Real Money Gaming and Gambling in India

Real-Money Gaming (RMG) is basically the act of betting or wagering or investing, money or any other monetary entity, on any sort of contest in which one party wins while the other one loses, so as to claim the winners prize and earn more than what was originally invested or betted or wagered. So it is quite imperative that RMG is a sophisticated business structure. In a normal and typical RMG setup, there is a manager or operator who overlooks the entire setup, a pool of investors who are hoping to maximise their profits, a pool of money that contains all the investments from each investor. Now, the investors, as well as their investment, are divided into different groups based upon the contestant they wager upon or the outcome of the contest that they wager upon, depending upon the situation. Finally, when the contest is complete and the winning contestant has been announced, the entire pool of investment money is divided among the investors who had wagered upon the winning contestant, proportionate to their wager amount. Thereby, the investors who had wagered on the losing contestant lose the entirety of their investment. The most common examples of such a setup include, Horse race betting, Poker, Cricket betting, Football Betting, Online game betting, etc.

It is critical to understand here that the RMG has several angles. Upon preliminary glance, it might seem that RMG is just another gambling contraption. This view might be substantiated by the fact that RMG shares many features of typical gambling mechanisms like winner-takes-all, pool of money, addiction to earn-money-fast idea, etc. , however it is crucial to understand and analyse the concept of RMG without being obliged to any such prejudices.

RMG may be classified into 2 divisions depending upon the factors that determine the outcome of an RMG. The First division includes the concept of ‘game of chance’ in RMG, wherein the RMG involves such a contest, the outcome of which is totally dependent upon the sheer luck of the investor. For example, Roulette, slot machines, etc. The Second division includes the concept of ‘game of skill’ in RMG, wherein the RMG involves such a contest, the outcome of which is possible to be calculated and predicted out of sheer skills, intuition, experience and aptitude of the investor. For example, Poker, Fantasy sport betting, etc. Therefore, we can see that, RMG does not absolutely imply a setup based upon the principles of gambling, it can also include a mechanism of business that rewards the investor who has higher skill or aptitude in that particular game.

It seems, therefore, that imposition of any restrictions upon RMG would not be a reasonable choice since the same might hamper the opportunity of many skilled and able investors to earn what they deserve. The same logic has been adopted by many countries worldwide including USA, EU, UK, and subsequently they have legalised the business structure of RMG by adding certain regulations and safety measures for the investors. RMG operators go above and above to safeguard the user when it comes to “trust” and “bots,” employing “Random Number Generation” (RNG) methods that have been independently verified by a third party as a standard instrument for guaranteeing procedural fairness of cards. They also include very powerful machine learning-based “anti-fraud” algorithms that ensure high game integrity and player safety against intra-player collusion. Every participant’s KYC has been verified, and the industry is moving to “video KYC,” which will verify the end user’s identity and age.

Further, Skill-based games like “Poker” are gaining in popularity, says Shivanandan Pare, Executive Director & CEO of Gaussian Networks, since they have a good possibility of making some money. It truly is a component of a bigger ecosystem. According to him, the scale of the global gaming market has already surpassed that of the music and film industries combined. I think the decade for streaming websites would be 2010–2020, while the decade for gaming would be 2020–2030. According to a joint report by Sequoia India and BCG, the market for mobile gaming now generates around $1.5 billion in revenue, and by 2025, it is anticipated to reach $5 billion. Given that it has shown the aptitude and skill sets necessary to meet international gaming standards, India will soon be seen as one of the industry’s leaders. Gamers are progressively entering competitions to showcase their gaming prowess and to represent their nation internationally. Mobile gaming has enabled many Indian players and streamers to support themselves and mix their interests with their jobs.

Therefore, it is quite reasonable that India must step into the shoes of aforementioned countries and become a leading player in RMG. Under the Section 30 of The Indian Contract Act, 1872, any agreement made by way of wager is void in nature and unenforceable in the Indian Courts of Justice. However, the same section provides an exception to the wagering on horse racing. This shows that the enactment is strictly in favour of the second division of RMG that includes the concept of ‘game of skills’. Being a matter of the State List according to the Schedule 7 of The Constitution of India, gaming and gambling laws in India are governed by regulations that vary from state to state. This would imply that something that is legal in one state may be illegal in another. Gambling is severely banned in India, with the exception of a few specific activities like lotteries and horse racing. While proponents of regulated gambling contend that it may be a significant source of state revenue, critics of gambling assert that it promotes crime, corruption, and money laundering.

In India, there are two types of games: games of skill and games of chance. The state of AP vs. K. Satyanarayana case from 1968 found that rummy is a game of skill. However, the Court stated in its ruling that it might constitute a crime under AP legislation if there is gambling present or if the gambling establishment is profiting from the game of rummy. SC also noted that the three-card game, often known as brag, flush, and other names, is just a game of chance. This rationale was reflected further in the judgements, M.J. Sivani v. State of Karnataka (1995) and Dr. K.R. Lakshmanan v. State Of Tamil Nadu And Anr (1996).

Further, In the matter of G. Network Private Limited vs. Monica lakhanpal, the Delhi District Court, after relying upon order 36 rule(1) of CPC, declared that:

  • Playing a game of skill for stakes does not constitute gambling;
  • Online games cannot be compared to actual games since playing skill games for money is only permitted in its physical form;
  • It’s against the law to lure customers or gamers with promises of prize money;
  • Gaming websites that share a portion of the winnings are prohibited since they operate like an online casino.

Up until December 4, 2017, the question of whether poker is a game of skill or chance was never raised in court. According to the Gujarat Prevention of Gambling Act of 1887, poker is a game of chance and is, thus, considered gambling in the case of Dominance games pvt. Ltd. v. state of Gujarat. Due to the fact that poker evolved from the chance-based game teen patti. Poker wagering or betting entails a stake because it is an essential component of the game.

