Archive for the ‘Legal Article’ Category

In continuation to the earlier analysis of thika tenancy in West Bengal : https://advocatechenoyceil.com/2013/07/13/deconstructing-west-bengal-thika-tenancy/

It has now come to light that the current West Bengal government is trying to bring a one window mechanism to help thika tenants and bharatias regulate their holding. Under the new law, the thika tenants or bharatias will not require the No Objection Certificate (NOC) from the Thika Controller before applying to the Kolkata Municipal Corporation (KMC) to bring about changes to the structures. Th government is trying to provide Occupancy Certificates to all Thika Tenants that allows them to directly apply for building plan from the KMC. Under the system, thika tenants will no longer be required to wait to get approved NOC from the Thika Controller.

This is a great initiative by the government to cut down on the multiple regulations that complicate the process of Thika Tenancy in West Bengal. However, it will also create chaos with realtors rushing to the thika tenants to get power of attorneys that will then allow them to obtain building plans sanctioned by the KMC. For thika tenants living in poverty and slums, this move allows them to bargain and create value for the land they are holding. However, most thika tenants are unaware of their rights and realtors are lurking to take advantage of them.

This will lead to further disputes and unless effectively controlled, this initiative can backfire.

You can read more about this here: https://www.kmcgov.in/KMCPortal/downloads/Thika_Tenant_29_12_2014.pdf

As of now over 28,000 applications for construction of buildings on thika and khatal land have been pending with the KMC for the past 10 years and it is to be seen how the KMC handles this new ruling. Further, any amendment to the law will be highly contested and it is to be seen how the courts adjudicate the matter.

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On 15th April 2014, the landmark judgment in National Legal Services Authority v Union of India and Others (Writ Petition No. 400 of 2012 with Writ Petition No. 604 of 2013) was passed.

The court was constituted of two judges and the leading judgment was given by Justice K.S. Radhakrishnan, whose judgment was endorsed by Justice A.K. Sikri and Justice Sikri went on to provide valuable inputs of his own.

 

However, the judgment is limited to only the Transgender Community and does not include Gay, Lesbian or Bisexuals.

According to Justice Skiri:

“The grammatical meaning of ‘transgender’ is across or beyond gender. This has come to be known as umbrella term which includes Gay men, Lesbians, bisexuals, and cross dressers within its scope. However, while dealing with the present issue we are not concerned with this aforesaid wider meaning of the expression transgender. Therefore, we make it clear at the outset that when we discuss about the question of conferring distinct identity, we are restrictive in our meaning which has to be given to TG community i.e. hijra etc….”

Justice Radhakrishnan held that:

“Transgender” (TG), in contemporary usage, has become an umbrella term that is used to describe a wide range of identities and experiences, including but not limited to pre-operative, post-operative and non-operative transsexual people, who strongly identify with the gender opposite to their biological sex; male and female. TG may also takes in persons who do not identify with their sex assigned at birth.”

“TG Community comprises of Hijras, eunuchs, Kothis, Aravanis, Jogappas, Shiv-Shakthis etc. and they, as a group, have got a strong historical presence in our country in the Hindu mythology and other religious texts. The Concept of tritiya prakrti or napunsaka has also been an integral part of vedic and puranic literatures.”

Thus, the judgment is limited in its extent to the TG Community.

 

Domestic Laws and International Law

The Court upheld the rights of TG in accordance with International laws and Domestic laws. Some of the international laws delved upon by the Court were the International Covenant on Civil and Political Rights (ICCPR) Article 6 (right to life), Article 7 (prohibition of torture or cruel, inhuman or degrading treatment), Article 16 (recognition before the law), Article 17 (right to private and family life). The Court also took into consideration the Universal Declaration of Human Rights (UDHR) Article 6 (right to life), Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment (CAT) Article 2, Yogyakarta Principles, Principles 1 (universal enjoyment of human rights), 2 (rights to equality and non-discrimination), 3 (right to recognition before the law), 4 (right to life), 6 (right to privacy), 9 (right to treatment with humanity while in detention), 18 (protection from medical abuses).

Justice Radhakrishnan held that:

“Article 253 of the Constitution of India states that the Parliament has the power to make any law for the whole or any part of the territory of India for implementing any treaty, agreement or convention. Generally, therefore, a legislation is required for implementing the international conventions, unlike the position in the United States of America where the rules of international law are applied by the municipal courts on the theory of their implied adoption by the State, as a part of its own municipal law. Courts in India would apply the rules of International law according to the principles of comity of Nations, unless they are overridden by clear rules of domestic law.”

Article 51 of the Indian Constitution read with Article 253 of the Constitution provides that if the parliament has made any legislation which is in conflict with the international law, then Indian Courts are bound to give effect to the Indian Law, rather than the international law. However, in the absence of a contrary legislation, municipal courts in India would respect the rules of international law.

According to Justice Radhakrishnan:

“Articles 14, 15, 16, 19 and 21, above discussion, would indicate, do not exclude Hijras/Transgenders from its ambit, but Indian law on the whole recognize the paradigm of binary genders of male and female, based on one’s biological sex. As already indicated, we cannot accept the Corbett principle of “Biological Test”, rather we prefer to follow the psyche of the person in determining sex and gender and prefer the “Psychological Test”.”

“Article 14 has used the expression “person” and the Article 15 has used the expression “citizen” and “sex” so also Article 16. Article 19 has also used the expression “citizen”. Article 21 has used the expression “person”. All these expressions, which are “gender neutral” evidently refer to human-beings. Hence, they take within their sweep Hijras/Transgenders and are not as such limited to male or female gender. Gender identity as already indicated forms the core of one’s personal self, based on self identification, not on surgical or medical procedure. Gender identity, in our view, is an integral part of sex and no citizen can be discriminated on the ground of gender identity, including those who identify as third gender.

According to Justice Sikri:

“The genesis of this recognition lies in the acknowledgment of another fundamental and universal principal viz. “right of choice” given to an individual which is the inseparable part of human rights. It is a matter of historical significance that the 20th Century is often described as “the age of rights.”

The Hon’ble Supreme Court found transgenders to be a socially and educationally backward class under Article 15(4). The Hon’ble Supreme Court opined that TGs should be entitled to reservation in matters of appointment in Article 16(4). The Court also held that gender identity is protected under Article 19 (1) (a) as a means of expression protected under the Constitution. The Court held that the right to choose one’s gender identity is integral to the right to lead a life with dignity and hence protected under Article 21 of the Indian Constitution.

Justice Sikri stated:

“We are of the opinion that even in the absence of any statutory regime in this country, a person has a constitutional right to get the recognition as male or female after SRS, which was not only his/her gender characteristic but has become his/her physical form as well”

Justice Sikri succinctly states the protection guaranteed to TGs under the Indian Constitution:

“It is only with this recognition that many rights attached to the sexual recognition as ‘third gender’ would be available to this community more meaningfully viz. the right to vote, the right to own property, the right to marry, the right to claim a formal identity through a passport and a ration card, a driver’s license, the right to education, employment, health so on.”

The TG Community now has the right to be recognized as third gender.

 

Effects of the Judgments

The judgment has definitely helped the TG community to come forward and is a landmark judgment in the history of India. After the judgment was passed, DU admissions and admissions in various colleges have introduced space for third genders in its application forms. UGC scholarships and fellowships have also been opened for third genders.

The government has taken significant steps, ever since the judgment was passed, such as constituting an expert committee by Ministry of Social Justice and Empowerment and in-depth study of the problems faced by TGs in India but the application of law would require further research and legislation.

 

No One Can Be Forced Into Sexual Determination and Medical Examination

The first instance of utilization of the law declared in National Legal Services Authority v Union of India and Others (Writ Petition No. 400 of 2012 with Writ Petition No. 604 of 2013) is

I.Jackuline Mary v The Superintendent of Police (17 April 2014) W.P. No. 587 of 2014 and M.P. No. 1 and 2 of 2014 wherein, the Hon’ble Madras High Court extended the TG community to include the case of Females to Males (FTMs) and stated that fundamental rights are available to them and therefore, it is for them to chose and express their identity either as females or males or as transsexuals.

The Madras High Court held that in National Legal Services Authority v Union of India and Others (Writ Petition No. 400 of 2012 with Writ Petition No. 604 of 2013) theHon’ble Supreme Court referred the male to female (MTFs) to be treated as a Transgender for the purpose of safeguarding their rights under Part-III of the Constitution of India and the laws made by the Parliament and the State Legislatures. The other transsexuals such as Females to Males (FTMs) will not have the benefit of the classification as third genders. Therefore, even after the said judgement, there is a legal compulsion that these Females to Males [FTMs] are to be brought within the binary classification as male or female. If they are not brought under this binary classification , then, they will be deprived of the fundamental rights under Part-III of the Constitution of India. If an individual, who is born as a female, is declared as a transsexual by the medical community, on that score, the individual cannot be kept out of the binary classification. Irrespective of the opinion of the medical, psychological, genetical and other scientific communities, these medically declared transsexuals are to be treated by the legal community only by the sexual identity given to them by birth and recognised by the society. If we have to treat this group of medically declared transsexuals as outside the purview of the female sexual identity, then, the State will not be in a position to provide employment and other opportunities by treating them as females or as males.”

The Madras High Court also stated that:

“By compelling an individual, who has been recognised all through as a female, like the petitioner, to undergo medical examination so as to declare her as a transsexual will be a gross violation of the right to privacy which falls within the ambit of Article 21 of the Constitution of India. Such kind of forcible declaration will have a lot of repercussions in her personal life.”

“In the absence of a legislation, compelling an individual to expose to medical examination to declare medically his/her sex identity itself is violative of Article 21 of the Constitution of India.”

The Madras High Court held that:

(i) The petitioner is declared as a female for all purposes and she has got right to retain such sexual / gender identity.

(ii) The petitioner has liberty to chose a different sexual / gender identity as a third gender in future based on the medical declaration, if there is any law put in place recognising FTMs as a third gender.

The most important statement by the Hon’ble Madras High Court:

“Pinky Pramanic choose to declare herself as a female forever. So was Shanthi Soundararajan. The petitioner herein also has declared her gender identity only as a “Female” notwithstanding the declaration made by the medical community that she is a transgender. Her sexual identity as female by birth and recognised by the society and her own self-identity as female should be recognised by the Government. Therefore, the petitioner should be treated as a female for all purposes, such as, employment, property rights, etc. Unless laws are made recognising this Female to Male (FTMs) as third genders providing certain special rights, such identification by the individual as third gender thereby exercising her freedom of expression will not be beneficial to her.”

Thus the Court recognized that expression of identity is an individual opinion and unless special provisions are made for FTMS, such persons would have the liberty to continue in the gender prescribed to them in their birth certificate and the gender she/he has been following till date. Further the Court has also held that no person can be forced to undergo medical examination for determination of their sexual identity (biological identity).

In Para 129 of the judgement of the Hon’ble Supreme Court in National Legal Services Authority v Union of India and Others (Writ Petition No. 400 of 2012 with Writ Petition No. 604 of 2013) the Hon’ble Supreme Court has declared that the transgender persons have right to decide their self identified gender and the Governments have to grant legal recognition of their gender identity such as male or female or as third gender.

Thus the Hon’ble Supreme Court and the Hon’ble Madras High Court have held that gender identity is an integral part of the personality and one of the most basic aspects of self-determination, dignity and freedom. Thus, no one can be forced to undergo medical procedures, including sex reassignment surgery, sterilisation or hormonal therapy as a requirement for legal recognition of their gender identity. Psychological gender is to be given priority over biological sex. Rights have to be protected irrespective of chromosomal sex, genitals, assigned birth sex, or implied gender role. 

 

Questions Remain

The Heinous law of Section 377 Indian Penal Code, 1860 Still Looming Large

In National Legal Services Authority v Union of India and Others (Writ Petition No. 400 of 2012 with Writ Petition No. 604 of 2013) Justice Radhakrishnan recognized the role played by Section 377 of the IPC:

“During the British rule, a legislation was enacted to supervise the deeds of Hijras/TG community, called the Criminal Tribes Act, 1871, which deemed the entire community of Hijras persons as innately ‘criminal’ and ‘addicted to the systematic commission of non-bailable offences’.

Section 377 of the IPC found a place in the Indian Penal Code, 1860, prior to the enactment of Criminal Tribles Act that criminalized all penile-non-vaginal sexual acts between persons, including anal sex and oral sex, at a time when transgender persons were also typically associated with the prescribed sexual practices.”

Justice Sikri stated that:

“Section 377 of the Indian Penal Code was misused and abused as there was a tendency, in

British period, to arrest and prosecute TG persons under Section 377 merely on suspicion.”

However, Section 377 was upheld by the Hon’ble Supreme Court to be constitutionally valid in Suresh Kumar Koushal and another v. Naz Foundation and others [(2014) 1 SCC 1]

The Hon’ble Supreme Court stated that:

“The learned Attorney General, who argued the case as Amicus, invited our attention to affidavit dated 1.3.2012 filed on behalf of the Home Ministry to show that the Group of Ministers constituted for looking into the issue relating to constitutionality of Section 377 IPC recommended that there is no error in the impugned order, but the Supreme Court may take final view in the matter. The learned Attorney General submitted that the declaration granted by the High Court may not result in deletion of Section 377 IPC from the statute book, but a proviso would have to be added to clarify that nothing contained therein shall apply to any sexual activity between the two consenting adults in private. Learned Attorney General also emphasised that the Court must take cognizance of the changing social values and reject the moral views prevalent in Britain in the 18th century”

However, the Hon’ble Supreme Court concluded the judgment by stating that:

“While parting with the case, we would like to make it clear that this Court has merely pronounced on the correctness of the view taken by the Delhi High Court on the constitutionality of Section 377 IPC and found that the said section does not suffer from any constitutional infirmity. Notwithstanding this verdict, the competent legislature shall be free to consider the desirability and propriety of deleting Section 377 IPC from the statute book or amend the same as per the suggestion made by the Attorney General”

As it stands today, Section 377 IPC is valid law and the rampant misuse of the law by police authorities would continue in future. The question that arises after the judgment in National Legal Services Authority v Union of India and Others (Writ Petition No. 400 of 2012 with Writ Petition No. 604 of 2013) is that if the TGs come out declaring their identity. Wouldn’t they be the easy targets since Section 377 IPC is still the valid law of the country? How would the administrative and enforcement agencies react to the present situation?

