiff.

Suit for an account and a share of the profits of a dissolved partnership can be filed within three years from the date of dissolution of the partnership.

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TIP #25

NON- BAILABLE OFFENCE

1 In the case of bailable offences police is bound to release the accused on bail at the police station itself.

2 In case of non-bailable offences police has got power to grant bail only if it reasonably appears that the accused named in the FIR may not be involved in the alleged offence. Such bail granted by the police shall be valid only until the completion of the investigation.

3. Bail granted by the police is to guarantee the appearance of the accused before the court.

4. When the accused is brought before the court, court may or may not grant bail in case of non-bailable offence.

5. If the accused is previously convicted of an offence punishable with death, life imprisonment or imprisonment of 7 years or more, bail cannot be granted.

6. Accused shall not be released on bail if there appear reasonable grounds for believing that he is punishable for an offence with death or imprisonment for life.

7. A person below the age of 16 and a woman may be granted bail by the court.

8. When court directs the accused/ surety to execute bail-bond for certain amount, no money is payable or required to be deposited in the court.

For instance, court directs the release of the accused on a personal bond of Rs.50,000; it means the accused has to execute a promissory note in favor of the court stating that if he fails to appear before the court then he shall become liable to pay Rs.50,000 to the court.

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TIP #26

LISPENDENS

LISPENDEN means pending litigation. The Rule/Doctrine says that during the pendency of the suit nothing new should be introduced/created with respect to the suit schedule property. If the property is transferred, the transferee is bound by the decision of the Court whether or not he had notice of the suit or proceeding. If the decision of the Court is in favor of the transferor, the transferee has rights in the property transferred to him. If the decision goes against the transferor, the transferee cannot get any interest in the property.

The following conditions are necessary for the application of the doctrine of lispendens:-

" There should be pendency of suit / proceeding

" Suit /proceeding `must be pending in a court of competent jurisdiction

" The property in dispute must be transferred

" Transfer must affect the right of the other party to litigation

" Suit / proceeding must not be collusive

The pendency of a suit begins from the date on which the plaint is prescribed and terminates on the date when final decree is passed.

If transfer is made with the permission of the court, the rule of lispendens is not applicable.

The Rule does not invalidate the transfer but renders if subservient or subject to the rights of the parties to litigation.

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TIP #27

PRIVATE SECURITY AGENCIES (PSA)

1. The Parliament has enacted PSA (Regulation) Act 2005 to regulate PSAs.

2. The Act shall come into force on the date the Central Government notifies the same.

3. This law provides that no person can carry on or commence the business of PSA unless he holds a license issued under this Act.

4. Unless after due verification of the applicant's antecedents, his application for license can be considered.

5. Persons convicted by a court in respect of an offence related to a company of convicted for a period of more than tow years or having links with organizations banned under law or government servants dismissed from service etc. shall not be eligible for license.

6. Every PSA must train the security guards and employ them only after checking their antecedents.

7. The security guards must satisfy the prescribed physical standards and must satisfy the agency about his character and antecedents etc., as prescribed.

8. While employing supervisors / security guards, preference must be given to ex-servicemen.

9. Every PSA must maintain a register of the security guards and also the name and addresses of the persons to whom services are provided.

10. Every security guard must be issued photo identity cards by the agency.

11. All security guards must render assistance to the police in any investigation pertaining to activities of the agency.

12. If any violation of law is noticed by any security guard, he must bring it to the notice of his superiors and inform the police accordingly.

13. Any person running a security agency without license, is liable to be punished with imprisonment up to one year and/or fine of Rs.25,000/-.

14. Any security guard or supervisor wearing the uniform of any armed force or that of the police etc., shall be punished with one year imprisonment and/or fine of Rs.25,000/-.