In a recent case, Justice Sanjay Kishan Kaul and Justice Dinesh Maheshwari, members of the Supreme Court’s review panel, had approved Dream11’s fantasy sports structure as a game of skill. Varun Gumber had filed a review case, which the court summarily dismissed, asking for the reopening and review of the Supreme Court’s dismissal order relating to the 2017 Punjab & Haryana High Court decision declaring fantasy sports to be a game of skill.

The Supreme Court ultimately rejected seven petitions. Three of these petitions centred on the question of whether the GST should be applied based on determining whether fantasy sports qualify as betting and gambling. The Supreme Court determined in one decision that only the question of whether GST should be applied by courts can be raised in relation to fantasy sports’ legitimacy as a legitimate company and game of skill.

Additionally, a court made up of Justice Nariman and Justice Gavai dismissed the petition on legality in July 2021 and stated that the problem of fantasy sports being a game of skill rather than gambling or betting is no longer res integra, meaning the legal issue has been definitively addressed.  In September 2022, Justice Gavai and Justice CT Ravi Kumar issued an order based on the 2021 order to reject a further SLP on the subject. Varun Gumber filed a review petition, claiming that the Punjab and Haryana High Court’s decision contained an obvious mistake. After careful consideration, the petition was dismissed on the merits as well as for tardiness, with the bench observing that the judgements appear to be error-free. Accordingly, the order stated that no revisiting of the subject is necessary.

Senior Attorney Gopal Jain offered the following statement in response to the latest development: “It is crucial to note that the Supreme Court of India dismissed this review petition on the basis of merits and unequivocally said that there was no mistake apparent in the decision of the Hon’ble High Court of Punjab and Haryana. The legality of the fantasy sports format provided by Dream11 in the nation has now been examined by a total of 9 Supreme Court justices, who have all consistently concluded that it is an activity protected by Article 19(1)(g) of the Constitution as a game of skill. It should be emphasised that the argument against categorising fantasy sports as gambling for the purposes of taxation has already been resolved, leaving the court to consider simply whether or not the GST should be applied to fantasy sports as a legal form of commerce. As a result, any attempt to classify Fantasy Sports as “betting” in the eyes of the law is no longer under discussion because the matter has been decided upon based on both the facts and the law”.

The Rajasthan High Court decided that Fantasy Sports did not constitute gambling in 2019 in the Ravindra Singh Chaudhary vs. Union of India case since its players would require abilities like those of a genuine sports team management. The State’s prohibition on playing online card games like rummy, poker, etc. has been overturned by the Tamil Nadu High Court in a recent decision. These favourable advances about the distinction between “games of chance” and “games of skill” will go a long way toward establishing a narrative in favour of gaming as opposed to gambling.

The latest development in this regard is the amendment done by the Ministry of Electronics and Information Technology (MeitY) in the IT Rules, 2021, that were scheduled to be executed on April 6, 2023. The Amendments mark a turning point for India’s real money online gambling sector, which has long sought national regulations in place of state-specific legislation. While the Amendments offer centrally administered rules, they do not take the role of state-level anti-gambling legislation. As a result, State-level activity may continue despite the Amendments. In accordance with the Government’s overarching goal of eliminating prescriptive legislation and improving the ease of doing business in India, the Amendments propose a light-touch, co-regulatory framework between MeitY and registered self-regulatory bodies (SRB). The Amendments differ from the prior draft proposed by MeitY in January (“Proposed Amendments”) in that they weaken or loosen a few requirements for online gaming intermediaries (or “OGI”). However, other requirements that the sector had criticised in the Proposed Amendments, such strict KYC standards, have been kept.

Real money gaming providers are required by MeitY’s Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules, 2023, to register with a self-regulatory body (SRB) that will evaluate whether the game is “permissible” or not. In a press conference on Wednesday, Minister of State for Electronics and Information Technology Rajeev Chandrasekhar said that three SRBs will shortly be acknowledged. “There will now be more governmental oversight on how SRBs function,” Shambhavi Ravishankar, an advisor at Ikigai Law, told The Hindu. Most of the standards in the guidelines are already included in the industry’s best practices for responsible gaming. According to Mr. Chandrasekhar, if these games are not declared “permissible,” they will not be covered by the amendment and the States may be able to retaliate against them for being betting or gambling sites. As a result, games that are approved will be permitted to function lawfully, even if they need deposits in the hopes of winning. Mr. Chandrasekhar stated that video games without monetary exchange do not require consulting an SRB, allaying the conventional gaming sector’s worries about the current form of the Rules. The real-money gambling sector embraced the change. Joy Bhattacharjya, the director general of the Federation of Indian Fantasy Sports (FIFS), described the Rules as a “pivotal moment” for the sector. As our members begin the compliance process, “We look forward to engaging with MeitY to seek necessary clarifications,” the speaker stated. The I&B Ministry’s advice should not apply to real money games that are validated by SRBs and are thus permitted by IT standards, according to Ms. Ravishankar.

As per Article 21 of the Constitution of India, “No person shall be deprived of his life or personal liberty except according to procedure established by law, nor shall any person be denied equality before the law or the equal protection of the laws within the territory of India”. It also covers a just and fair trial without any arbitrary procedure, which confers that arrest should not only be legal but also justified. In this context, this article consists of the procedural and constitutional rights of the accused before and after the arrest in India. Except when exceptions are created, the accused person, unless and until provided otherwise, is considered innocent until proven guilty before the court of law.

Rights of an Accused Person

  • Rights to Know the Grounds of Arrest

1. Article 22 of the Constitution of India deals with the protection against arrest and detention in certain cases:

  • No person who is arrested shall be detained in custody without being informed, as soon as possible, of the grounds for such arrest nor shall he be denied the right to consult and to be defended by a legal practitioner of his choice.

2. Section 50 of the Code of the Criminal procedure (Cr.P.C.) states that the person arrested has to be informed of the grounds of arrest and his right to bail:

  • Every police officer or other person arresting any person without a warrant shall forthwith communicate to him full particulars of the offense for which he is arrested or other grounds for such arrest.
  • Where a police officer arrests without warrant any person other than a person accused of a non-bailable offense, he shall inform the person arrested that he is entitled to be released on bail and that he may arrange for sureties on his behalf.