Further, while arriving at its decision, the Hon’ble Supreme Court of India in National Legal Services Authority v Union of India and Others (Writ Petition No. 400 of 2012 with Writ Petition No. 604 of 2013) considered several foreign judgments. However, one particular judgments is of significant importance and was dealt by Justice Radhakrishnan:

“A.B. v. Western Australia (2011) HCA 42 was a case concerned with the Gender Reassignment Act, 2000. In that Act, person who had undergone a reassignment procedure could apply to Gender Reassignment Board for the issue of a recognition certificate. Under Section 15 of that Act, before issuing the certificate, the Board had to be satisfied, inter alia, that the applicant believed his or her true gender was the person’s reassigned gender and had adopted the lifestyle and gender characteristics of that gender. Majority of Judges agreed with Lockhart, J. in Secretary, Department of Social Security v. “SRA”, (1993) 43 FCR 299 that gender should not be regarded merely as a matter of chromosomes, but partly a psychological question, one of self-perception, and partly a social question, how society perceives the individual.”

In India there is no such law for Gender reassignment and gender recognition by any Board. Further, the judgment has recognized the concept of psychological gender instead of the biological gender to arrive at recognizing TGs in India. Thus, TGs do not have to undergo any biological tests to get themselves recognized. However, it has to be seen whether in future, specific State or Centre Boards are constituted to recognize the TG community and protect them from intrusion. Further, the Judgment is limited to the TG community. This implies that the protection is not extended to Lesbians, Gays or Bisexuals who are still a part of marginalised community and looking for ways to deal with Section 377 IPC. The LGBT Community has been divided by the Supreme Court judgment as the protection extends only to the transgender community. It is without doubt true that the marginalized would look for ways of inclusion and therein problems would arise.

Since there is no legislation to force any person to determine their sexual identity (biological identity) and since the Courts have recognized that sexual identity is psychological, it would be interesting to see how the administration declares certain individuals as TGs and provides affirmative action to support the TG community. Further, Section 377 should be immediately repealed or amended to protect the TG community from being easy targets.

It has been held time and again that in mutation application, the municipal corporation or concerned authority should not go into the question of whether valid title exists for the applicant. Mutation of property does not prove ownership or title to the property but it only showcases that the State is collecting revenue for the property from a certain individual.

In Sankalchan Jaychandbhai Patel & Ors. v. Vithalbhai Jaychandbhai Patel & Ors., (1996) 6 SCC 433, it was held (para.7) that it is a settled law that mutation entries are only to enable the state to collect revenues from the persons in possession and enjoyment of the property; that right, title or interest in the property should be established dehors the entries; that the entries are only one of the modes of proof of the enjoyment of the property; and that mutation entries do not create any title or interest therein.

In K.G. Patel & Co. v. Smt. Chandra Devi Bothra & Ors., 1997 (1) CLJ 156, it was held (para.9) that it is a settled principle of law that disputed question of title cannot be gone into in any mutation proceedings.

In Balwant Singh & Anr. v. Daulat Singh & Ors., (1997) 7 SCC 137, it was held (para.27) that mutation entries do not convey or extinguish title to the property.

In Shrenik Kumar Singhee v. the State of West Bengal & Ors., (2006) CalLT 435 (HC), relying on K.G. Patel, it was held (para.33) that the municipal authority cannot adjudicate the question of title raised by the rival claimants. Therefore, the consistent view taken by the courts is that in mutation proceedings the authority dealing with the matter cannot go into the question of title of the parties to the property.

This view has also been recently upheld by the Hon’ble Calcutta High Court in Smt. Shakuntala Devi Dalmia & Anr. v. Howrah Municipal Corporation & Ors. W.P. No. 9660 ( W ) of 2006.

It has been held that in a mutation application, the corporation could not go into the petitioners’ title to the property. Thus, for any mutation application in India, West Bengal or mutation application in Kolkata, Krishnanagar, Kalyani or Bidhannagar, the concerned authority should not question the ownership while dealing with such mutation unless there is absolute lack of evidence to support the claim. Mutation applications are not meant for interpretation of diverse laws to understand the legality of the ownership.

A Co-operative Housing Society is formed under the West Bengal Co-operative Society Act, 2006 (previously the West Bengal Co-operative Society Act, 1983). The Act extends to the whole of West Bengal and came into force on 18th January, 2011 vide Notification No. 177 – Coop/H/2R – 1/2006. Under Section 157(1) of WBCS Act, 2006, the WBCS Rules, 2011 were formulated which along with the WBCS Act, 2006 regulates the formation and working of Co-operative Housing Societies in West Bengal. The Rules 2011 came into force on 18th January, 2011 vide Notification No. 180 – Coop/H/2R – 1/2006.

Under the WBCS Act, 2006, co-operative housing societies are formed as democratic institutions that are owned, managed and controlled by the members of the society who operate their business on the principles of co-operation and mutual aid.

Under Section 3(iv) of the WBCS Act, 2006, the economic benefits out of the Co-operative Society would belong to the members of the Society and the society acts as an autonomous body with little interference from the State Government. A co-operative housing society works on the theory of mutuality and sharing of funds among the members of the society and hence the society is exempted from tax.

The Housing Society can also enter into contracts for business purpose. However, any income that is received by the Society from outside, i.e. from sources other than the members of the Society is taxable. Renting parking lot or commercial space to outsiders would incur tax liability.

The board of Directors, in a Housing Society, as formed under Section 32 of the WBCS Act, 2006, controls the operations of the housing society and constitutes the governing body vide Section 4(8) of the WBCS Act, 2006. A housing Co-operative Society is defined under Section 4(36) of the WBCS Act, 2006 and includes a society whose primary object is to provide to its members dwelling units, flats or provide land for construction of such flats or houses and the Society may also provide finance to the members for purchase of land and construction of flats thereupon. The Society also looks into the maintenance of common service facilities to its members.

A Co-operative is defined under Rule 6 of the Rules, 2011 and states:

“Cooperatives are autonomous associations of persons united voluntarily to meet their common needs and aspirations through a jointly owned and democratically – controlled enterprise and adhering to the cooperative principles and values.”   

Persons from other States in India can also become members of a housing co-operative society registered in West Bengal, provided they have the intention of residing in West Bengal permanently within a period of one year from the date of application for membership [vide Section 87(d) of WBCS Act, 2006]. Further, any member who wishes to be a part of the housing co-operative society in West Bengal must make a declaration before a Magistrate stating several details as enumerated under Section 87 WBCS Act, 2006.

The member must also showcase genuine need for housing or additional accommodation from such Co-operative Society.

Practically speaking, a person may always showcase intention to reside in West Bengal and express his need for accommodation in a co-operative housing society in West Bengal but thereafter due to change in circumstances he may also sell the flat or rent it out according to the given situation by showcasing that due to professional or business needs he has to reside elsewhere. Such declarations cannot be used against them under such circumstances. However, a test of bonafide may be called if the member fails to live up to the declaration provided while acquiring interest in the co-operative housing society.

An NRI can also be a member of Co-operative Housing Society in West Bengal if he/she abides by the above provisions and gives the necessary directions, as provided under Section 87 of WBCS Act, 2006. Please refer to the provisions contained in Foreign Exchange Management Act (FEMA) for further guidance regarding what kind of property can be held by NRIs. Agricultural land cannot be held by NRIs.

A housing Co-operative Society in West Bengal can be of three different types under Section 88 WBCS Act, 2006:

a)    a society where all the members have purchased the land for construction of unit houses on separate plots on their own or through the Co-operative Society. However, if the members elect to construct houses on their own then they must construct the same within 3 years from the date of possession.

b)    A housing society where the members have purchased land for construction of flats which shall be allotted to the members by the society.

c)     Lastly, the society may also be formed after construction has started on any building and when the members of the building want to form a Co-operative society for providing maintenance, common services and amenities.

It must also be understood that the Housing Society can build more apartments than the number of members who have subscribed as long as the plan or scheme has such option. Flats can always exceed the number of members but number of members should not exceed total number of apartments or flats.

However, under Rule 131(2) of WBCS Rules, 2011:

“In a co-operative housing society the number of members shall not exceed the total number of plots, houses or apartments proposed by a society to be allotted to members under any scheme or project of such society:

Provided that member shall be eligible for allotment of only one plot, house or apartment in a housing co-operative society.”

From the above reading, it must be understood that although a person from outside West Bengal or an NRI can be member of Co-operative Housing Society in West Bengal but they have to abide by several other regulations and guidelines as provided under WBCS Act 2006 and WBCS Rules 2011.

For more information and advice about Co-operative Housing Society check here: https://advocatechenoyceil.wordpress.com/2014/02/19/co-operative-housing-society-west-bengal-rules/

Transfer of property defined under Section 5 of the Transfer of Property Act, 1882 as an act by which a living person conveys property, in present or in future, to one or more other living persons, or to himself and one or more other living persons; and “to transfer property” is to perform such act.

In this section “living person includes a company or association or body of individuals, whether incorporated or not, but nothing herein contained shall affect any law for the time being in force relating to transfer of property to or by companies, associations or bodies of individuals.

As per General clauses Act also ‘person’ includes a company or association or body of individuals, whether incorporated or not

Trust is defined in section 3 of the Trust Act, 1882 as ” an obligation annexed to the ownership of property and arising out of a confidence reposed in and accepted by the owner, or declared and accepted by him, for the benefit of another or of another and the owner. In simple words it is a transfer of property by the owner to another for the benefit of a third person alongwith or without himself or a declaration by the owner, to hold the property not for himself and another.

Membership in a housing society has to abide by the rules under Section 63 and Section 87 of WBCS Act, 2006. Further, a member in a housing society is defined under Section 4(41) of the WBCS Act, 2006 and inter alia includes a joint member, a self-help group or a nominal member.

A self-help group has been further defined under 4(60) of the WBCS Act, 2006 and includes a group of persons, men or women of 5 to 20 who belong to different families and to the weaker section of the society and have their residential address within a contiguous place.

Further, you must note that the provisions of Companies Act do not apply to Co-operative Societies vide Section 8 of the WBCS Act, 2006.

However, most importantly you must note that only individuals can be members of Housing Societies as under Section 87 WBCS Act, 2006, in addition to the conditions given under Section 63 WBCS Act, 2006, only individuals can be members of Housing Societies. There is no provision for Companies or Firms or Trusts owning such property.

Members also have to submit several documents under Rule 131 of Rules, 2011 such as:

“i) Declaration in the form of an Affidavit in prescribed form (ii) Two recent passport size photographs duly attested by the Chief Promoter and in case of Chief Promoter by an M.P./M.L.A./ local Municipal Commissioner/Pradhan of GP/any Gazetted Officer of the State or the Central Government/Headmaster/ Principal of any Government recognized educational Institution. (iii) Copy of salary certificate or copy of Form – 16 showing deduction of P. Tax (in case of salaried persons), (iv) Copy of Professional Tax Registration Certificate or Professional Tax Enrolment Certificate or Professional Tax Clearance Certificate, as the case may be, (in case of professionals), (v) Copy of PAN Card or PPO or P.Tax Clearance Certificate in case of other category (vi) Application for nomination in prescribed form.”

Further, a company or firm cannot be a member because even if the owner of such apartment wishes to transfer the apartment, he has to obtain permission of the Housing Society as enumerated under Rule 131(3)(a) of Rules, 2011 and the person intending to be a member must show genuine need for housing or additional accommodation from such society and file a given form.

Further, the member also has to abide by Rule 138 of Rules, 2011 and obtain written consent of the Society in case the member wants to transfer the flat.

For more information and advice about Co-operative Housing Society check here: https://advocatechenoyceil.wordpress.com/2014/02/19/co-operative-housing-society-west-bengal-rules/

To register a co-operative housing society in West Bengal, you need at least 8 members.

If one member has the land in his name he cannot start the society without the requisite number of members. However, under Rule 131(6) of the West Bengal Co-operative Society Rules, 2011 (WBCS Rules 2011), a person conveying a plot of land in favour of a co-operative housing society and who intends to become a member of such society without any additional consideration and is otherwise eligible for such membership, he may be admitted as a member of such society. Thus, the owner of the plot can become a member of the Society along with other 7 members.

Registration of a housing society is guided under Section 16 of West Bengal Co-operative Society Act, 2006 (WBCS Act 2006). While registering the society you need at least 8 signatures of members from different families with their addresses and occupations.

Under Section 16(5), the application for registering the housing society would be disposed off by the Registrar within 90 days from the date of application and the certificate of Registration would be delivered to the applicant or chief promoting officer.

In case, registration is not allowed, the applicant may further appeal to the Co-operative Registration Council within 30 days from expiry of the previous 90 days or 30 days from the date of receipt of the order of refusal.

Further, it must be noted that the Co-operative Society that has not yet been registered can also enter in transactions in good faith with members or other parties and such acts will get validated upon registration of the Society. This implies that contracts entered into before formation of the Society would also get validated once the Society is registered.

Under Section 17(2) of the WBCS Act 2006, all transactions entered into in good faith prior to registration of the purposes for the Co-operative shall be deemed to be transactions of the society upon registration. Once the society has been registered, it can hold property and even sell or acquire property.

Thus, the owner of the land can sell the land to the Housing Society and thereafter become a member of the Society. The Housing Society can induct members into the society as long as there is availability of flats or apartments.

To apply for membership, the member has to apply in the following format under Rule 108 of the Rules, 2011.

 

FORM XXVIII

Form of application for membership of a co-operative society

[ Rule 108 ]

To

The Secretary/Manager/Chief Executive Officer/Managing Director

……………………………….Co-operative Society Ltd.

 

Dear Sir,

I hereby apply for membership of your society.

I have studied the registered by-laws of your society and the West Bengal Co-operative Societies Act, 2006 and the Rules made thereunder and I hereby declare and undertake to abide by the provisions of the by-laws, the Act and the Rules.

 

Signature

 

Registration fees are payable on transfer of land and upon the cost of transfer. The necessary stamp duty and registration fees would be payable by the Society upon transfer of land in its name. The Registration Act and Stamp Duty Act regulate such provisions.

The law of trusts in India has developed in its own specialized way but it has definitely created a lot of advantages as a very convenient instrument for running religious and charitable organisations. A trust provides the means by which specific benefits are carved out for different people who are interest in the same Trust property.

In India, the Indian Trusts Act, 1882, deals with private trusts only. Section 1 of the Indian Trust Act, 1882 prohibits applicability of such Act into the area where Religious or Charitable endowment applies.

Section 3 of the Indian Trusts Act, 1882 defines a trust as “an obligation annexed to the ownership of property and arising out of confidence reposed in and accepted by the owner or declared and accepted by him, for the benefit of another, or of another and the owner.”