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TIP # 28

PURCHASE OF AGRICULTURAL LAND

1. Under Section 80 of the Karnataka Land Reforms Act, transfer of agricultural land to non-agriculturist is barred.

2. Under Section 79(a) of the Act, no person whose individual or family annual non-agricultural income is not less than Rs. Two lakhs is entitled to acquire any land as owner, landlord, tenant or mortgagee, with possession by sale, gift, lease, will or succession.

3. Further, unless the purchaser of agricultural land produces RTC of the land held by him, the Sub-Registrar shall not register the sale deed.

4. In case a person whose income is less than Rs. Two lakhs per annum intends to purchase agricultural land, he must apply for permission to acquire before the Asst. Commissioner of the concerned area.

5. Any land purchased or acquired in violation of Section 79(a) shall be null and void and the DEPUTY COMMISSIONER is empowered to transfer and vest the land with the state government, free from encumbrances.

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TIP #29

GIFT (SECTION 122 O 129 OF THE T.P. ACT)

1. Gift is the transfer of certain existing movables or immovable property made voluntarily and without consideration by one person called the DONOR to another called the DONEE and accepted by and on behalf of the Donee.

2. Gift must be made without consideration.

3. If the Donee dies before acceptance, the Gift is void.

4. The transfer of immovable property must be affected by a Registered Gift Deed by or on behalf of the Donor and is attested by at least two witnesses.

5. Gift of future property is void. The property must be existing during the transfer.

6. Gift made by Mohammedan Donor not covered under Section 122 to 129 of the T.P. Act. Under Mohammedan law oral gift is valid.

7. Generally, gift cannot be revoked.

8. But if the Donor and Donee agree that on the happening of a specified event then the gift shall be suspended or revoked.

9. But if the gift is revocable at the will of the Donor, then such gift is void.

10. The stamp duty is Rs.1,000/- for a gift of property to husband, wife, son, daughter, daughter-in-law, brothers, sisters and grandchildren.

11. Stamp duty is payable on market value of the property where the Donee is not the family member of the Donor.

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TIP #30

FRAUDULENT TRANSFER

1. A property sold/ transferred with the intention to defeat or delay the creditors of the seller/ transferor is voidable by the creditor.

2. But the right of the transferee in good faith and for consideration shall not be affected.

3. If a prior transfer is made without consideration to defeat the right of subsequent transferee, then the subsequent transferee can challenge the prior transfer as voidable.

4. The remedy is under sec 53 of T. P. Act.

5. Fraudulent Transfer is punishable offence under section 421 of IPC.

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TIP #31

COPY RIGHT

1. Copyright is the exclusive right to do or authorize others to do certain acts in relation to literary dramatic musical and artistic works cinematography film, sound recording and computer databases.

2. The Copyright law protects the authors, corporate, artists and designers rights from being infringed.

3. The Copyright board is set up to adjudicate the disputes relating to copyrights.

4. Copyright board and Registrar of copyright possess certain powers similar to that of civil court.

5. An appeal will lie to the Hon'ble Court against the decision of Copyright boards within three months.

6. A person interested in the Copyright can make an application in the prescribed form by paying the prescribed fees to the Registrar of Copyrights for entering the particulars of his work in the Registrar of copyrights.

7. If there is any infringement of copyright, the owner of the copyright can file a civil suit for injunction, damages, etc.

8. Civil Suit / proceedings relating to infringement of copyright can be instituted in the District court, where the aggrieved party resides and carry on his business.

9. Any person who knowingly infringes or abets the infringement of the Copyright is also a punishable offence. A person shall be punished with imprisonment for a period of six months or three years or with fine amounting to Rs.50,000/- or Rs.2,00,000/-.

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TIP #32

LAND ACQUISITON

1. The State or Central Government can acquire a land in any locality provided the land is need for public purpose or for any company

2. Before acquisition of a property, a preliminary notification U/s 4 of The Land Acquisition Act, 1894, that effect must be published in the official gazette and in two daily newspapers circulating in that locality of which at least one shall be in a regional language by the state government.