3. Section 50-A of the Code of the Criminal procedure (Cr.P.C.) talks about the obligation of the police officer making the arrest to inform about the arrest to a nominated person –

  • Every police officer or other person making any arrest under this Code shall forthwith give the information regarding such arrest and place where the arrested person is being held to any of his friends, relatives or such other persons as may be disclosed or nominated by the arrested person to give such information.

4. Section 55 of the Code of the Criminal procedure (Cr.P.C.) deals with arrests when a police officer deputes a subordinate to arrest the accused without a warrant.

  • When any officer in charge of a police station or any police officer making an investigation under Chapter XII requires any officer subordinate to him to arrest without a warrant (otherwise than in his presence) any person who may lawfully be arrested without a warrant, he shall deliver to the officer required to make the arrest order in writing, specifying the person to be controlled and the offense or other cause for which the arrest is to be completed and the officer so required shall, before making the arrest, notify to the person to be arrested the substance of the order and, if so required by such person, shall show him the order.

5. Section 75 of the Code of the Criminal procedure (Cr.P.C.) provides that the police officer or other person executing a warrant of arrest shall notify the substance thereof to the person to be arrested and, if so required, shall show him the warrant.

A landmark judgment of Joginder Kumar v. State it was held that although the police had the absolute legal powers to arrest a person in a criminal case, every arrest had to be justified. Arrests could not be made routinely, merely on an allegation or a suspicion of their involvement in a crime.

Every arrest should be made after the police officer reached a reasonable satisfaction after the Investigation that the complaint was genuine and bona fide, the accused was complicit in the Crime, and the arrest was necessary and justified.

  • Right to be Produced before the Magistrate without Unnecessary Delay

1. Article 22 (2) of the Constitution of India provides that every person who is arrested and detained in custody shall be produced before the nearest magistrate within twenty-four hours of such arrest, excluding the time necessary for the journey from the place of detention to the court of the magistrate and no such person shall be detained in custody beyond the said period without the authority of a magistrate.

2. Section 57 of the Code of the Criminal procedure (Cr.P.C.) stipulates that the subject to the terms of the arrest, a police officer who arrests without a warrant should produce the arrested individual without undue delay before the Magistrate with jurisdiction or a police officer in charge of the police station.

3. Section 76 of the Code of the Criminal procedure (Cr.P.C.) states that the person who is arrested is to be brought before Court without delay.

  • The police officer or other person executing a warrant of arrest shall without unnecessary delay, bring the person arrested before the Court before which he is required by law to produce such person:

As mentioned in Section 57 that such delay shall not, in any case, exceed twenty- four hours exclusive of the time necessary for the journey from the place of arrest to the Magistrate’s Court.

  • Rights to be Released on Bail

Section 50 (2) of the Code of the Criminal procedure (Cr.P.C.) states that where a police officer arrests without warrant any person other than a person accused of a non-bailable offense, he shall inform the person arrested that he is entitled to be released on bail and that he may arrange for sureties on his behalf.

  • Right to a Fair and Just Trial

Article 14 of the Constitution of India states that every person is equal before the law means that every person in the dispute shall have equal treatment.

The Supreme Court has held in several judgments that a speedy trial is guaranteed by Article 21 of the Constitution. The right to a speedy trial is first mentioned in that landmark document of English law, the Magna Carta. In the case of Huissainara Khatoon v. Home Secretary, State of Bihar, the Hon’ble court held that the State could not avoid its constitutional obligation to provide a speedy trial to the accused by pleading financial or administrative inability. The State is under a constitutional mandate to ensure a speedy trial, and whatever is necessary for this purpose must be done by the State.

In Ashim v. National Investigation Agency, Hon’ble Supreme Court held that the deprivation of personal liberty without ensuring a speedy trial is inconsistent with Article 21 of the Constitution of India.

  • Right to Consult a Lawyer

1. Article 22 of the Constitution provides that no arrested person shall be denied the right to consult a legal practitioner of his choice.

2. Section 41D of the Code of the Criminal procedure (Cr.P.C.) provides that when any person is arrested and interrogated by the police, he shall be entitled to meet an advocate of his choice during interrogation, though not throughout the interrogation.

3. Section 303 of the Code of the Criminal procedure (Cr.P.C.) deals with the rights of the person against whom proceedings are instituted. Any person accused of an offense before a Criminal Court or against whom proceedings are created under this Code may be defended by a pleader of his choice.

4. Article 39 A of the Constitution of India states that the State shall secure that the operation of the legal system promotes justice based on equal opportunity and shall, in particular, provide free legal aid by suitable legislation or schemes or in any other way, to ensure that opportunities for securing justice are not denied to any citizen because of economic or other disabilities.

In the landmark case of Khatri v. the State of Bihar, Hon’ble Justice P.N. Bhagwati made it mandatory for Session Judges to inform the accused of their rights to free legal aid and to advise individuals if they are unable to retain a counsel to defend themselves caused by poverty or destitution. In Sheela Barse v. Union of India, the Hon’ble Court ruled that a person’s fundamental right to a speedy trial is contained in Article 21 of the Indian Constitution. Also, in the case of Suk Das v. Union Territory of Arunachal Pradesh, Hon’ble Justice P. N. Bhagwati stated that India has many illiterate people unaware of their rights. As a result, it is critical to developing legal literacy and awareness among the general public and is also an essential component of legal aid.

5. Section 304 of the Code of the Criminal procedure (Cr.P.C.) provides that where, in a trial before the Court of Session, the accused is not represented by a pleader, and where it appears to the Court that the accused has not sufficient means to engage a pleader, the Court shall assign a pleader for his defense at the expense of the State.

  • Right to Keep Silence

When a confession or statement is made in court, the magistrate must determine whether the announcement was made voluntarily or not. No one can be compelled to speak in court against their will. The right to remain silent is not recognized in any law, but it can be based on constitutional provisions or the Indian Evidence Act. The right to a fair trial is important because it helps ensure that people are treated fairly in court.