The Charitable and Religious Trusts Act, 1920 was enacted to provide facilities for the obtaining of information regarding trust created for public purposes of a charitable or religious nature, and to enable the trustees of such trusts to obtain the directions of a Court on certain matters, and to make special provision for the payment of the expenditure incurred in certain suits against the trustees of such trusts

Section 7 of the Charitable and Religious Trusts Act, 1920 (Act XIV of 1920) provides as follows:–

Section 7–“(1) Save as hereinafter provided in this Act, any trustee of an express or constructive trust created or existing for a public purpose of a charitable or religious nature may apply by petition to the Court, within the local limits of whose jurisdiction any substantial part of the subject-matter of the trust is situate, for the opinion, advice or direction of the Court on any question affecting the management or administration of the trust property and the Court shall give its opinion, advice or direction, as the case may be, thereon:

Provided that the Court shall not be bound to give such opinion advice or direction on any question which it considers to be a question not proper foe summary disposal.

(2) The Court, on a petition under Sub-section (1), may either give its opinion, advice or direction thereon forthwith, or fix a date for the hearing of the petition and may direct a copy thereof, together with notice of the date so fixed, to be served on such of the persona interested in the trust, or to be published for information in such manner, as it thinks fit.

(3) On any date fixed under Sub-section (2) or on any subsequent date to which the hearing may be adjourned, the Court, before giving any opinion, advice or direction, shall afford a reasonable opportunity of being heard to all persons appearing in connection with the petition.

(4) A trustee stating in good faith the facts of any matter relating to the trust in a petition under Sub-section(1), and acting upon the opinion, advice or direction of the Court given thereon shall be deemed, as far as his own responsibility is concerned, to have discharged his duty as such trustee in the matter in respect of which the petition was made.”

Section 7 entitles a trustee to apply for the direction, advice or opinion of the Court with regard to the management or administration of the trust property where the trust is a public charitable or religious trust.

Sub-section (1) of said Section 7 confers the right upon any one of the trustees to apply under Sub-section (1) of the said section. If there be more than one trustee, then either one is entitled to apply to Court for necessary guidance.

Under Section 2 of the Charitable and Religious Trusts Act 1920, the Court” means the Court of the District Judge or any other Court empowered in that behalf by the State Government and includes the High Court in the exercise of its ordinary original civil jurisdiction.

In Mohan Lall Seal & Ors. v Kanak Lall Seal & Ors. G.A. No. 3095 of 2008 C.S. No. 116 of 2008 it has been held that:

“Under Section 36 of the Indian Trustees Act, it was necessary to obtain permission of the principal Civil Court of original jurisdiction to execute a long term lease, exceeding 21 years. Even though the trust was a charitable trust to which the Indian Trusts Act did not apply all the principles embodied in the Indian Trusts Act would apply.”

Property belonging to religious and charitable endowments could not be permitted to be sold, unless the same was justified by reasons as stated in R. Venugopala Naidu v. Venkatarayulu Naidu Charities & Ors. AIR 1990 SS 444.

The Supreme Court in Committee of Management of Pachaiyappa’s Trust vs. Official Trustee of Madras & Anr. AIR 1994 (1) SCC 475, has held that lease of trust property should be granted by public auction.

In Dhanalal Karnawat & Anr. AIR 1975 Cal. 67 it has been held that:

“The provisions of Section 34 of the Indian Trusts Act are similar to those of Section 7 of the Charitable and Religious Trusts Act. The impugned order was made on 11 th April, 1973 on the application were in the cause title mention was made of Section 34 of the Indian Trusts Act. Apart from the said mention of Section 34 there was nothing to show that the application was not made under Section 7 of the Charitable and Religious Trusts Act. The application in effect, was made by the trustees seeking a direction from this Court to grant lease of the Trust property No.48, Sir Hariram Goenka Street, Calcutta. As a matter of fact in the Charitable and Religious Trusts Act there are no provisions similar to those contain in the latter portion of Section 36 of the Indian Trusts Act. Therefore in this respect the provisions in the Trusts Act should be followed.

In a case reported in AIR 1941 All 387, it was held that though the Indian Trusts Act does not apply to public or private religious charitable endowments, but nevertheless the principles underlying the sections served as useful guide.

In Abdul Kayum vs. Alibhai AIR 1963 SC 309 the Supreme Court held that the principles embodied in the provisions of the Indian Trusts Act, 1882 would apply to public and private religious/charitable trusts. In Venugopala Naiduvs. Venkatarayulu Naidu Charities AIR 1990 SS 444 the Supreme Court held that the Court should not permit property belonging to religious and charitable endowments to be transferred by private negotiations.

It was finally held by the Court in Mohan Lall Seal & Ors. v Kanak Lall Seal & Ors. G.A. No. 3095 of 2008 C.S. No. 116 of 2008 that:

“Even though this Court is unable to arrive at any definite finding with regard to the appropriateness of the terms and conditions on which Premises No.2, Red Cross Place, Kolkata – 700 001 has been leased out, this Court is constrained to hold that efforts to obtain the best offers had not been made. Public notices could have ensured the best offers.

The trustees ought to have issued public notices in newspapers instead of privately negotiating an apparently unconscionable bargain.

This Court is also of the view that a long term lease exceeding 21 years requires the sanction of Court as provided in Section 26 of the Indian Trusts Act, 1882 and in any case has to be at the best rent. Properties of public and/or private charitable trust cannot be decimated by the trustees at their own whims and fancies. A property held in trust cannot be alienated save for compelling reasons at rent that is not the best. In this case, the transfer is coupled with the right of demolition and construction.”

Thus, in case of charitable and religious trusts, the trustees have an inherent obligation to act in the interest of the trust and its beneficiary and/or in other words, in public interest. Public interest demands that any transfer or alienation of the trust property should be completely transparent, fair and in public interest. It is, therefore, expedient that all transfers of property held by religious or charitable trusts, should be open, by issuance of public notices and/or advertisement. The transfer should be given sufficient publicity to fetch the best offers.

Thus, Section 7 of the Charitable and Religious Trust Act, 1920 gives power to the Trustee to apply to the Court for the purpose of obtaining certain directions. Such Section is very much comparable with Section 34 of the Indian Trust Act. In both the Sections, any Trustee without instituting the suit can be able to apply to the Court having appropriate Jurisdiction mentioned therein for getting any directions in respect of the management or administration of the Trust property.

But one aspect is very clear that the Court can proceed in a summary manner either under Section 34 of the Act of 1882 or under Section 7 of the Act of 1920 provided such application is made by a Trustee. It must also be noted that directions given by the Court under Section 7 of the Act is not appealable.

Section 12 of the Charitable and Religious Trusts Act, 1920 bars appeals from being filed and states that no appeal shall lie from any order passed or against any opinion, advice or direction given under the Act.

However, In Re: Birla Jankalyan Trust vs Unknown AIR 1971 Cal 290, it has been held that:

“Opinion expressed under said Section 7 of Religious and Charitable Trusts Act or advice or directions given thereunder cannot be challenged in appeal in view of the provisions of Section 12 of the Charitable and Religious Trusts Act. The said opinion, however, shall not operate as res iudicata in subsequent proceedings if and when they arise between the Revenue and the Trustees (See Babu Bhagwandin v. Gir Har Saroop, 67 Ind App 1 = (AIR 1940 PC 7).”

It was further held by the court that:

“The provisions of Section 7 of the Charitable and Religious Trusts Act are similar to the provisions of Section 302 of the Indian Succession Act. The said section is to the following effect:–

Section 302: – Where probate or letters of administration in respect of any estate has or have been granted under this Act, the High Court may on application made to it, give to the executor or administrator any general or special directions in regard to the estate or in regard to the administration thereof.

In construing the said Section 302, P. B. Mukharji, J. (as His Lordship then was) observed In re: Akshoy K. Ghose, AIR 1949 Cal 482 at page 466 as follows: “In my opinion Section 302 should not be read in such a way as to make this section in the statute a substitute for a suit in any and every case relating to the estate or its administration. The legislature uses the word “directions” which in my judgment should receive a construction consonant to the ordinary meaning of that word. The word “directions” does not in my view mean adjudication and determination of substantive rights, but they mean in my judgment directions to help the executors in the difficulties in respect of practical management or administration where no disputed question of title or difficult question of construction of will or complicated questions of law are involved.”

The aforesaid observations apply with equal force in my opinion to an application made under Section 7 of the Charitable and Religious Trusts Act as well.”

Thus, from the above discussion it is evident that leasing Trust property in any part of West Bengal, including, Mayapur, Kalyani or Krishnanagar requires adherence to Section 7 of the Charitable and Religious Trusts Act, 1920. A public notice, advertisement in local newspaper must be given regarding the lease of the said property and thereafter the necessary lease deed may be executed for the said purpose. Further, in case the Trust property requires reconstruction or demolition with subsequent construction, then the permission of the Court must be sought under Section 7 of the Charitable and Religious Trusts Act, 1920.

Section 452 CrPC applies when an inquiry or trial is concluded. After an inquiry or trial is concluded it is the duty of the Court to order the disposal of the property regarding which an offence was alleged to have been committed and to get back the property you need to file an application under Section 452 of the Criminal Procedure Code, 1973. Section 452 empowers the Criminal Court to pass final orders regarding disposal, destruction, confiscation or delivery as it thinks fit, when an enquiry or trial is concluded. Therefore, property seized must always be deemed to be property produced before Criminal Court and having become custodia legis. However, under Section 451 CrPC, the Court might have allowed you to become custodian of the property but in spite of that upon conclusion of trial you must apply under Section 452 CrPC to get further custody of the property or goods. It must also be noted that property includes not only such property that has been originally in the possession or under the control of any party, but also includes any property into or for which the same may have been converted or exchanged and anything acquired by such conversion or exchange, whether immediately or otherwise. Thus, stolen money converted into buying car or bike would also lead to the resultant bike or car being property coming under the purview of Section 452 CrPC.

You must also note that Sections 451/452 CrPC comes into play in cases of properties seized by police during the course of enquiry or investigation of an alleged offence and therefore, property becomes custodia legis as soon as seized. On the other hand, Section 457 CrPC applies in cases of properties seized by police which are not linked with complaint of an offence received earlier and therefore, not likely to be produced before Criminal Court for the purpose of enquiry or trial.

For the application of the provisions contained Section 452 CrPC, it is necessary that there must have been an inquiry or trial which must have been concluded and the property in respect of the order is sought to be made must be one (i) which has been produced before the Court; or (ii) which is in its custody, or (iii) regarding which the offence alleged was committed, and (iv) which has been used for commission of the offence.

However, it must also be noted that the Court would not given an order for disposal for property on an application for disposal of property which isn’t livestock or is subject to speedy and natural decay or for which no bond has been executed in pursuance to Section 452(2) CrPC until passing of two months from the completion of trial or until any appeal that may have been filed is disposed of by the appellate court. While passing order under Section 452, the Court should exercise its judicial discretion and give reasons for choosing a particular mode of disposal. But, you may also be required to execute a bond with or without sureties to the Court for delivery of any property if you want delivery of property before conclusion of appeal period or before termination of two months period from the date of conclusion of trial or if the order for disposal of property under Section 452(1) is modified or set aside on appeal or revision.

Further, appeal against order under Section 452 can also lie to the appellate court by any person aggrieved by such an order. Section 452 (4) expressly provides that the carrying out of the order of disposal of case property should be stayed until the appeal from it is finally disposed of or until the appeal from the order or conviction or acquittal is disposed of by the appellate Court.

Where the title to the stolen property is uncertain or disputed and there is no sufficient evidence to show as to who is the actual owner of it, the Court of Session under Section 452(3) CrPC, may direct the property to be delivered to the Chief Judicial Magistrate who would deal with it in the manner as provided in Sections 457, 458 and 459 of the Code.

In Barendra Kumar Choudhury vs State Of Orissa 1995 II OLR 252, the Orissa High Court held that:

“Section 452, CrPC deals with order for disposal of property at conclusion of trial. The said provision comes into operation only on conclusion of an enquiry or trial in a Criminal Court. It refers, to four classes of property or document: (a) produced before the Court; (b) in its custody; (c) regarding which any offence is committed; or (d) which is used in committing any offence. These four classes of property are listed disjunctively so that, provided the inquiry or trial has come to an end and the property falls within any of the four categories, the Court has jurisdiction to pass order under the Section. Such property can be disposed of in any of the four following ways : (i) destruction; (ii) confiscation; (iii) delivery to person entitled to its possession; or (iv) otherwise. Stress is on return of the property to the person claiming to be entitled to possession thereof in case property is not for destruction or confiscation. The section authorises the Court to returns the articles, whether or not an offence is committed in respect thereof, to the person claiming to be entitled to possession. The expression” person claiming to be entitled to possession” is important. It does not mean owner. Ownership involves a question of title, whereas possession does not. It is stated that, trial Court should have by resort to the residual provision “or therwise” directed delivery to the accused. The words “or otherwise” must be read ejusdem generis to the modes of disposal previously stated and do not confer a general power to make any order of disposal which the Court may deem fit. As appears from the order of learned Special judge” none of the accused persons laid any claim to the seized property. Before me also no material could be placed as to how appellant ” is aggrieved by the direction for confiscation as the claim is not the seized articles belonged to him. Therefore, learned Judge, Special Court was justified in directing return of the truck to the owner and also proceeds of seized rice to be confiscated to the State.”

However, if there is dispute regarding who owns the property, in Keshar Singh vs The State Of Bihar 2013, the Patna High Court has held that

“Sections 451 and 452 of CrPC cannot be made applicable for the disposal of the property as during the trial the accused died and on account of death the proceeding has abated and it will not be deemed that proceeding has concluded in absence of final judgment by the Criminal Court. In that circumstance Section 457 CrPC has a play in this case but the criminal Court will not have a jurisdiction to decide the rival title and ownership claimed by the parties. The Criminal Court will have a jurisdiction only to the extent when there is no serious dispute of title, ownership and possession over the property.”

In the present case the property from whom has been recovered is dead. Different claimants are coming forward in such a situation when the parties are claiming their rival claim over the property how far the Magistrate can make enquiry on rival claim of disputant party about their right and title. According to the Calcutta High Court in the case of Ram Khalawan Ahir Vs. Tulsi Telini A.I.R.1924 Calcutta 1040 the Court has taken the view that when there is dispute of title matter will be referred to Civil Court and direction of possession would abide by the result of title suit as conflicting right cannot be decided by Criminal Court and during that period the property will remain under the custody of criminal court.