3. Collector shall put up public notice at a convenient place in the said locality regarding acquisition of land.

4. Without issuing notice or publication or notification, the land acquisition officer will not have any right to survey mark, draw boundaries and enter the lands of any persons.

5. The land owner can file his objections against the acquisition of land within 30 days from the date of publishing the notification. The collector shall give the objector an opportunity of being heard. The decisions of the appropriate government on the objections shall be final.

6. U/s 6 of the Act if a declaration is made by the appropriate government regarding requirement of land for public purpose or company, within one year. It shall be conclusive evidence that the land is needed for public purpose or company. Such Declaration shall be published in official gazette and in the local newspaper.

7. After the declaration the collector may be directed by the government to take order for acquisition of the land.

8. The collector then cause public notice, U/s 9 stating the government intends to take possession of the land and the claims for compensation can be made to him.

9. The collector shall also serve the public notice to the land owners / occupiers / persons interested in the land / to the agents authorized to receive them if the interested person resides elsewhere, notice shall be sent post to his best known residence or place of business.

10. Only if an award is passed, the collector will have right to take possession of the land and then the land shall vest absolutely in the government free from encumbrances.

11. The collector shall make an award within a period of two years from the date of publication of declaration; if it is not made the entire acquisition procedure shall lapse.

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TIP# 33

SERVICE TAX ON APARTMENTS

Whether service tax is leviable under construction of complex service [section 65(105)(zzzh)] on builder, promoter, developer or any such person,-

(a) who gets the complex built by engaging the services of a separate contractor, and

(b) who builds the residential complex on his own by employing direct labour?

a) In a case where the builder, promoter, developer or any such person builds a residential complex, having more than 12 residential units, by engaging a contractor for construction of the said residential complex, the contractor in his capacity as a taxable service provider (to the builder / promoter / developer / any such person) shall be liable to pay service tax on the gross amount charged for the construction services under 'construction of complex' service [section 65(105)(zzzh)].

(b) If no other person is engaged for construction work and the builder / promoter / developer / any such person undertakes construction work on his own without engaging the services of any other person, then in such cases,-

(i) service provider and service recipient relationship does not exist,

(ii) services provided are in the nature of self-supply of services.

Hence, in the absence of service provider and service recipient relationship and the services provided are in the nature of self-supply of services, the question of providing taxable service to any person by any other person does not arise.

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TIP# 34

EXCHANGE OF PROPERTY

1. When two persons mutually transfer the ownership of one property for the ownership of another property, the transaction is called exchange.

2. Exchange of immovable property can be made only in the manner provided for the transfer of such property by sale.

3. It requires registered deed and the stamp duty involved is same as provided for sale.

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TIP# 35

APARTMENT OWNERS ASSOCIATION

1. Under the Karnataka Ownership Flats Act, 1972, the promoter of an apartment, building or flats, intended to be used for residence or office or showroom or shop or godown shall submit an application for formation and registration of co-operative society or company as the case may be within four months from the date of which the minimum members required to form such an organization have taken the flats.

2. The other option is for residential apartment is by executing and registering a declaration (by sole owner or of all the owners) for submitting the property under the Karnataka Apartment Owners Act, 1972. The contents of the declaration are prescribed under this Act including various aspects of the land, building, apartment, common area facilities etc. Further, for governing and managing the apartments, rules under the said Act also requires a Deed of Apartments along with the declaration to be registered before the sub-registrar under the Indian Registration Act. This Act is an elaborate provision of law provided for administration and total management of the association.

3. The association can also be formed and registered under the Karnataka Societies Registration Act.

4. It is obvious that the obligation of formation of association initially is on the promoter, i.e., the builder of the project.

5. That unless a valid association of members is formed, usually, the management and maintenance of the multistory complexes have faced serious problems and utter chaos.

6. Hence, every purchasers of apartment must make an endeavor to ensure that the promoter of their project undertake to form the association within the stipulated period.