Article- 20(2) of the Constitution of India reiterates that no person, whether accused or not, cannot be compelled to be a witness against himself. This act of exposing oneself is the principle of self-incrimination. In the Landmark judgment of Nandini Sathpathy v. P.L. Dani & Others, the Court noted that Article 20(3) existed in the form of general fundamental right protection and was available to every accused person in India. Still, its wording was not very specific about which situations it applied to. Also, no one can forcibly extract statements from the accused, and the accused has the right to keep silent during interrogation.

  • Right to be Examined by a Doctor

Section 54 of the Code of the Criminal procedure (Cr.P.C.) stipulates that when a person who is arrested, whether on a charge or otherwise, alleges, at the time when he is produced before a Magistrate or at any time during the period of his detention in custody, that the examination of his body will afford evidence which will disprove the commission by him of any offense or which will establish the commission by any other person of any crime against his body, the Magistrate shall, if requested by the arrested person so to do direct the examination of the body of such person by a registered medical practitioner unless the Magistrate considers that the request is made for vexation or delay or for defeating the ends of justice.

  • Additional Rights available to an Arrested Person

1. Section 55A of the Code of the Criminal procedure (Cr.P.C.) deals with the health and safety of an arrested person- It shall be the duty of the person having the custody of an accused to take reasonable care of the health and safety of the accused.

2. Section 358 of the Code of the Criminal procedure (Cr.P.C.) deals with the compensation to persons who got arrested groundlessly-

  • Whenever any person causes a police officer to arrest another person, if it appears to the Magistrate by whom the case is heard that there was no sufficient ground for causing such arrest, the Magistrate may award such compensation, not exceeding [one thousand rupees], to be paid by the person so causing the arrest to the person so arrested, for his loss of time and expenses in the matter, as the Magistrate thinks fit.
  • In such cases, if more persons than one are arrested, the Magistrate may, in like manner, award to each of them such compensation, not exceeding [one thousand rupees], as such Magistrate thinks fit.
  • All compensation awarded under this section may be recovered as if it were fine, and, if it cannot be so recovered, the person by whom it is payable shall be sentenced to simple imprisonment for such term not exceeding thirty days as the Magistrate directs unless such sum is sooner paid.

3. Section 41A of The Code of the Criminal procedure (Cr.P.C.) provides the notice of appearance of arrested person before a police officer.

  • The police officer shall, in all cases where the arrest of a person is not required under the provisions of sub-section (1) of section 41, issue a notice directing the person against whom a reasonable complaint has been made or credible information has been received, or a reasonable suspicion exists that he has committed a cognizable offense, to appear before him or at such other place as may be specified in the notice.
  • Where such a notice is issued to any person, it shall be that person’s duty to comply with the terms of the notice.
  • Where such person complies and continues to adhere to the notice, he shall not be arrested in respect of the offense referred to in the notice unless, for reasons to be recorded, the police officer believes that he should be arrested.
  • Where such person, at any time, fails to comply with the terms of the notice or is unwilling to identify himself, the police officer may, subject to such orders as may have been passed by a competent Court on this behalf, arrest him for the offense mentioned in the notice.

In Arnesh Kumar v. State of Bihar & Anr, the Supreme Court had inter-alia directed that the notice of appearance in section 41A CrPC should be served on the accused before making the arrest. The Court had issued the direction to prevent unnecessary arrests, which, in the opinion of the Court, bring humiliation, curtail freedom and cast scars forever. The endeavor of the court was to ensure that police officer do not arrest accused unnecessarily and Magistrate do not authorize detention casually and mechanically. The Supreme Court also gave the following directions:

  • All the State Governments to instruct its police officers not to automatically arrest when a case under Section 498-A of the IPC is registered but to satisfy themselves about the necessity for arrest under the parameters laid down above flowing from Section 41, Cr.P.C.;
  • All police officers be provided with a check list containing specified sub-clauses under Section 41(1)(b)(ii);
  • The police officer shall forward the check list duly filed and furnish the reasons and materials which necessitated the arrest, while forwarding/producing the accused before the magistrate for further detention;
  • The Magistrate while authorizing detention of the accused shall peruse the report furnished by the police officer in terms aforesaid and only after recording its satisfaction, the Magistrate will authorize detention;
  • The decision not to arrest an accused, be forwarded to the Magistrate within two weeks from the date of the institution of the case with a copy to the Magistrate which may be extended by the Superintendent of police of the district for the reasons to be recorded in writing;
  • Notice of appearance in terms of Section 41A of Cr.P.C. be served on the accused within two weeks from the date of institution of the case, which may be extended by the Superintendent of Police of the District for the reasons to be recorded in writing;
  • Failure to comply with the directions aforesaid shall apart from rendering the police officers concerned liable for departmental action, they shall also be liable to be punished for contempt of court to be instituted before High Court having territorial jurisdiction.
  • Authorizing detention without recording reasons as aforesaid by the judicial Magistrate concerned shall be liable for departmental action by the appropriate High Court.

The judgment of the Supreme Court in Munawar v. The State of M.P., since the police had failed to issue a notice under Section 41A Cr.P.C., as mandated by the Supreme Court in Arnesh Kumar Vs. the state of Bihar, the applicants ought to have been straightway admitted to interim bail.

4. Section- 46 of the Code of the Criminal procedure (Cr.P.C.) stipulates the mode of arresting an accused person, including submission to the custody by the accused, physically touching the body, or to a body. Except when the person to be arrested is accused of an offense punishable by death or life imprisonment, when the accused person is attempting to resist his arrest by becoming violent and aggressive unnecessarily, or when the accused is trying to flee, the police officer must not cause the death of the accused person while attempting to arrest the person.

5. Section 49 of the Code of the Criminal procedure (Cr.P.C.) stipulates that the person arrested shall not be subjected to more restraint than is necessary to prevent his escape.