In nutshell the conclusion is derived, in case of serious dispute of right, title and ownership of the property the Criminal Court will not adjudicate the ownership and title of the property seized as jurisdiction lies within the domain of Civil Court and the Criminal Court would abide by the result of the decision of the Civil Court and till then the property will remain under the custody of Criminal Court which is supported from the view of Andhra Pradesh High Court in the case of In re Masgi Bitchanna A.I.R.1969 AP 54, Paragraph 2 the Andhra Pradesh High Court has held that in serious dispute about the title and ownership the parties would be asked to approach the Civil Court and get the dispute settled as the Criminal Court cannot go into these disputes and decide. In any case, such a decision would be subject to the decision of the Civil Court till the dispute is decided. But the parties or any one of them who approach the Civil Court can get necessary directions of the Civil Court if the property has to be preserved.

The application under Section 452 CrPC must be in the given format as Criminal Miscellaneous application:

In the Court of…………………………………………, Calcutta

Cr. Misc. Application No………………………………………, of 2014

State

vs

………………………

Cr. No. ………………./14                                                                       u/s …………………… IPC

P.S. …………….. District………….

Respected Sir,

Humble release application on behalf of the applicant ……………………….S/o……………………. R/o……………….P.S………………………..District……………….. is as under:

  1. That the applicant is the complainant of the aforesaid case.
  2. That the applicant is the registered owner of the Pulsar 150 CC Bike No………………… which was stolen from the house of the complainant.
  3. That the said Bike ………………. was recovered from the possession of the accused and is lying in the possession of ……………….
  4. That the trial in the aforesaid case has been completed and order dated…….. has been passed by the Learned Court in the aforesaid case.
  5. That the accused have been found guilty and convicted by the Learned Court.
  6. That no appeal has been proffered by the accused/convicted and two months have passed since the completion of trial.
  7. That in the interest of justice and humanity it is expedient that the Bike No……….. may be released in favour of the complainant applicant who is the owner of the said Bike.

It is, therefore prayed that your Honour may be pleased to kindly release the said Bike No…………….. in favour of the applicant and oblige.

Dated……                                                                                            Sd/

Applicant

Identified by

Advocate

 

To convert doba/tank or water body land into residential or commercial or homestead land, one has to apply to local municipality as well as the District Land Reform and Land Reform Officer (DLR/LRO) in the given format that is attached below.

The cost for conversion is somewhere between Rs. 20 to Rs. 100 per decimal of doba or tank or water body land, depending on location. Check with concerned authority in your area.

If one were to apply for conversion of doba or tank or water body land then the competent authority to look into such matters is the Municipal Commissioner of the Corporation. The application must be forwarded to the Municipality and the (DLR/LRO) must recommend the proposal of for sanction of building plan. The land must be surveyed by the Surveyor and a report submitted. Further, in pursuance of the aforesaid report, the Deputy City Architect must also give his approval and thereafter the proposal must finally receive clearance certificate under the Town and Country (Planning & Development) Act, 1979.

Further, you must also seek permission of the Fisheries Department to check whether the said land is suitable for pisiculture purposes.

You must be aware that Section 17A of the West Bengal Inland Fisheries Act, 1984 states that:

(1) No person shall

(a) put any water area including embankment measuring 5 cottahs or 0.035 hectare or more, which is capable of being used as fishery, or any naturally or artificially depressed land holding measuring 5 cottahs or 0.035 hectare or more, which retains water for a minimum period of six months in a year, to such use, other than fishery, as may result in abolition of fishery, or

(b) fill up any water area including embankment or naturally or artificially depressed land holding as aforesaid, with a view to converting it into solid land for the purpose of construction of any building thereon or for any other purpose, or

(c) divide any water area including embankment or naturally or artificially depressed land holding as aforesaid into parts so as to make any such part measure less than 5 cottahs or 0.035 hectare for any purpose other than pisciculture or transfer any part of any such water area including embankment or naturally or artificially depressed land holding as so divided to any other person.”

(2) If the competent authority, on receipt of an information or on his own motion or otherwise, is satisfied that –

(a) any water area including embankment or naturally or artificially depressed land holding, referred to in clause (a) of sub-section (1), is being, or is about to be, put to any use, other than fishery, or

(b) any such water area including embankment or naturally or artificially depressed land holding is being, or is about to be, filled up, or

(c) any such water area including embankment or naturally or artificially depressed land holding is being, is about to be, divided into parts, or any part of any such water area including embankment or naturally or artificially depressed land holding as so divided is being, or is about to be, transferred to any other person, in contravention of the provisions of sub-section (1) and that it is necessary for the purpose of promotion of pisciculture, checking of destruction of fisheries and prevention of environmental degradation so to do, he may, by order in writing, take over the management and control of such water area including embankment or naturally or artificially depressed land holding, as the case may be.

(4) The management and control of such water area including embankment or naturally or artificially depressed land holding may be transferred by the competent authority to any person for proper utilization for pisciculture of such water area including embankment or naturally or artificially depressed land holding, as the case may be, in such manner as may be prescribed.

 

(7) If the person referred to in sub-section (4) fails to utilize the water area including embankment or naturally or artificially depressed land holding, as the case may be, in accordance with the prevailing norms of pisciculture, the competent authority may, after giving noting to such person, resume the management and control of such water area including embankment or naturally or artificially depressed land holding, as the case may be, without payment of any rent or compensation to such person; and such water area including embankment or naturally or artificially depressed land holding, as the case may be, may thereafter be managed by the competent authority or transferred to some other person for pisciculture.

(10) (a) The competent authority may, by a written notice, require any person who, by contravening the provisions of sub-section (1)- (i) puts any water area including embankment or naturally or artificially depressed land holding to any use other than fishery, or (ii) fills up any water area including embankment or naturally or artificially depressed land holding with a view to converting it into solid land, or (iii) divides any water area including embankment or naturally or artificially depressed land holding into parts for any purpose other than pisciculture or transfer any part of any such water area including embankment or naturally or artificially depressed land holding as so divided to any other person, to restore, within such period as may be specified in the notice, such water area including embankment or naturally or artificially depressed land holding, as the case may be, to its original condition at his own expense.

(b) If such person fails to restore such water area including embankment or naturally or artificially depressed land holding to its original condition within the period specified in the notice under clause (a), the competent authority may, by order in writing, take over the management and control of such water area including embankment or naturally or artificially depressed land holding, as the case may be, restore it to its original condition, and recover the entire cost in this behalf or any part thereof from such person.

(c) The management and control of such water area including embankment or naturally or artificially depressed land holding as may be taken over by the competent authority under clause (b) may be transferred by the competent authority to any person for proper utilization of such water area including embankment or naturally or artificially depressed land holding, as the case may be, in such manner as may be prescribed. And, thereupon, the provisions of sub- sections (5), (6), (7) and (8) shall apply to such water area including embankment or naturally or artificially depressed land holding, as the case may be.”

Fishery has been defined in Section 2 (vi) of the West Bengal Inland Fisheries Act, 1984. It reads:

2(vi) fishery means any activity or occupation connected with conservation, development, propagation, protection, exploitation or disposal of fish and fish products, or any place or water area where such activity or occupation is carried on, and includes a tank fishery.” Mr. Chatterjee has argued that the said property is not naturally or artificially depressed land holding but a water area as mentioned in the first part of clause (a) of Section 17A(1) of the Fisheries Act and that there has been contravention of provisions of clause (b) thereof.

In Siteswar Pramanik -vs- The State of West Bengal & Ors (W.P. 16140(W) of 2008) it has been stated that if the conversion is violative of West Bengal Land Reforms Act, 1955 and West Bengal Municipal Act and West Bengal Fisheries Act, 1984 then steps may be taken for inquiry. As per section 4(C) of the West Bengal Land Reforms Act, nobody can change the nature and character of any plot without permission of the Collector and violation of the said provision is punishable. Further, West Bengal Inland Fisheries (Amendment) Act, 1993 puts an embargo on the conversion of water area for other use as per provision of section 17A(1)(b) of the said Act.

As per the provisions of then West Bengal Municipal Act, 1993 nobody can make any construction for residential house without permission and the Municipal Authority cannot issue sanction plan in a water body. The Land Reform Department cannot also convert the water body for other purpose. However, a deeper analysis of such provisions is required.

It has been held in Bajranglal Sarda & ors. vs State of west Bengal & Ors. W.P. No. 9383 ( W ) of 2008 that:

“water area including embankment or naturally or artificially depressed land holding as aforesaid” and “such water area including embankment or naturally or artificially depressed land holding” have been used in Section 17A, the expressions “as aforesaid” and “such” refer either to “any water area including embankment measuring 5 cottahs or 0.035 hectare or more, which is capable of being used as fishery” or to “any naturally or artificially depressed land holding measuring 5 cottahs or 0.035 hectare or more, which retains water for a minimum period of six months in a year”. I am conscious that clause (b) of Section 17A(1) does not contain the words “as may result in abolition of fishery”, which find place only in clause (a) thereof. However, having regard to the object of the Fisheries Act, the words “for any other purpose” in clause (b) is wide enough to include within its reach “as may result in abolition of fishery”.

Further, it has been held by the Hon’ble Calcutta High Court that:

“In order to attract Section 17A(1) of the Fisheries Act that debars conversion of a water area of the requisite nature and area to any other use including construction of building thereon, as in the present case, it was therefore imperative for the competent authority to reach a satisfaction that not only a water area of the requisite size is being sought to be filled up or has been filled up for use other than fishery as may result in abolition of fishery but also that such water area is capable of being used as fishery. From the order of the competent authority it is revealed that no finding has been given as to whether the water body which, according to him, was existing and has since been gradually filled up, was at all capable of being used as fishery or not.

What clauses (a) and (b) of Section 17A(1) seek to prevent is that no water area existing on the relevant date, measuring 5 cottahs or more and which is capable of being used as fishery, shall be put to any use other than fishery or filled up with a view to converting it into solid land for the purpose of construction of any building thereon or for any other purpose, including a purpose that may result in abolition of fishery. The words “which is capable of being used as fishery” after the words “water area including embankment measuring 5 cottahs or 0.035 hectare or more” assumes significance in the light of sub-section (2) of Section 17A which confers power on the competent authority, if contravention of provisions contained in sub-section (1) thereof by any person is established, to take over management and control of such water area, if necessary, inter alia for the purpose of “promotion of pisciculture” and “checking of destruction of fisheries”. Sub-sections (4) and (7) of Section 17A also refer to handing over of management and control of a water area for “proper utilization for pisciculture” and “for pisciculture” respectively. The predominant purpose is to give effect to the object of the Fisheries Act, i.e. for conservation, development, propagation, protection, exploitation and disposal of inland fish and fisheries in West Bengal.”

Check this link for further info: http://ldo.nic.in/ & http://ldo.nic.in/conversion/SCHEME.pdf

Also check this link: http://ipheindia.org/yahoo_site_admin/assets/docs/scan_1.109161203.pdf

 

Format for Application for Conversion of Land for Setting up of Industries /Housing Complex.

(Court fee of Rs.10/- to be affixed)

To

The District Land and Land Reforms Officer,

……………………………………………….

Sub : Prayer for conversion of Land.

Dear Sir,

I/ we shall be very much glad if you kindly arrange to convert the following schedule of

land to Non-agri land for setting up of Industries/ Housing Complex.

Schedule of Land.

a) Name of Mouza- ………………………………………………………….

b) J.L.No. ………………………………………………………….

c) Khatian No. ( R.S. & L.R.) …………………………………………………………

d) Plot No. ( R.S. & L.R.) ………………………………………………………….

e) Recorded classification. ………………………………………………………….

f) Area of Land. …………………………………………………………

g) Police Station. ………………………………………………………….

h) District. ………………………………………………………….

The following documents in 5 copies are enclosed.

1. Declaration

2. Copy of Mutation Certificate.

3. Copy of current Record-of-Right.

4. Site plan in duplicate.

5. Certificate regarding industries issued by the D.I.C./ Dte. Of

Industries / Deptt. of Industry.

6. Copy of the project report duly vetted by the Competent Authority.

I/we further undertake to the effect that I/we will have no claim over the said land if in future the land(s) vests in the State in any proceeding under any provision of law. I/we also undertake to the effect that if the land in question is found to be vested. I/we will apply to the State Govt. for Long Term Settlement of the same under usual terms and conditions on payment of Rent and Salami etc. as will be determined by the State Govt.

That in case of my failure to apply Long Term Settlement within the period of one month. I shall be liable to be evicted from the land as a trespasser and shall also be liable to payment of damage for the use and occupation of the said land.
That I have taken over possession of the land and the said land is free from encumbrances.

I/we also declare that none of the land is recorded as Tank/Orchard or cultivated by Bargadar.

Date :                                                                    Yours faithfully

To understand Capital Gains from selling Co-operative Housing Society flat/plot in West Bengal it is important to understand the specific provisions of the Income Tax Act as provided under:

a) Section 54: In case the asset transferred is a long term capital asset being a residential house, and if out of the capital gains, a new residential house is constructed within 3 years, or purchased 1 year before or 2 years after the date of transfer, then exemption on the Long Term Capital Gain (LTCG) is available on the amount of investment in the new asset to the extent of the capital gains. It may be noted that the amount of capital gains not appropriated towards purchase or construction may be deposited in the Capital Gains Account Scheme of a public sector bank before the due date of filing of Income Tax Return. This amount should subsequently be used for purchase or construction of a new house within 3 years.

(b) Section 54F: When the asset transferred is a long term capital asset other than a residential house, and if out of the consideration, investment in purchase or construction of a residential house is made within the specified time as in sec. 54, then exemption from the capital gains will be available as:

(i) If cost of new asset is greater than the net consideration received, the entire capital gain is exempt.

(ii) Otherwise, exemption = Capital Gains x Cost of new asset/Net consideration.

It may be noted that this exemption is not available, if on the date of transfer, the assessee owns any house other than the new asset.

When the owner sells property and if the owner invests the gain amount in buying new property, then he need not pay any income tax at all. Further, if he wants to keep the money for investment in another residential property, then the only option available for him is to open a separate bank account under the capital gain account scheme.

The capital gain arising to the owner will be treated as long-term capital gain and it will be adjusted as per the Cost Inflation Index. Income tax on the sale price minus the indexed cost of the property has to be paid by the owner on such long term or short term capital gains.

Further, if the owner of the land is selling the property and not receiving any money but say he is receiving only certain flats in lieu of the land cost then there would be no capital gain. However, if he receives any money then the same should be accounted for as capital gain. Well, innumerable options are available for saving long-term capital gains with respect to house property. The owner can invest in capital gain bonds up to Rs 50 lakh or he can buy a property within one year before the date of sale or two years after the date of sale or buy land and construct house within three years after the date of sale. If not he has to pay 20% tax. The time limit for investment in capital gain bonds is six months from the date of sale of the asset. Also, the limit is Rs 50 lakh.