In D.K. Basu v. State of West Bengal Supreme Court held that under Section 49, the police are not permitted to use more restraint than is necessary to prevent the person’s escape. The court further stated that the police officer would be held in contempt of court and subject to a departmental inquiry if they could not carry out his duties correctly. Any High Court with jurisdiction over the case above may be approached for such a dispute.

6. Section 41B of the Code of the Criminal procedure (Cr.P.C.) states the arrest procedure and duties of the officer making an arrest. Unless the memorandum is attested by a member of his family, inform the person arrested that he has a right to have a relative or a friend named by him be informed of his arrest.

7. 41D of the Code of the Criminal procedure (Cr.P.C.) stipulates that when any person is arrested and interrogated by the police, he shall be entitled to meet an advocate of his choice during interrogation, though not throughout the interrogation.

Conclusion

Modern constitutional law has come a long way in terms of protecting and safeguarding the rights of persons guilty of crimes. Patrol officers are especially prone to making mistakes since they serve under public scrutiny and are expected to achieve speedy results. India has a significant problem with illegal arrests and custodial deaths, primarily caused by unlawful arrests. According to India’s legal system, which supports the concept of “Innocent until proven guilty,” an accused person has certain rights as an arrested person that are untouched whenever a police officer knocks on his door to make an arrest. The Supreme Court of India in D.K. Basu v. West Bengal is not being effectively implemented. There should be proper execution of provisions and guidelines stated in this case to ultimately assist in decreasing the proportion of illegal arrests and resulting custodial deaths.

As we all recollect that the Finance Act 2022 was passed with some changes to the Finance Bill introduced on February 1, 2022.

The Bill stated that a tax of 30% would be charged on income arising from Virtual Digital Assets w.e.f. April 1, 2022 and TDS @ 1% will become applicable w.e.f. July 1, 2022.

Pursuant to the above, the Central Board of Direct Taxes, Ministry of Finance, Department of Revenue, on June 22, 2022, came out with detailed guidelines for removal of difficulties under Section 194S(6) of the Income Tax Act, 1961.

Chapter XVII of the Income Tax Act, 1961 deals with provisions relating to collection and recovery of tax. A new Section (Section 194S) was introduced vide Finance Act, 2022 which provides for Payment on Transfer of Virtual Digital Assets. The said provision will become applicable for FY 2022-23 w.e.f. July 1, 2022.

The new section mandates a person, who is responsible for paying to any resident any sum by way of consideration for transfer of a virtual digital asset (VDA), to deduct an amount equal to 1% of such sum as income tax thereon. The tax deduction is required to be made at the time of credit of such sum to the account of the resident or at the time of payment, whichever is earlier.

Provided that in a case where the consideration for transfer of virtual digital asset is:

(a) wholly in kind or in exchange of another virtual digital asset, where there is no part in cash; or

(b) partly in cash and partly in kind but the part in cash is not sufficient to meet the liability of deduction of tax in respect of whole of such transfer, the person responsible for paying such consideration shall, before releasing the consideration, ensure that tax required to be deducted has been paid in respect of such consideration for the transfer of virtual digital asset.

This deduction is not required to be made in the following cases:-

(i) the consideration is payable by a specified person and the value or aggregate value of such consideration does not exceed fifty thousand rupees during the financial year; or

(ii) the consideration is payable by any person other than a specified person and the value or aggregate value of such consideration does not exceed ten thousand rupees during the financial year.

Specified person” means a person,

  • being an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business carried on by him or profession exercised by him does not exceed one crore rupees in case of business or fifty lakh rupees in case of profession, during the financial year immediately preceding the financial year in which such virtual digital asset is transferred;
  • being an individual or a Hindu undivided family, not having any income under the head “Profits and gains of business or profession

If the PAN of the deductee (buyer) is not available, then the tax at the time of transfer of VDA will be deducted at the rate of 20%. Further, if an individual has not filed his/her income tax return, then TDS will be deducted at a higher rate of 5% (as against normal rate of 1%), if the payer is not a specified person.

A new TDS certificate in Form16E has been introduced. The buyer who deducts tax at the time of making payment will be required to issue Form 16E to the seller of VDA within 15 days from the due date of furnishing the challan-cum-statement in Form26QE. 

It is pertinent to note that these guidelines will apply to cases where transfer of VDA is taking place on or through an Exchange and also other transactions like peer to peer and others, where the provisions of section 194S of the Act shall apply to the extent and in the manner as clarified by the CBDT.

Primarily the responsibility to deduct tax is of the buyer. Therefore in peer to peer transactions, the buyer is required to deduct tax. However, when the trades are being conducted through an exchange, the responsibility to deduct tax will vary depending on the parties involved (Buyer, Exchange or Broker) and the ownership of the VDA. 

While TDS on loss making transactions is refundable, the inability to offset crypto losses against gains still needs to be addressed. The clarification issued by CBDT has come as a breather to the investors who are now in a position to invest and trade. This initiative by the Government will go a long way in creating an ecosystem for virtual digital assets which will be beneficial to all stakeholders.

What is Child Labour

“The term ‘child labour’ is often defined as work that deprives children of their childhood, their potential and their dignity, and that is harmful to physical and mental development. It refers to work that:

  • is mentally, physically, socially or morally dangerous and harmful to children; and
  • interferes with their schooling by:
  1. Depriving them of the opportunity to attend school;
  2. Obliging them to leave school prematurely; or
  3. Requiring them to attempt to combine school attendance with excessively long and heavy work.”

Laws governing Child Labour

The Factories Act of 1948: The Act prohibits the employment of children below the age of 14 years in any factory. The law also placed rules on who, when and how long can pre-adults aged 15–18 years be employed in any factory.

The Mines Act of 1952: The Act prohibits the employment of children below 18 years of age in a mine. Mining being one of the most dangerous occupations, which in the past has led to many major accidents taking life of many. Children are completely banned for employment in Mining.

The Child Labour (Prohibition and Regulation) Act of 1986: The Act prohibits the employment of children below the age of 14 years in hazardous occupations identified in a list by the law. The list was expanded in 2006, and again in 2008.

The Juvenile Justice (Care and Protection) of Children Act of 2000: This law made it a crime, punishable with a prison term, for anyone to procure or employ a child in any hazardous employment or in bondage. This act provides punishment to those who act in contravention to the previous acts by employing children to work.

The Right of Children to Free and Compulsory Education Act of 2009: The law mandates free and compulsory education to all children aged 6 to 14 years. This legislation also mandated that 25 percent of seats in every private school must be allocated for children from disadvantaged groups and physically challenged children.

Main Causes of Child Labour

Major causes of child labour that can be understood keeping in mind the Indian scenario, are:

Poverty:-

In developing countries it is impossible to control child labour as children have been considered as helping hand to feed their families, to support their families and to feed themselves. Due to poverty, illiteracy and unemployment parents are unable to bear the burden of feeding their children and to run their families. So, poor parents send their children for work in inhuman conditions at lower wages.

Previous Debts:-

The poor economic conditions of people in india force them to borrow money. The Illiterate populations go to money lenders and sometimes mortgage their belongings in turn of the debt taken by them. But, due to insufficiency of income, debtors find it very difficult to pay back the debt and the interest. This vicious circle of poverty drags them towards working day and night for the creditor and then the debtors drag their children too in assisting them so that the debts could be paid off.

Professional Needs:-

There are some industries such as the ‘bangle making’ industry, where delicate hands and little fingers are needed to do very minute work with extreme excellence and precision. An adult’s hands are usually not so delicate and small, so they require children to work for them and do such a dangerous work with glass. This often resulted in major eye accidents of the children.

Important Facts:-

Currently, there are nearly 30 million people held in slavery and an estimated 26 percent are children worldwide.

  • In 2012, 168 million children – from 5-years-old to 17 – were involved in child labor. Of this number, 85 million worked in hazardous conditions, enduring beatings to sexual violence.
  • Around the world one in six children are forced to work, with children below the age of 18 representing between 40 to 50 percent of laborers.
  • Children living in more rural areas can begin working as young as the age of five.
  • According to the ILO, an estimated two thirds of all child labor is in the agricultural sector.
  • The highest proportion of child laborers is in Sub-Saharan Africa where 49 million children are forced laborers.
  • The highest numbers of child laborers are in Asia and the Pacific, where over 122 million children are forced into work.
  • According to the U.N. Children’s Fund (UNICEF), there are over 300,000 child soldiers forced into armed combat.
  • In most regions, girls are just as likely as boys to be involved in child labor; however, girls are more likely to be involved in domestic work.
  • According to the ILO, only one in five child laborers is paid for their work, as the majority of child laborers are unpaid family workers.

The Challenges

Poverty is the most often cited reason why children work. Pressured to provide food and shelter, as well as to pay off debt owed by the parents, some children have no other choice but to become involved in labor in order to support their families. However, some children are sold against their will and forced into slavery. Other factors that influence whether children work or not include barriers to education and inadequate enforcement of legislation protecting children.

Child labor is a complex issue, as are the solutions, but the following steps must continue to be pushed for in order to see further progress. First and foremost, child labor laws must be enforced. Another strategy would be to reduce poverty in these areas so as to limit the need for children to be forced into these situations. Finally, providing access to quality education ensures that each child has a chance for a better future.


Conclusion

If awareness about the cons of child labour is spread across the nation and strict policing of implementation of existing laws are done, India can combat the issue of Child Labour. Every individual must understand how important it is for the children to grow and study, as they are the ones who will shape the future of the nation.

The Protection of Women from Domestic Violence Act, 2005 (Domestic Violence Act) is enacted to protect the rights of women. The Domestic Violence Act not only covers those women who are or have been in a relationship with the abuser but it also covers those women who have lived together in a shared household and are related by consanguinity, marriage or through a relationship in the nature of marriage or adoption. Even those women who are sisters, widows, mothers, single women, or living in any other relationship with the abuser are entitled to legal protection under the Domestic Violence Act.

Who can file a complaint under the Domestic Violence Act?

Section 2(a) of the Domestic Violence Act defines “aggrieved person” as any woman who is, or has been, in a domestic relationship with the Abuser and who alleges to have been subjected to any act of domestic violence by the Abuser.

Women in Live in relationships covered under the Act:

This act has a wider meaning to “aggrieved person” which includes women in live in relationships. Supreme Court of India in the case of D. Veluswamy v. D. Patchaiammal has enumerated ingredients of live in relationships as follows:

  1. They must be of a valid legal age of marriage
  2. They should qualify to enter into marriage eg. None of the partner should have a spouse living at the time of entering into relationship.
  3. They must have voluntarily cohabited for a significant period of time
  4. They must have lived together in a shared household

What is shared household?

The term shared household is defined under the Domestic Violence Act as a household where the person aggrieved lives or at any stage has lived in a domestic relationship with the abuser and includes such a household whether owned or tenanted either jointly by the aggrieved person and the abuser, or owned or tenanted by either of them in respect of which either the aggrieved person or the abuser or both jointly or singly have any right, title, interest or equity and includes such a household which may belong to the joint family of which the abuser is a member, irrespective of whether the abuser or the aggrieved person has any right, title or interest in the shared household.