Further, you must remember that the long-term capital gain for the real estate sector will be when you hold the property for more than 36 months. If, however, you hold the property for less than 36 months, then it will be short-term capital gains and there is no way to save tax on short-term capital gain.

Similarly, allotment of a flat or a house by a cooperative society, of which the assessee is the member, is also treated as construction of the house. Further, in such cases, the assessee shall be entitled to claim exemption in respect of capital gains even though the construction is not completed within the statutory time limit [Sashi Varma v CIT (1997) 224 ITR 106 (MP)]. Delhi High Court has applied the same analogy where the assessee made substantial payment within the prescribed time and thus acquired substantial domain over the property, although the builder failed to hand over the possession within the stipulated period [CIT v R.C. Sood (2000) 108 Taxman 227 (Del)].

In Apsara Co-op. Hsg. Society Ltd. 204 ITE 662 (Cal. ) it was held that:

Since the Society has constructed additional area on the existing building and allotted to the existing member by taking certain construction deposit and certain donation to the Common Amenity Fund on the principles of mutuality, there will not be tax liability.

For more information and advice about Co-operative Housing Society check here: https://advocatechenoyceil.wordpress.com/2014/02/19/co-operative-housing-society-west-bengal-rules/

The complexities surrounding arbitration in India and the clouded arbitration legislation as an oft-judicially-interpreted Act in India is nothing new. To the ones initiated, the Arbitration and Conciliation Act (the Act) in India has undergone modifications since pre-Independence days. However, till date, the prevalent Act can still be regarded as one of the most highly debated and judicially interpreted/mis-interpreted legislations in India.

Coming to the topic, Section 42 of the Act mandates the jurisdiction of Court to deal with arbitral proceedings. It states that only such Court to which an application has been previously made/filed with respect to an arbitration agreement, will alone have jurisdiction over subsequent matters arising from the arbitration agreement and arbitral proceedings.

Section 42 states:  “Jurisdiction   –   Notwithstanding   anything   contained elsewhere in this Part or in any other law for the time being in force, where  with  respect  to  an  arbitration  agreement  any application under this Part has been made in a Court, that Court alone shall have jurisdiction over the arbitral proceedings  and all subsequent applications arising out of  that  agreement  and the arbitral proceedings shall be made in that Court and  in  no other Court.”

However, here Court implies a Court of competent jurisdiction as held in Sabson (India) Pvt. Ltd. vs. Neyveli Lignite Corpn. Ltd. (1991) 2 MLJ 211. It was held in this matter by the Hon’ble Madras High Court that even if an application is filed at a Court of first instance, but if the same court is without competent jurisdiction to decide upon the same matter, then it cannot be held to be the Court of first instance and thereby a subsequent Court will have jurisdiction over subsequent matters arising from the arbitration agreement and arbitral proceedings.

Here, the definition of Court can be understood from Section 2 (1) (e) of the Act which states that:

Court means  the  principal  Civil  Court  of original jurisdiction in a district,  and  includes  the  High  Court  in exercise of its ordinary  original  civil  jurisdiction,  having jurisdiction to decide the questions forming the  subject-matter of the arbitration if the same had been the subject-matter of  a suit, but does not include any civil court of a  grade  inferior  to such principal Civil Court, or any Court of Small Causes.

In Bhatia International and Venture Global Engineering (2004) 2 SCC 105, the Supreme Court has concluded that Part I would also apply to all arbitrations held out of India, unless the parties by agreement, express or implied, exclude all or any of its provisions.

However, the above principles went through a sea change following Bhatia International and then finally in Bharat  Aluminium Company & Ors. vs. Kaiser Aluminium Technical Services Inc & Ors.  (2012)  9 SCC 559, (BALCO) the following points were recorded:

“96.  ….      We are of the opinion, the term “subject matter of the arbitration” cannot be confused with “subject matter  of  the  suit”.  The term “subject matter” in Section 2(1)(e) is confined to Part I.  It has a reference and connection with the process of dispute resolution.  Its purpose is to identify the courts having supervisory control over the arbitration proceedings. Hence, it  refers  to  a  court  which  would essentially be a court of the seat of the arbitration process. In  our opinion, the provision in Section 2(1)(e) has to be construed  keeping  in view the provisions in Section 20 which give recognition  to  party autonomy. Accepting  the  narrow  construction  as  projected  by  the Learned Counsel for the Appellants would, in fact, render  Section  20 nugatory.  In  our  view,  the  legislature  has  intentionally  given jurisdiction  to  two  courts  i.e.  the  court   which   would   have jurisdiction where the cause of action is located and the courts where the arbitration takes place.

This was necessary as on  many  occasions the agreement may provide for a seat of arbitration at a  place  which would be neutral to both the parties.

Therefore, the courts where  the arbitration takes place would  be  required  to  exercise  supervisory control over the arbitral process.

For example, if the arbitration  is held in Delhi, where neither of the parties  are  from  Delhi, (Delhi having been chosen as a neutral place as between a party  from  Mumbai and the other from Kolkata) and the tribunal sitting in  Delhi  passes an interim order Under Section 17 of the Arbitration  Act,  1996,  the appeal against such an interim order under Section 37 must lie to  the Courts of Delhi being the Courts having supervisory jurisdiction  over the  arbitration  proceedings  and  the  tribunal. This   would   be irrespective of the fact that the obligations to  be  performed  under the contract were to be performed either at Mumbai or at Kolkata,  and only arbitration is to take place in  Delhi. In  such  circumstances, both the Courts would have jurisdiction, i.e., the Court within  whose jurisdiction the subject matter of the suit is situated and the courts within  the  jurisdiction  of  which  the  dispute  resolution,  i.e., arbitration is located.

The definition of Section 2(1)(e) includes “subject matter of  the arbitration” to give jurisdiction to the courts where the  arbitration takes place, which otherwise would  not  exist.

On  the  other  hand, Section 47 which is in Part II of the Arbitration  Act,  1996  dealing with enforcement of  certain  foreign  awards  has  defined  the  term “court” as a court having jurisdiction over the subject-matter of  the award.

This has a clear reference to a court within whose jurisdiction the asset/person is located, against which/whom the enforcement of the international arbitral award is sought.

The  provisions  contained  in Section 2(1)(e) being purely jurisdictional  in  nature  can  have  no relevance to the question whether Part I applies to arbitrations which take place outside India.

98. We now come to Section 20, which is as under:

“20. Place of arbitration—(1) The parties are free to  agree  on the place of arbitration.

(2) Failing any agreement referred to in  Sub-section  (1),  the place  of  arbitration  shall  be  determined  by  the  arbitral  tribunal  having  regard  to  the  circumstances  of  the  case, including the convenience of the parties.

(3) Notwithstanding Sub-section  (1)  or  Sub-section  (2),  the arbitral tribunal may, unless otherwise agreed by  the  parties, meet at any place  it  considers  appropriate  for  consultation among  its  members,  for  hearing  witnesses,  experts  or  the parties,  or  for  inspection  of  documents,  good   or   other  property.”

A plain reading of Section 20 leaves no room for doubt that where  the place of arbitration is in India, the parties are free to agree to any  “place” or “seat” within India,  be  it  Delhi,  Mumbai  etc.

In  the absence of the parties’ agreement thereto,  Section  20(2)  authorizes the tribunal to determine the place/seat of such arbitration.  Section 20(3) enables the  tribunal  to  meet  at  any  place  for  conducting hearings at a place of convenience in matters  such  as  consultations among its members for hearing witnesses, experts or the parties.”

Recently, in Konkola Copper Mines (PLC) v. Stewarts and Lloyds of India Ltd, the Bombay High Court held that:

In paragraph 63 of the BALCO judgment, the Supreme Court held that the court was unable to agree with the conclusion of the Supreme Court in case of Bhatia International and Venture Global Engineering that Part I would also apply to all arbitrations held out of India, unless the parties by agreement, express or implied, exclude all or any of its provisions. In paragraph 67, the Supreme Court held that on a plain reading of section 2(2), it is clear that Part I is limited in its application to arbitrations which take place in India. In paragraphs 75 and 76 of the said judgment, the Supreme Court held that the arbitrators at times hold meetings at more convenient locations and law of the seat or place where the arbitration is held, is normally the law to govern that arbitration. The territorial link between the place of arbitration and the law governing the arbitration is well established in the international instruments, namely, the New York Convention of 1958 and the UNCITRAL Model Law of 1985. It is held that the terms “seat” and “place” are often used interchangeably.

In paragraph 78 of the BALCO judgment, it is held that the Supreme Court was unable to support the conclusion reached in Bhatia International and Venture Global Engineering, that Part I would also apply to arbitrations that do not take place in India. In paragraph 86, it is held that the provisions of section 2(4) and Section 2(5) would not be applicable to arbitrations which are covered by Part II of the Arbitration Act, 1996, i.e. the arbitrations which take place outside India and that there is no inconsistency between Sections 2(2), 2(4) and 2(5). In paragraph 89, it is held that Part I and Part II are exclusive of each other is evident also from the definitions section in Part I and Part II. It is held that the intention of the Parliament is clear that there shall be no overlapping between Part I and Part II of the Arbitration Act, 1996. The two parts are mutually exclusive of each other.

In para 96 of BALCO, it is held by the Supreme Court that court where the arbitration takes place shall be required to exercise supervisory control over the arbitral process. In para 100, it is held that in an international commercial arbitration, having a seat in India, hearings may be necessitated outside India and in such circumstances, the hearing of the arbitration will be conducted at the venue fixed by the parties, but it would not have the effect of changing the seat of arbitration which would remain in India. It is held that the seat of the arbitration remains the place initially agreed by or on behalf of the parties and the said view is correct depiction of the practical considerations and the distinction between “seat” (Section 20(1) and 20(2)) and “venue” (Section 20(3)). It is held that only if the agreement of the parties is construed to provide for the “seat” / “place” of Arbitration being in India, Part I of the Arbitration Act, 1996 would be applicable. Part I would be inapplicable to the extent inconsistent with the arbitration law of the seat, even if the agreement purports to provide that the Arbitration Act, 1996 shall govern the arbitration proceedings.

In para 193 of BALCO, it is held that there is no existing provision under the Civil Procedure Code or under the Arbitration Act, 1996 for a court to grant interim measures in terms of section 9, in arbitrations which takes place outside India, even though the parties by agreement may have made the Arbitration Act, 1996 as the governing law of arbitration.

28. In paragraphs 194 to 196 of the said judgment, it is held that Part I of the Arbitration Act, 1996 would have no application to International Commercial Arbitration held outside India and such awards would only be subject to the jurisdiction of the Indian courts when the same are sought to be enforced in India in accordance with the provisions contained in Part II of the Arbitration Act, 1996 and that there can be no overlapping or intermingling of the provisions contained in Part I with the provisions contained in Part II of the Arbitration Act, 1996. It is held that section 2(2) of the Act is not in conflict with any of the provisions either in Part I or in Part II of the Arbitration Act, 1996. In a foreign seated international commercial arbitration, no application for interim relief would be maintainable under Section 9 or any other provision, as applicability of Part I of the Arbitration Act, 1996 is limited to all arbitrations which take place in India. In the concluding para, it is held that Part I of Arbitration Act, 1996 is applicable only to all arbitrations which take lace within the territory of India.

According to the BALCO judgment the place/seat of arbitration also However, BALCO judgment decided on 6th September, 2012 is supposed to have a prospective effect and the judgment clearly mentions so.

The Bombay High Court in Konkola Copper Mines (PLC) v. Stewarts and Lloyds of India Ltd also went on to state that:

“In our view, the legislature has intentionally given jurisdiction to two courts i.e. the court which would have jurisdiction where the cause of action is located and the courts where the arbitration takes place. This was necessary as on many occasions the agreement may provide for a seat of arbitration at a place which would be neutral to both the parties. Therefore, the courts where the arbitration takes place would be required to exercise supervisory control over the arbitral process. For example, if the arbitration is held in Delhi, where neither of the parties are from Delhi, (Delhi having been chosen as a neutral place as between a party from Mumbai and the other from Kolkata) and the tribunal sitting in Delhi passes an interim order under Section 17 of the Arbitration Act, 1996, the appeal against such an interim order under Section 37 must lie to the courts of Delhi being the courts having supervisory jurisdiction over the arbitration proceedings and the tribunal. This would be irrespective of the fact that the obligations to be performed under the contract were to be performed either at Mumbai or at Kolkata, and only arbitration is to take place in Delhi. In such circumstances, both the courts would have jurisdiction i.e. the court within whose jurisdiction the subject matter of the suit is situated and the courts within the jurisdiction of which the dispute resolution i.e. arbitration is located.”

The Bombay High Court in Konkola Copper Mines (PLC) v. Stewarts and Lloyds of India Ltd further held that:

“In our view, it would not be appropriate, while applying the ratio of the judgment in BALCO to hold that the reasons which are contained in the judgment would operate with prospective effect. What the Supreme Court has essentially ordered, while moulding the reliefs is that the declaration of law to the effect that Part-I shall apply only to those arbitrations where the place of arbitration in India shall take prospective effect after the date of the judgment. But equally, it would be impermissible to hold that the interpretation which has been placed by the Supreme Court on the provisions of Section 2(1)(e) would apply only prospectively. The judgment of the Supreme Court is declaratory of the position of law that the Court having jurisdiction over the place of arbitration can entertain a proceeding in the exercise of its supervisory jurisdiction as indeed the Court where the cause of action arises.…”

This leads to imply that the BALCO judgment, although prospective in nature, all the provisions of the Act are not to be interpreted accordingly. This judgment of the Bombay High Court would definitely be appealed at the Supreme Court and it only remains to be seen how the Supreme Court guides the precarious arbitration regime in India.

While arbitration was supposed to be the means to an end to frivolous, time consuming litigation in India, however, in fact, arbitration has become the first step towards litigation and India Inc. really needs to get out of this quagmire before it rings the death knell to business relations in India.

Hypothecation legally means providing something as collateral for any form of debt. However, although a collateral security is provided the debtor usually does not have to turn over physical custody of the collateral although the lender is “hypothetically” in control of the collateral.

The Indian Contract Act does not define the term ‘hypothecation’, however, section 2 (n) of Securitization and Reconstruction of Financial Assets & Enforcement of Security Interest Act 2002) defines Hypothecation as:

 “’Hypothecation’ means a charge in or upon any movable property, existing in future, created by a borrower in favour of a secured creditor, without delivery of possession of the movable property to such creditor, as a security for financial assistance and includes floating charge and crystallization of such charge into fixed charge on movable property”.

Hypothecation is to be registered under Section 125 of the Indian Companies Act, 1956 before the Registrar of Companies by filing Form No. 8, when the hypothecator is a company.

Hypothecation is a way of creating a charge against the security of movable assets, which is quite similar to pledge.

a) The assets remain in the custody of the borrower.

b) Assets are not kept under the lock and key of the banker.

c) The borrower has to submit a stock statement at prescribed intervals as per terms of sanction to the bank.

d) Without Bank’s consent, no person can utilize the hypothecated assets for his own benefit or sale by the borrower or any person connected thereto.

Difference Between Hypothecation and Pledge

Hypothecation is a way of creating a charge against the security of movable assets, which is much similar to pledge. However, pledge is a charge, which is defined by law whereas it is not so in the case of hypothecation. Under Section 172 of the Indian Contract Act, 1872: “Pledge is a contract where, by way of deposit of goods a security for a debt is created and the right to property vests in the pawnee so  far  as it is necessary  to secure the debt.”

In case of pledge, the assets are in the custody of the lender, real or constructive, whereas in the case of hypothecation the assets are in the custody of the borrower.

Hypothecation is  to  be registered  under Section  125  of  the Indian Companies Act,  1956  when the hypothecator is  a  company,  whereas  no  such provision  exists in  case of charges by  way of pledge. 

In hypothecation, goods are not kept under the lock and key of the banker. The borrower, however, will have to submit a stock statement at prescribed intervals as per terms of sanction to the bank. In addition  to  the  fact  that  the  bank  does  not  have  the physical  possession  of  the  goods  under  hypothecation,  the  fact  remains  that  no  statutory  status  is given to a hypothecation transaction. In this regard, it is, however, to be noted that hypothecation has a close link to floating charge. It must be noted that without the consent of the Bank, no person can utilize the hypothecated goods for his own benefit or sale by the borrower or any person connected thereto.

In P. Ramanatha Aiyar’s Advanced Law Lexicon (Third (2005) Edition, Vol.2, Pages 2179 and 2180) are relevant:

“Hypothecation: It is the act of pledging an asset as security for borrowing, without parting with its possession or ownership. The borrower enters into an agreement with the lender to hand over the possession of the hypothecated asset whenever called upon to do so. The charge of hypothecation is then converted into that of a pledge and the lender enjoys the rights of a pledgee.”

It was held in Indian Oil Corporation v. NEPC India Limited [(2006) 6 SCC 736] that:

“hypothecation does not mean ‘entrustment of the property’ or ‘entrustment of dominion over the property’ by the hypothecatee (creditor) to the hypothecator (debtor). When possession has remained with the debtor/owner and when the creditor has neither ownership nor beneficial interest, obviously there cannot be any entrustment by the creditor.”

It was further held in Indian Oil Corporation v. NEPC India Limited [(2006) 6 SCC 736]:

“If the observations relied on by the appellant are to be interpreted as holding that the debtor holds the hypothecated goods, in trust for the creditor, then they are contrary to the decision of this Court in Central Bureau of Investigation v. Duncans Agro Industries Ltd., Calcutta [1996 (5) SCC 591] which specifically holds that when goods are hypothecated, the owner does not hold the goods in trust for the creditor. A charge over the hypothecated goods in favour of the creditor, cannot be said to create a beneficial interest in the creditor, until and unless the creditor in exercise of his rights under the deed, takes possession. The term ‘beneficial interest’ has a specific meaning and connotation. When a trust is created vesting a property in the trustee, the right of the beneficiary against the trustee (who is the owner of the trust property) is known as the ‘beneficial interest’. The trustee has the power of management and the beneficiary has the right of enjoyment. Whenever there is a breach of any duty imposed on the trustee with reference to the trust property or the beneficiary, he commits a breach of trust. On the other hand, when the owner of a goods hypothecates a movable property in favour of a creditor, no ‘beneficial interest’ is created in favour of the creditor nor does the owner become a trustee in regard to the property hypothecated. The right of the creditor under a deed of hypothecation is the right to enforce the charge created under the deed of hypothecation in the manner specified in the deed and by no stretch of imagination can such right be equated to a beneficial interest of a beneficiary in a property held in trust. Therefore, the first contention that a creditor has a beneficial interest in the hypothecated property and the owner is in the position of a trustee with reference to the creditor is liable to be rejected.

23. The second ground on which learned counsel for the appellant sought to distinguish Duncan Agro (supra) is that the said case dealt with a hypothecation deed creating a floating charge, whereas the case on hand related to a fixed charge and therefore, the principle laid down in Duncan Agro (supra) will not apply. This contention is also without basis. The principle stated in Duncan Agro (supra) will apply in regard to all types of hypothecations. It makes no difference whether the charge created by the deed of hypothecation is a floating charge or a fixed charge. Where a specific existing property is hypothecated what is created is a ‘fixed’ charge. The floating charge refers to a charge created generally against the assets held by the debtor at any given point of time during the subsistence of the deed of hypothecation. For example where a borrower hypothecates his stock-in-trade in favour of the Bank creating a floating charge, the stock-in-trade, held by the borrower as on the date of hypothecation may be sold or disposed of by the debtor without reference to the creditor. But as and when new stock-in-trade is manufactured or received, the charge attaches to such future stock- in-trade until it is disposed of. The creditor has the right at any given point of time to exercise his right by converting the hypothecation into a pledge by taking possession of the stock-in-trade held by the debtor at that point of time. The principle in Duncan Agro is based on the requirement of ‘entrustment’ and not with reference to the ‘floating’ nature of the charge. The second contention also has no merit.”

In J.K. (Bombay) Private Limited v. New Kaiser-I-Hind Spinning & Weaving Co. Ltd. & Others [(1969) 2 SCR 866], explained the difference between the charge and the mortgage as follows :-

“While in the case of a charge there is no transfer of property or any interest therein, but only the creation of a right of payment out of the specified property, a mortgage effectuates transfer of property or an interest therein. No particular form of words is necessary to create a charge and all that is necessary is that there must be a clear intention to make a property security for payment of money in praesnti.”

8. Section 100 of the Transfer of Property Act, 1882 defines “charge” as follows :-

“100. Charges.- Where immoveable property of one person is by act of parties or operation of law made security for the payment of money to another, and the transaction does not amount to a mortgage, the latter person is said to have a charge on the property; and all the provisions hereinbefore contained which apply to a simple mortgage shall, so far as may be, apply to such charge. Nothing in this section applies to the charge of a trustee on the trust- property for expenses properly incurred in the execution of his trust, and, save as otherwise expressly provided by any law for the time being in force, no charge shall be enforced against any property in the hands of a person to whom such property has been transferred for consideration and without notice of the charge.”

The above-mentioned Section clearly indicates the following types of charges :

1) Charges created by act of parties; and

2) Charges arising by operation of law.

9. An ordinary charge created under the Transfer of Property Act is compulsorily registerable. The first portion of Section 100 of the TP Act lays down that where immoveable property of one person is by act of parties or operation of law made security for the payment of money to another, and the transaction does not amount to a mortgage, the latter person is said to have a charge on the property; and all the provisions hereinbefore contained which apply to a simple mortgage shall, so far as may be, apply to such charge. The words “which apply to a simple mortgage shall, so far as may be, apply to such charge” in this Section were substituted by Section 53 of the Transfer of Property (Amendment) Act, 1929, for the words “as to a mortgagor shall, so far as may be, apply to the owner of such property, and the provisions of Sections 81 and 82 shall, so far as may be, apply to the persons having such charge.” Evidently, the effect of the amendment was that all the provisions of the TP Act which apply to simple mortgages were made applicable to charges.

10. Section 59 of the Transfer of Property Act refers to the mode of transfer which reads as follows :-

“59. Mortgage when to be by assurance.- Where the principal money secured is one hundred rupees or upwards, a mortgage other than a mortgage by deposit of title- deeds can be effected only by a registered instrument signed by the mortgagor and attested by at least two witnesses. Where the principal money secured is less than one hundred rupees, a mortgage may be effected either by a registered instrument signed and attested as aforesaid, or (except in the case of a simple mortgage) by delivery of the property.”

11. A conjoint reading of Section 100 with Section 59 of the TP Act makes it clear that if by act of parties, any immovable property is made security for the payment of money to another and it does not amount to mortgage, then all the provisions which apply to a simple mortgage, as far as may be, apply to such charge. Consequently, in view of Section 59 of the TP Act when there is a mortgage other than a mortgage by deposit of the title deeds, it can be effected only by a registered instrument.

Equitable Mortgage in India.

Equitable mortgage is not defined under Indian law but it can be surmised from Section 58(f) and section 59 of the Transfer of Property Act, 1882, as reproduced below:

58(f). Mortgage by deposit of title-deeds.—Where a person in any of the following towns, namely, the towns of Calcutta, Madras, and Bombay, and in any other town which the State Government concerned may, by notification in the Official Gazette, specify in this behalf, DELIVERS TO A CREDITOR OR HIS AGENT DOCUMENTS OF TITLE TO IMMOVEABLE PROPERTY, WITH INTENT TO CREATE A SECURITY THEREON, the transaction is called a mortgage by deposit of title-deeds.

59. Mortgage when to be by assurance.—Where the principal money secured is one hundred rupees or upwards, a mortgage, OTHER THAN A MORTGAGE BY DEPOSIT OF TITLE DEEDS, can be effected ONLY BY A REGISTERED INSTRUMENT signed by the mortgagor and attested by at least two witnesses.

Where the principal money secured is less than one hundred rupees, a mortgage may be effected either by a registered instrument signed and attested as aforesaid or (except in the case of a simple mortgage) by delivery of the property. (capitals mine)

As aforesaid, Section 59 of the Transfer of Property Act, 1882 provides that a mortgage, other than a mortgage by deposit of title deeds, can be effected only by a registered instrument.

The Hon’ble Supreme Court in United Bank Of India Ltd. vs. Lekharam Sonaram And Co. And Ors. {AIR 1965 SC 1591; 1965 (0) BLJR 480}, held:

“A mortgage by deposit of title deeds is a form of mortgage recognised by Section 58(f) of the Transfer of Property Act which provides that it may be effected in certain towns (including Calcutta) where a person “delivers to a creditor or his agent documents of title to immovable property with intent to create a security thereon.” In other words, when the debtor deposits with the creditor title deeds of his property with an intent to create a security, the law implies a contract between the parties to create a mortgage and no registered instrument is required under Section 59 as in other classes of mortgage. It is essential to bear in mind that the essence of a mortgage by deposit of title deeds is the actual handing over by a borrower to the lender of documents of title to immovable property with the intention that those documents shall constitute a security which will enable the creditor ultimately to recover the money which he has lent. But if the parties choose to reduce the contract to writing, this implication of law is excluded by their express bargain, and the document will be the sole evidence of its terms. In such a case the deposit and the document both form integral parts of the transaction and are essential ingredients in the creation of the mortgage. It follows that in such a case the document which constitutes the bargain regarding security requires registration under Section 17 of the Indian Registration Act, 1908, as a non-testamentary instrument creating an interest in immovable property, where the value of such property is one hundred rupees and upwards. If a document of this character is not registered it cannot be used in the evidence at all and the transaction itself cannot be proved by oral evidence either.

Generally, banks execute memorandum of entry recording the deposit of title deeds on grant of loan; however quite often in practice, the memorandum is not in full compliance with the applicable stamp and registration laws and this area needs to be strengthened by many lenders.

In T.V.ALWAR V. BANK OF TAMIL NADU, THIRUNELVELI THROUGH ITS BRANCH MANAGER, 1997 (III) CTC 28, it was held:

“Therefore, the cumulative effect of these circumstances would go to show that the document in question is at best only a list of title deeds and that the document can never be said to form an integral part of the transaction nor it can be stated to evidence the bargain between the parties. On the other hand, it is at best an instrument recording the particulars of document and nothing more. The document was not intended to and did not operate to create any right in or over any property nor has the effect of creating any charge over the property and therefore it is not a document which requires to be registered. Therefore it follows that the conclusion of the courts below that the document is admissible in evidence and that is not hit by section 17 of the Registration Act is a proper conclusion.”

In B.R.SHAMALA AND B.R.SHYAMALA DEVI AND ANOTHER VS. KUNDAN S.BHAYAANI AND OTHERS, 1999 (3) MLJ 74, it was held:

“The document Ex.P.16 shows that it only records a past transaction etc. and further the said exhibit shows that the document has already been handed over. So long as Ex.P.16 is not bargain but only evidences the intention to create a mortgage, it will not require registration.”

Thus, equitable mortgage or mortgage by deposit of title deeds does not require registration unless the transaction is put down as a written agreement, which if executed, would require registration vide United Bank Of India Ltd. vs. Lekharam Sonaram And Co. And Ors. (supra)

The basic requirements for hypothecation and mortgage:

Asset Type Security Type Conditions To Be Satisfied To Make The Security Valid and Enforceable
Plant and Machinery Hypothecation (for movable property)Mortgage (for immovable property) Filing of Form 8 with the relevant Registrar of Companies and of duly stamped document with the relevant Sub-Registrar of Assurances. (Section 125 Companies Act)Mortgage must be in writing.
Trading Stock Floating Charge Filing of Form 8 with the relevant Registrar of Companies. (Section 125 Companies Act)
Other movable property Pledge, hypothecation, fixed or floating charge Except in case of pledge, filing of Form 8 with the relevant Registrar of Companies and of duly stamped document with the relevant Sub-Registrar of Assurances. (Section 125 Companies Act)Pledge requires delivery of pledged asset (actual or constructive).

At the outset, it is stated that under the Indian Law, “ Data Theft” is a misnomer. Under the Indian Law, there is no offence of “Data Theft” i.e. theft of Data.

Section 378 of the Indian Penal Code, 1860 defines Theft as follows:-

“ Theft – Whoever, intending to take dishonestly any movable property out of the possession of any person without that person’s consent, moves that property in order to such taking, is said to commit theft.”

Section 22 of I.P.C., 1860 defines “movable property” as follows:-

“The words “movable property” are intended to include corporeal property of every description, except land and things attached to the earth or permanently fastened to anything which is attached to the earth.”

Section 378, Indian Penal Code, 1860 refers to “movable property” i.e. corporeal property, and since  Data by itself is intangible, it is not covered therein. Just as theft of Electricity has been made a part of the definition of Theft under Section 378 I.P.C. through a legal fiction contained in  Section 39 of the Indian Electricity Act, 1910, similarly the legislature should actively consider amending the law by covering Data also under the definition of Theft. Requisite amendments should be made to the Indian Penal Code, 1860 and / or the I.T.Act, 2000 for the said purpose.