Types of abuse under the Domestic Violence Act

  • Physical Abuse: Physical abuse is the use of physical force against a woman in a way   that   causes   her   bodily   injury   or   hurt.   Physical   assault,   criminal  intimidation   and   criminal   force   are   also   forms of   physical   abuse   like  beating,   kicking   and   punching,   throwing objects,   damaging   property,  punched   walls,   kicked   doors, abandoning   her   in   a   dangerous   or  unfamiliar place, using a weapon to threaten or hurt her, forcing her to leave the matrimonial home, hurting her children, using physical force in  sexual situations.
  • Sexual Abuse: This is also a form of physical abuse. Any situation in which a woman is forced to participate in unwanted safe or degrading sexual activity, calling her sexual names, hurting a woman with objects and weapons during sex is sexual abuse.
  • Verbal and Emotional Abuse: Many women suffer from   emotional   abuse,   which   is   no   less   destructive.  Unfortunately, emotional abuse is often minimized or overlooked – even by the woman being   abused. Emotional abuse includes   verbal abuse such as yelling, name-calling,   blaming   and   shaming, isolation,   intimidation   and controlling behaviour also fall under emotional abuse. Calls her names, insults her or continually criticizing her also come under verbal and emotional abuse.
  • Economic Abuse: Economic abuse is not a very recognized form of abuse among the women   but   it   is   very   detrimental. Economic   abuse   mainly   includes   a woman   not   been   provided   with   enough   money   by   her   partner   to  maintain herself and her children, which may comprise money for food,  clothing,   medicines etc. and  not allowing a woman to take up an employment. Forcing   her   out   of   the   house   where she   lives   and   not providing her rent, in case of a rented share hold also amounts to abuse. Disposing or alienating the assets of the women   whether   movable   or   immovable,   valuables,   shares,   securities, bonds and the like other property in which she may have an interest also comes under economic abuse.

Procedure involved under the Act:

Step 1 – Informing the protection officer:

Any person who has reason to believe that domestic violence has been or is likely to be inflicted upon her can inform about the same to a protection officer appointed under Section 8(1) of the Act. It would be better if such a protection officer is a woman herself.

Such women would be informed of her rights by the protection officer, a police officer, service providers (any voluntary association registered under law working with the objective of protecting the rights and interests of women), or a magistrate who has received the complaint or was present when the offence occurred. These rights are:

  • Such women have a right to make an application obtaining relief in the form of protection order, monetary relief, custody order, residence order, compensation order.
  • They also have a right to make use of the service provided by the available service providers.
  • They also have a right to make use of the services provided by the protection officers.
  • They have a right to free legal services under the Legal Services Authority Act, 1987.
  • They also have a right to file a criminal case under Section 498-A of the Indian Penal Code.

It must also be mentioned here that if the appointed protection officer does not perform her/his duties she/he can be liable to imprisonment upto 1 year and fine upto Rs. 20,000.

Step 2 – Making a domestic incident report by the protection officer:

Upon receipt of domestic violence complaints, the protection officer must make a domestic incident report to the Magistrate. This report should also claim relief for a protection order if the aggrieved person desires. Such magistrate ( to whom the report is made) would be Magistrate of 1st class or the Metropolitan Magistrate who is exercising jurisdiction in the area where:

  • The aggrieved person resides temporarily,
  • Respondent resides, or
  • The place where domestic violence allegedly took place.

The copies of the report should also be forwarded to the Police Officer in charge of the Police station within local limits of which the domestic violence allegedly took place. Apart from this, it is the duty of the protection officers to ensure that the aggrieved person gets all benefits as mentioned as her rights and maintains a list of the service providers, shelter homes and medical facilities in an area.

Step 3 – Application with the magistrate:

Once an application is filed to the magistrate on by the aggrieved person, someone on the behalf of the aggrieved person or a protection officer, the magistrate will fix the date of the first hearing. Such a date is usually not beyond three days from the date of receipt of an application by the magistrate. Also, the magistrate will endeavor to dispose of the application made within 60 days from the first hearing.

Step 4 – Notice to the respondent:

Once the date of the first hearing has been set by the magistrate, a notice shall be given to the protection officer who shall inform the informant and any other person, prescribed by the magistrate. This shall be done by the protection officer within 2 days from the date of receipt unless an extension is given by the magistrate.

Step 5 – Other options that the magistrate can make use of:

Under Section 14 of the Act, the magistrate may ask the Abuser or the aggrieved party (singly or jointly) to undergo counselling with a member of the service provider. Such a person must have experience in counselling.

Under Section 15 of the Act, the magistrate can take the help of a person, preferably a woman, for discharging his functions. Such a person should preferably be working in the promotion of family welfare.

Step 6 – Giving Orders:
Protection Order

If after hearing both the parties, the magistrate is satisfied that domestic violence took place, the magistrate can pass a protection order in favour of the aggrieved party. Such protection order restricts the respondent from:

  1. Committing the act of domestic violence.
  2. Abetting in the commission of domestic violence.
  3. Entering the place of employment, school, etc. of the aggrieved person.
  4. Attempting to communicate with the aggrieved person.
  5. Alienate any assets, bank accounts or lockers enjoyed by either both the parties or the respondent singly, including her Sridharan.
  6. Causing violence to any person who helped the aggrieved person and provided protection from domestic violence.
  7. Committing any other act which is specified in the order given.
Residence Order
  • The Magistrate may also pass the Residence Order. Such order may:
  • Restrain the respondent from dispossessing or distributing the possessions of the aggrieved person.
    • Direct the respondent to remove himself from the shared household.
    • Restrain the respondent or any of his relatives from entering the shared household of the parties where the aggrieved person resides.
    • Restrain the respondent from renouncing his rights in the shared household.
    • Restrain the respondent from disposing off the shared household.
Monetary Relief

The magistrate may also direct the respondent to pay monetary relief to the aggrieved person for expenses incurred and losses suffered by her. Such relief may include (but is not limited to):

  1. Loss of earnings;
  2. Medical expenses;
  3. Loss caused due to destruction and damage of any property;
  4. Maintenance for the aggrieved person and her children.
Custody Order

The magistrate may also grant the custody of a child or children to the aggrieved person or person making an application on her behalf. He may also specify the visitation arrangements as well. In case he feels that visitation by the respondent would be harmful to the child, the magistrate may even refuse to allow such a visit.

Compensation Orders

The magistrate may also pass an order directing the respondent to pay compensation to the aggrieved person for the injuries, mental torture and emotional distress caused to her because of the domestic violence.

In case the magistrate feels it is necessary and is satisfied that the respondent has caused domestic violence and may continue to do so in the future, he may also pass interim and ex-parte orders.