The Supreme Court of India in Avtar Singh vs State of Punjab, reported in AIR 1965 SC 666, has held as follows:-

” (6) With regard to the first reason that Section 39 of the Act extended the operation of Section 378 of the Code, it seems to us beyond question that Section 39 did not extend Section 378 in the sense of amending it or in any way altering the language used in it.  Section 378, read by itself even after the enactment of Section 39, would not include a theft of electricity for electricity is not considered to be moveable property.  The only way in which it can be said that Section 39 extended Section 378 is by stating that it made something which was not a theft under Section 378, a theft within the meaning of that section.  It follows that if Section 39 did so, it created the offence itself and Section 378 did not do so.  In this view of the matter we do not think it possible to say that the thing so made a theft and an offence, became one by virtue of Section 378”

Data as such is not movable property and the question of its theft is hence per se irregular. However, if Data is stored in a medium (CD, Floppy etc.) and such medium is stolen, it would be covered under the definition of Theft, since the medium is a movable property.

In view of the aforesaid legal position, the expression “Data Theft”, being a misnomer in law, shall not be used hereinafter and instead, the expressions “Data Crime” and “Data Criminals” shall be used.

Since  Data Theft is no Theft in law, alternative legal strategies need to be explored to check, deter and punish this menace, which is  rampant  in the I T World, in which Data is a very valuable asset.  At the same time, due to its nature, Data is extremely vulnerable to being misappropriated, copied, hacked etc.  The maximum risk to Data, is from employees handling /using the same during the course of their employment and other independent contractors (Call Centres etc.) entrusted with the Data to carry out specific tasks / assignments.  The most common modus- operandi adopted by Data Criminals is to sell the same to competitors, who benefit through reduction in effort, time and costs of building their own Data Base or buying the same from the market.

The Data Criminal can be effectively dealt with under various provisions of the Indian Penal Code, 1860, I.T. Act, 2000 & The Copyright Act , 1957.  In so far as the Data Criminals from amongst the employees and other independent contractors are concerned, the offence of Criminal Breach of Trust, defined and made punishable under Sections 405 – 409 of I.P.C., 1860 need to be activated and the Agreement(s) with employees and independent contractors should be drafted keeping in view the said provisions of I.P.C.

Indian Penal Code, 1860:

Section 405 defines Criminal Breach of Trust as follows:-

Criminal Breach of Trust.- Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or willfully suffers any other person so to do, commits ‘criminal breach of trust’ ”.

Section 405 refers to “property” and not “movable property”, hence, the word “property” is not restrictive.  Therefore, Data would be covered within the ambit of “property” in Section 405 I.P.C.  The Supreme Court in R.K. Dalmia  vs  Delhi Administration, reported in AIR 1962 SC 1821, has held that the word “property” could not be restricted to movable property especially when it is used without any qualifications in Section 405 or other Sections of the Penal Code.  The Hon’ble Supreme Court inter-alia stated as follows:-

“(57) The case law, therefore, is more in favour of the wider meaning being given to the word ‘property’ in sections where the word is not qualified by any other expression like ‘movable’.”

“(58)……That a debt is property is, we think, clear.  It is a chose in action and is heritable and assignable and it is treated as property in India under the ‘Transfer of Property Act which calls it an ‘ actionable claim.”

Also, in S. Shivnarain Laxminarain Joshi, reported in AIR 1981 SC 439, the Supreme Court has held that the word “property” is wide enough to include a ‘chose in action’.

Similarly, in Common Cause vs Union of India, reported in (1999) 6 SCC 667, the Supreme Court has held that the word “property” means the property which can be entrusted or over which dominion may be exercised as entrustment of property and this an essential ingredient of Section 405.

Section 406 I.P.C. punishes Criminal Breach of Trust with punishment of imprisonment upto 3 years, or with fine, or with both.

Section 407, which is reproduced hereunder is another specie of Criminal Breach of Trust:

Criminal Breach of Trust by carrier, etc. – Whoever, being entrusted with property as a carrier, warfinger or warehouse-keeper, commits Criminal Breach of Trust, in respect of such property, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine”.

Where the Data is entrusted to a carrier, warfinger or warehouse-keeper, who commits Criminal Breach of Trust, is liable to be punished with imprisonment of upto 7 years with fine.

In so far as Data Criminals from amongst employees are concerned,  Section 408 I P C, which is as follows, should be used as a strong weapon of deterrence, since punishment extends to imprisonment of 7 years with fine.

Criminal Breach of Trust by clerk or servant – Whoever, being a clerk or servant or employed as a clerk or servant, and being in any manner entrusted in such capacity with property, or with any dominion over property, commits Criminal Breach of Trust in respect of that property, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.”

Section 409 is a specie of Criminal Breach of Trust by a merchant and others which entails a punishment of imprisonment extending to life or 10 years, with fine.  Section 409 reads as under:-

Criminal Breach of Trust by public servant, or by banker, merchant or agent.- Whoever being in any manner entrusted with property, or with any dominion over property in his capacity of public servant or in the way of his business as a banker, merchant, factor, broker, attorney or agent, commits Criminal Breach of Trust in respect of that property, shall be punished with imprisonment for life, or with imprisonment of either description for a term which may extend to ten years, and shall also be liable to fine.”

Section 409 should be activated against Data Criminals from amongst the independent contractors (Call Centres etc.) to whom Data may be entrusted in the course of business for carrying out specific tasks / assignments.

It is suggested that the Agreements with employees and independent contractors ( Call Centres etc. ) should clearly stipulate an entrustment of Data to them, during the course of employment or business, as the case may be.

The issue of criminal liability of a Company and its’ Principal Officers under the Indian Penal Code, 1860 and other Laws, has agitated the minds of Courts and Jurists for a long time.  Recently, the Supreme Court in Standard Chartered Bank vs Directorate of Enforcement, reported in (2005) 4 SCC page 530, inter-alia, has held that  ‘the generally accepted modern rule is that except for such crimes as a corporation is held incapable of committing by reason of the fact that they involve personal malicious intent, a corporation may be subject to indictment or other criminal process, although the criminal act is committed through its agents.’

The Supreme Court  has also held as follows:-

“We do not think that there is a blanket immunity for any company from any prosecution for serious offences merely because the prosecution would ultimately entail a sentence of mandatory imprisonment.  The corporate bodies, such as a firm or company undertake a series of activities that affect the life, liberty and property of the citizens. Large-scale financial irregularities are done by various corporations.  The corporate vehicle now occupies such a large portion of the industrial, commercial and sociological sectors that amenability of the corporation to  criminal law is essential to have a peaceful society with stable economy.”

The Supreme Court in Radhey Shyam Khemka & Anr vs State of Bihar, reported in (1993) 3 SCC 54, has held that the persons managing the affairs of a Company cannot use the juristic entity and corporate personality of the Company as a shield to evade themselves from prosecution for offences under the Indian Penal Code.  The Supreme Court also held as follows:-

“It need not be impressed that for prosecution for offences under the Penal Code the complainant has to make out a prima-facie case against the individuals concerned, regarding their acts and omissions which constitute the different ingredients of the offences under the Penal Code.  It cannot be overlooked that there is a basic difference between the offences under the Penal Code and acts and omissions which have been made punishable under different Acts and statutes which are in nature of social welfare legislations.  For framing charges in respect of those acts and omissions, in many cases, mens rea is not an essential ingredient; the concerned statute imposes a duty on those who are in charge of the management, to follow the statutory provisions and once there is a breach or contravention, such persons become liable to be punished.  But for framing a charge for an offence under the Penal Code, the traditional rule of existence of mens rea is to be followed.”

Following the aforesaid legal principles, Call Centre Companies and the Principal Officers, could be implicated for Data Crimes.

Since a Company, being a juristic entity, cannot suffer corporal punishment, on conviction under I.P.C., 1860, a fine could be imposed on it.  For making the Promoters / Directors / Principal Officers liable under I.P.C., 1860, their respective roles in the commission of the offence would need to be proved.  They would not be automatically liable upon conviction of the Company, as there is no provision in I.P.C., 1860 as Section 85 of I.T. Act, 2000.

 The offence of Criminal Breach of Trust, species of which are stipulated under Sections 405 – 409 I.P.C. as aforesaid, are cognizable and non-bailable  offences, meaning thereby that the police is under a legal duty to investigate these offences and prosecute the accused, who do not have a right to bail but have to apply for bail which may or may not be granted by the Court, depending upon a confluence of factors. In Delhi, there is a special branch of Delhi Police, exclusively handling cases of Criminal Breach of Trust. Further, the complainant can directly move the Court with a criminal complaint in writing under Section 190 read with Section 200 of Code of Criminal Procedure, 1973.

Traps:

There is no bar under the law against the use of traps in the form of decoy customers etc.  Traps are generally used in cases under the laws on drugs, prostitution and corruption.  Though, there is no bar against the use of traps to catch the criminals, the evidence so collected with the use of traps, can be used only as supportive and corroborative evidence.  The evidence collected by the use of traps cannot be made the sole-basis for conviction.  Hence, traps can be used to catch and deter Data Criminals, as supportive evidence.  Collecting evidence through trap witnesses in the form of decoy customers, cannot replace evidence of the actual crime committed.

The following observations of the Supreme Court in Som Prakash vs State of Delhi, reported in (1974) 4 SCC 84, are apposite in this regard:-

6. Yet, the contentions have been ingeniously and hopefully presented.  The basic attack has been on the morally murky mechanism of criminal trap.  Who has not – our legends say, even rishis have – succumbed to attractive temptation in loneliness laid?  And Courts have frowned upon evidence procured by such experiments since the participants are prone to be over-anxious and under-scrupulous and the victims are caught morally unawares.  Even so, there are traps and traps.  Where you intercept the natural course of the corrupt stream by setting an invisible contraption, its ethics is above board.  On the contrary, to test the moral fibre of an officer whose reputation is suspect, if you lay a crime ‘mine’ which explodes when he, in a weak moment, walks on it the whole scheme is tainted.  Of course, our social milieu is so vitiated by a superstitious belief that any official can be activised by illegal gratification, so confidential is the technique of give and take in which the white collar offender is adept and so tough is the forensic problem of proof beyond reasonable doubt by good testimony in this area, that the only hope of tracking down the tricky officers is by laying traps and creating statutory presumptions.  Even Kautilya has stated that “just as fish moving under water cannot possibly be found out either as drinking or not drinking water so government servants cannot be found out while taking money”.  Ex cathedra condemnation of all traps and associate witnesses is neither pragmatic nor just, nor is it fair to denounce all public servants indiscriminately.  Judicial attitudes have to be discriminating, as has happened in this case.  The High Court has, after careful study, chosen to accept the bona fides of the trap and its author Bishnoi, a senior police official of the S.P.E. (P.W.27).  We cannot accede to the theory that the trapping of corrupt officials, in the usual course, is a polluted procedure.

7. The appellant has cited decisions in support of his plea that traps are tainted and trap witnesses are unworthy.  The rulings do not go so far and merely indicate the need for caution and corroboration depending on the circumstances of each case.  An awakened judicial conscience and an alert critical appraisal are the best tools in this process.”

I.T.Act, 2000

Some of the provisions of the I.T.Act, 2000 can also be invoked, parallel to the aforesaid provisions of I.P.C., against Data Criminals.  For instance, Section 43 (b) of the I.T.Act, 2000, which is as follows, makes the Defendant liable to pay damages by way of compensation not exceeding Rs. 1 crore to the person affected.

43. If any person without permission of the owner or any other person who is incharge of a computer, computer system or computer network,-

a)           accesses or secures access to such computer, computer system or computer network;

b)           downloads, copies or extracts any data, computer database or information from such computer, computer system or computer network including information or data held or stored in any removable storage medium;……….

d)      damages or causes to be damaged any computer, computer system or computer network, data, computer database or any other programmes residing in such computer, computer system or computer network;

g)      provides any assistance to any person to facilitate access to a computer, computer system or computer network in contravention of the provisions of this Act, rules or regulations made thereunder;

he shall be liable to pay damages by way of compensation not exceeding one crore rupees to the person so affected.”

“Computer database” has been defined as follows in Explanation (ii) to Section 43:

“computer database” means a representation of information, knowledge, facts, concepts or instructions in text, image, audio, video that are being prepared or have been prepared in a formalized manner or have been produced by a computer, computer system or computer network and are intended for use in a computer, computer system or computer network”

Section 43, therefore, imposes monetary liability on  Data Criminals.  The victim / Plaintiff need not struggle in the corridors of the dilatory Civil Justice System in India, to seek compensation under Section 43 of the I.T.Act, 2000.

Sections 46 & 47 of the Information Technology Act create a specialised adjudicatory mechanism to redress claims under Section 43.  Sections 46 & 47 of the Information Technology Act are as follows:-

“46  Power to adjudicate: -(1) For the purpose of adjudging under this Chapter whether any person has committed a contravention of any of the provisions of this Act or of any rule, regulation, direction or order made thereunder, the Central Government shall, subject to the provisions of sub-section (3), appoint any officer not below the rank of a Director to the Government of India or an equivalent officer of a State Government to be an adjudicating officer for holding an inquiry in the manner prescribed by the Central Government.”

“47   Factors to be taken into account by the adjudicating officer. While adjudging the quantum of compensation under this Chapter, the adjudicating officer shall have due regard to the following factors, namely:-

a)           the amount of gain of unfair advantage, wherever quantifiable, made as a result of the default;

b)           the amount of loss caused to any person as a result of the default;

c)           the repetitive nature of the default.”

An appeal against the order of the Adjudicating Authority lies before the Cyber Appellate Tribunal.

Section 66 of the I.T.Act, 2000 widely defines Hacking as follows:-

66.  Hacking with computer system.- (1) Whoever with the intent to cause or knowing that he is likely to cause wrongful loss or damage to the public or any person destroys or deletes or alters any information residing in a computer resource or diminishes its value or utility or affects it injuriously by any means, commits hacking.

(2)     Whoever commits hacking shall be punished with imprisonment up to three years, or with fine which may extend upto two lakh rupees, or with both.”

Whether or not Data Criminals would be covered under the widely defined “Hacking”, as aforesaid, is a debatable question, even though, the provision is very widely worded.  Whether the misappropriation and unauthorised transfer of Data amounts to diminishing the value or utility of the information residing in a computer resource, so as to bring it under the definition of Hacking, is a debatable proposition.  An authoritative judicial pronouncement of this issue, by the High Court (s) or Supreme Court,  would only settle the issue with some finality.  Until then, Section 66 should be charged against the accused along side the various provisions of  I.P.C. as stated above.  The focus, however, should be on the provisions of I.P.C., 1860.

Certain Amendments have been proposed to the I.T. Act, 2000, whereby Section 66 is sought to be replaced.  The proposed portion of Section 66, relevant for our purposes, is as follows:-

“a)     If any person, dishonestly or fraudulently, without permission of the owner or of any other person who is incharge of a computer resource

( i)     downloads, copies or extracts any data, computer data base or information from such computer resource including information or data held or stored in any removable storage medium;

he shall be punishable with imprisonment upto one year or a fine which may extend upto  Rs. Two lakhs or with both;”

If the aforesaid Amendment is carried out, unauthorised data transfer etc. would become a specific offence under the I.T. Act, 2000, for which the accused if convicted, would be liable for corporal punishment.  However, whether and when the said proposal becomes law, is uncertain.  Hence, till then, we need to proceed on the basis of the present Section 66 of the I.T. Act, 2000.

Section 65 of the I.T. Act, 2000 punishes tampering with computer source code, which does not cover unauthorized data transfer.

Section 77 of the I T Act, which is as follows, stipulates that the penalty thereunder is not exhaustive, thereby implying in other words that other laws such as I.P.C., 1860 could be applied along with the I T Act, 2000.

77. Penalties or confiscation not to interfere with other punishments.- No penalty imposed or confiscation made under this Act shall prevent the imposition of any other punishment to which the person affected thereby is liable under any other law for the time being in force.”

So as to enhance the credibility of the investigation into offences under the I.T. Act, 2000, the powers of investigation and arrest, have been conferred only to Police Officers not below the rank of D.S.P. and other stipulated Officers.  Wide powers of arrest without warrant have been conferred under Section 80 of the I.T. Act, 2000.

Section 85 of the I T Act, 2000 imposes criminal liability on Principal Officers of a Company accused for violations thereunder:

85 Offences by Companies.-  (1) Where a person committing a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder is a company, every person who, at the time the contravention was committed, was in charge of, and was responsible to, the company for the conduct of business of the company as well as the company, shall be guilty of the contravention and shall be liable to be proceeded against and punished accordingly.

Provided that nothing contained in this sub-section shall render any such person liable to punishment if he proves that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention.

(2)     Notwithstanding anything contained in sub-section (1), where a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder has been committed by a company and it is proved that the contravention has taken place with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly.”

The Copyright  Act,1957

The definition of “literary work” under Section 2(o) of the Copyright Act, 1957 includes tables and Computer Databases.  Infringement of Copyright is defined under Section 51 of the Act.   Infringement of Copyright is also a criminal offence under Section 63.

Section 69 of the Copyright Act , 1957, like Section 85 of the I.T.Act, 2000, makes the Principal Officers of the Company committing an offence, also liable for criminal prosecution.  Offences under Section 63 of the Copyright Act , 1957 are also cognizable and non-bailable.

Amendments Information Technology (Amendment Act) 2008:

a) Vide Section 43A and 72A, protection of sensitive personal information and data has been included.

b) Maintenance of reasonable security practices and procedures

c) civil and criminal liabilities

Following amendment of I.T. Act in 2008, the following provisions have become effective:

Section 66B. Punishment for dishonestly receiving stolen computer resource or communication device.- Whoever dishonestly receives or retains any stolen computer resource or communication device knowing or having reason to believe the same to be stolen computer resource or communication device, shall be punished with imprisonment of either description for a term which may extend to three years or with fine which may extend to rupees one lakh or with both.

Section 66-C Punishment for identity theft. (Inserted Vide ITA 2008)
Whoever, fraudulently or dishonestly make use of the electronic signature, password or any other unique identification feature of any other person, shall be punished with imprisonment of eitherdescription for a term which may extend to three years and shall also be liable to fine which may extend to rupees one lakh.

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Strategies For Data Protection:

a) Agreement(s) with an employee must contain suitable clauses by which Data / Confidential Information ( as defined in the Agreement ) is entrusted by the employer/company to the employee;

b)           The entrustment of Data, should also be clearly stipulated in the Agreement(s) with employees and other independent contractors so as to effectively deter Data Criminals and they should be made responsible to ensure that Data Crimes are not committed.

c) Confidentiality clauses should be incorporated

“Since information by itself is not tangible by nature, the relationship of trust with respect to the information including confidential information under entrustment to the employee at any point during the course of his employment, shall continue even after the employee leaves the employment of the Company and after returning or delivering the tangible medium containing confidential information”

d)           Employees should be held liable for “misusing confidential information or using the same for any personal use or use, other than strictly for performing duties in the course of employment with the Company”.

e) Employees should give an undertaking not to do any act of commission or omission which is in breach of trust or contract, including sell, transfer, send, give access to any person, remove, move, copy, disclose, take back-ups or use the same, other than in the manner as specifically authorised by the Company”.

You must check the following before embarking upon buying any property, be it a house, land or an ownership flat or even a Co-operative society flat. The splurge of developers and builders in every nook and corner is of serious concern. So buyer beware…

1.Clear title of the land
2. Mutation of land
in current owners name
3. Development agreement between developer and Plot owner (registered deed)
4. General Power of Attorney (registered Rs. 1000 stamp paper)
OR notarized in favour of developer by owner
5. Last paid local authority (municipality) tax receipt
6. Last paid electricity bill
7. Building and Floor Plan approval
8. Intimation of Disapproval (IOD) from Municipality
(not applicable everywhere)
10. NOC Sewerage
11. NOC Electricity
12. NOC Water
13. NOC Environment
14. NOC Fire
15. NOC Garbage Requirements
16. Urban land ceiling certificate
17. Commencement certificate
18. Structural safety certificate
(may not be available immediately)

Before buying property enter into an agreement for sell with the developer and owner detailing:
A) your selling rights
B)Construction Deadline (Penalties)
C)Transfer of undivided share to buyer
D) Difference between super built up area and carpet area
E) Hidden Costs

The concept of “Non Resident Indian” has been defined differently under various statutes such as the Income Tax Act, 1961 and Foreign Exchange Management Act (FEMA), 1999. The Citizenship Act, 1955 does not define “Non Resident Indian”. The Citizenship Act mainly provides for the acquisition and termination of citizenship. In brief, citizenship of India can be acquired by birth, descent, registration and naturalization.

Non Resident (NR) Vs. Non Resident Indians (NRI)

 

The term ‘Non Resident’ is a very broad term and includes non-residents who can be categorized as under:

(i)                Non Resident Indian citizens (NRIs),

(ii)             Non-resident foreign citizens, who may be further categorized as:

(a)  Non-resident foreign citizens of Indian origin (PIOs)

(b)  Non-resident foreign citizens of non-Indian origin.

Non-resident persons of Indian origin are given special treatment in respect of investment in India and for certain purposes they are treated almost at par with non-resident Indian nationals under FEMA, 1999 and are collectively referred to as “Non-resident Indians”.  (NRIs).

 

The term Non-resident (NR) thus includes NRIs and other non-resident foreign nationals. For the present purpose, we are concerned with only the concept of “Non Resident Indian”.

 

  1. Non Resident Indian under FEMA, 1999:

 

Section 2(w) of the Foreign Exchange Management Act, 1999 defines “person resident outside India” as a person who is not a resident in India.

 

Section 2(v) of FEMA defines “person resident in India” as follows:

“ (v)    “person resident in India” means-

 

(i)                a person residing in India for more than one hundred and eighty-two days during the course of the preceding financial year but does not include-

 

(A)            a person who has gone out of Indian or who stays outside India, in either case-

(a)        for or on taking up employment outside India, or

(b)        for carrying on outside India a business or vocation outside India, or

(c)        for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period;

 

(B)             a person who has come to or stays in India, in either case, otherwise than-

(a)        for or on taking up employment in India, or

(b)        for carrying on in India a business or vocation in India, or

(c)        for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period;

 

(ii)             any person or body corporate registered or incorporated in India,

(iii)           an office, branch or agency in India owned or controlled by a person resident outside India,

(iv)           an office, branch or agency outside India owned or controlled by a person resident in India.”

 

It is clear that persons who are not residents in India as per the aforesaid definition, would be a Non Resident Indians.

 

From the aforesaid definition, it is clear that an individual would be an NRI in the following cases:-

(a)              When a person stays in India for less than or up to 182 days during the preceding financial year. The period of stay may not be continuous. The period of stay shall be calculated by adding up days of stay in India during that financial year.

(b)              When a person stays outside India for any of the following purposes:

(i)                for or on taking up employment outside India, or

(ii)             for carrying on outside India a business or vocation outside India, or

(iii)           for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period.

In the above cases, a person becomes a Non-Resident Indian irrespective of the period of stay in India. It is relevant to state that while the period of stay in India (in (a) above) is to be calculated for the preceding financial year, the staying abroad for any of the aforesaid purpose (in (b) above) shall be reckoned for the current financial year.

(c)              When a person comes and stays in India, for any purpose other than the following:

(i)                for or on, taking up employment in India; or

(ii)             for carrying on in India a business or vocation in India; or

(iii)           for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period.

 

In such cases too, the person remains a non-resident, even if the period of his stay in India is more than 182 days. Again, in such cases, the period of stay in India shall be reckoned for the preceding financial year, while the event of coming or staying in India for a purpose as aforesaid shall be reckoned for the current financial year.

 

The aforesaid principles can be explained with the help of the following illustrations:

 

Mr. ‘A’ leaves India on 1st August, 2002 for taking up employment in a software company in USA. Mr. ‘A’ shall be treated as a non-resident though his stay in India during the preceding financial year was more than 182 days. However, till the date of his leaving India, he would be deemed as a resident.

 

Mr. ‘B’ comes to India during August 2002, for the purpose of the marriage of his son and stays here, upto March 2003. He shall be treated as non-resident for the year 2003-04 though he stays in India for more than 182 days during the year 2002-03.

 

The main emphasis is on the purpose of stay outside India. So long as an Indian citizen is engaged in some gainful employment outside India, he/she will be treated as ‘non-resident’ irrespective of the period of such employment.

 

Similarly, Non-Resident Indian citizens who come to India on temporary visits i.e. for purposes other than employment, business, etc. indicating no intention to stay in India indefinitely, even if their period of stay in India exceeds 182 days, will continue to be treated as non-resident. It is only when they come back to India permanently for employment or for carrying on any business or vocation in India or in circumstances indicating their intention to stay in India for an indefinite period that such persons will be treated as resident in India.

 

4.         The term “persons of Indian origin” has also been defined under the various regulations framed under FEMA 1999. “A Person of Indian Origin” means a citizen of any country other than Bangladesh or Pakistan, if-

(a)              he at any time held an Indian passport; or

(b)              he or either of his parents or any of his grand-parents was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955); or

(c)              the person is a spouse of an Indian citizen or a person referred to in sub-clause (a) or (b).

Hence, even if a person acquires foreign citizenship, he may be a person of Indian origin.

 

5.         Non-Resident Indian under Income-tax Act, 1961:        The definition of a Non-Resident for the purpose of the Indian Income Tax Law is different than under the Foreign Exchange Management Act, 1999.

There are 3 categories of residential status under the Income Tax Law:

(i)                Resident in India.

(ii)             Not Resident in India i.e. non-residents, and

(iii)           Resident but not ordinarily resident.

 

Residential status is determined on the basis of physical presence for every year separately as per the provisions of Income-tax Act, 1961 as explained hereunder:

 

A.        Resident

(a)              An individual is resident if any of the following conditions are satisfied:

(i)                he stayed in India for 182 days or more during the previous year, or [Section 6(1) (a)]

(ii)             he stayed in India for 365 days or more during the four preceding years and stays in India for at least 60 days (182 days in case of an Indian citizen or a person of Indian origin coming on a visit to India or 182 days in case of an Indian citizen going abroad for an employment) during the previous year.[Section 6(1) (c)]

Stay in India for the above criteria may be continuous or intermittent.

(b)              Hindu Undivided Family (HUF) or firm or other Association of persons is resident of India except in cases where the control and management of its affairs is wholly situated outside India in the previous year. [Section 6(2)]

(c)              A company is resident in India of-

(i)                it is an Indian company, or

(ii)             during the previous year, the control and management is situated wholly in India. [Section 6(3)]

A person resident in India, in a previous year in respect of any source of income shall be deemed to be resident in India in respect of his other sources of income. [Section 6(5)]

 

 

 

B.        Non-Resident

A person is non-resident if he is not resident in India. [Section 2(30)]

 

  1. Resident but Not Ordinarily Resident

An individual or an HUF is treated to be not ordinarily resident in India in any previous year if he or the manager of HUF-

(a)              has not been resident in India in 9 out of the 10 previous years preceding the previous year; or

(b)              has not during the seven previous years preceding that year, been in India for a period of or periods amounting in all to 730 days or more.

 

From the aforesaid provisions of the Income Tax Law, the following principles are culled out:

 

(i)        In case of Indian citizen who leaves India during previous year for the purpose of employment and an Indian citizen or a person of Indian origin living abroad coming on a visit to India

The residential status of such person is determined after looking into the following conditions:

 

(a)       He stays in India for at least 182 days during the previous year.

(b)       He is resident in India for at least 9 out of 10 years preceding the previous year.

(c)              He has been in India for at least 730 days during 7 years preceding the previous year.

 

Such a person will be resident and ordinarily resident, if he satisfies all conditions (a) to (c) above.

 

If such a person satisfies condition (a) but does not satisfy either of conditions (b) or  (c) above, such a person will be resident but not ordinarily resident.

 

Such person will be non-resident if he does not satisfy condition (a) above.

 

(ii)       In case of any other individual

 

For individuals other than those included in category (i), we have to look in to the following four conditions to determine the residential status:

(a)       He stays in India for at least 182 days during the previous year.

(b)       He stays in India for at least 60 days during the previous year and for at least 365 days during 4 years preceding the previous year.

(c)       He is resident in India for at least 9 out of 10 years preceding the previous year.

(d)       He has been in India for at least 730 days during 7 years preceding the previous year.

A person will be resident and ordinarily resident in India if he satisfies either of the conditions (a) or (b) and both the conditions (c) and (d).

A person will be resident but not ordinary resident if he satisfies either of the conditions (a) or (b) and does not satisfy either of the conditions (c) or (d).

If the person satisfies neither of the conditions (a) or (b), he is non-resident.

 

Since the principals for determining the residential status of a person are different under FEMA and the Income Tax Act, 1961, a person may be a non-resident under one of the said laws and a resident under the other. By satisfying the conditions of non-residency under both the laws, the person is a Non-Resident Indian (NRI) under both the said laws.

 

The residential/non-residential status of a person can be determined by applying the aforesaid principles.