Step 7 – Steps to take in case of breach of the order given

In case there is a breach of the protection order given by the magistrate, the contemnor shall be liable with punishment upto a term extending to one year, or fine (at maximum 20,000 Rupees)

Duty of the court while dealing with cases under the Act:

In the case of Krishna Bhatacharjee vs Sarathi Choudhury And Anr., the court laid down some guidelines that all courts must follow while dealing with a case under this Act. These are:

  • The court must give the decision keeping in mind that the helpless aggrieved person has approached the court in compelling circumstances.
  • It should also be ensured that the court scrutinizes the facts from all angles. It must take efforts to ensure whether the plea advanced by the respondent to nullify the grievances of the aggrieved person is legally and factually correct.
  • The court of law must uphold the truth and aim at delivering proper justice
  • Before throwing a petition at the threshold on the grounds of maintainability, the court must see that the aggrieved person is not faced with a situation of non-adjudication.

Criticism of the Act

The law is not free of criticism. People have criticised it on some of the following grounds:

Some people have criticised the law on the basis of it being only civil, instead of both civil and criminal as it was meant to be. The criminal part of the law only gets triggered when the act of domestic violence is accompanied by some other offence, like not following the protection order given by the court.

As per the Act, the authority responsible for effective implementation of the Act is a Protection Officer, who is identified by the State Government. Such an officer is assigned the major role of assisting the court, initiating action on behalf of the aggrieved and looking after the services required by the victim like medical help, counselling, legal aid, etc. However, the people appointed under the Act are people who are in practice not working full time. Most of the time, in fact, this duty is given as an additional charge to those who are already in Government services. These people are mostly not qualified to fit into this role.

Many people have said that this law assumes men to be the sole perpetrators of domestic violence. Thus, by allowing only women to file a complaint about domestic violence, this law violates Article 14 and 15 of the Indian Constitution and discriminates against men.


Conclusion

The Protection of Women from Domestic Violence Act, 2005 which was implemented in October 2006 is very promising legislation that combines civil remedies and criminal procedures to provide effective remedies to the women who become victims of domestic violence. The act provides for protection officers, medical facilities, free of cost orders, etc. which helps the aggrieved women in protecting themselves and their loved ones.

However, the Act is not free of certain problems. Clearly, the implementation of the Act needs to be made more concrete. The Human Rights Watch has found that police often do not file a First Information Report (FIR), i.e, the first step to initiating a police investigation, especially if the aggrieved person is from an economically or socially backward community. Most of the domestic violence, sexual violence, and marital rape cases in India never go reported. Lack of trained counsellors who can help domestic abuse victims and little access to legal aid also adds to the misery of these victims. Issues like these need to be solved so as to ensure that women get the justice they truly deserve.

Suit for Specific performance can be refused for non- compliance of an essential promise in contract

The Supreme Court held that a party who does not perform one of the essential promises in a contract is not entitled to discretionary relief of specific performance of the very contract.

The said judgment was held in the case of Surinder Kaur (d) thr. LR. Jasinderjit  Singh (d) thr. LRs. vs Bahadur Singh (d) thr. LRs.” (Civil Appeal No. 7424-7425 of 2011) decided on 11.09.2019.

Challenge:

Whether a vendee who does not perform one of his promises in a contract can obtain the discretionary relief of specific performance of that very contract?

Facts:

Mohinder Kaur entered into an agreement with Bahadur Singh in year 1964 whereby she agreed to sell the suit land for total consideration of Rs. 5605/. Out of this, Rs. 1000/- was paid as earnest money at the time of execution of agreement to sell and agreed that balance amount is to be paid at the time of registration of the sale deed. The possession was handed over to the vendee at the time of agreement. Since there was some litigation with regard to property and it was agreed between the party that the sale deed would be executed within one month from the date of decision of court.

It was further agreed between the parties that if the case is not decided within one year, then the second party shall pay to the first party the customary rent for the land.

Bahadur Singh didn’t pay the rent even till the filing of the present suit instead denied his liability to pay the same. Later, suit for specific performance was filed him. In resisting the suit for specific performance, the defendant had raised the plea that since the plaintiff had admittedly failed to pay the rent of the land in terms of Clause 3 of the agreement, he was not entitled to a decree for specific performance.


Held

The bench observed that the payment of rent was an essential term of the contract. Plaintiff had failed to perform his part of the contract. Explanation (ii) to Section 16(c) clearly lays down that the plaintiff must prove performance or readiness or willingness to perform the contract according to its true construction. The bench further observed that plaintiff was not entitled to claim the discretionary relief of specific performance of the agreement having not performed his part of the contract even if that part is held to be a distinct part of the agreement to sell. The vendee Bahadur Singh by not paying the rent for 13 long years to the vendor Mohinder Kaur, even when he had been put in possession of the land on payment of less than 18% of the market value, caused undue hardship to her. He, by not paying the rent did not act fairly forfeited his right to get the discretionary relief of specific performance.

Referring to Section 20 of the Specific Relief Act, the bench said that the relief of specific performance is discretionary. Merely because the plaintiff is legally right, the Court is not bound to grant him the relief. It is true, that the Court while exercising its discretionary power is bound to exercise the same on established judicial principles and in a reasonable manner. Obviously, the discretion cannot be exercised in an arbitrary or whimsical manner.

CAN A GRANT OF SUCCESSION CERTIFICATE BE REVOKED?

Yes, Grant of Succession Certificate or Probate or even a grant of Letter of Administration can be revoked. There is a provision for Revocation of an order of grant of a probate or a letter of administration or a certificate granted for succession.

Section 383 enumerates the grounds on which a Succession Certificate may be revoked.

Clause (a) provides for revocation if the proceeding itself were defective, but at the same time, words ”defective in substance” has been incorporated which means the defect in conducting proceeding must be such so as to influence the grant of the certificate or to cause of prejudice to any party. A formal technical defect would be suffice revocation.

Similarly, clause (b) prescribes two grounds. It first says that a certificate may be revoked if it is obtained fraudulently. In the latter portion clause (b) says that the certificate may be revoked if some facts have been concealed. The phrase “Something material to the case” sufficiently indicates that the concealment of fact must materially affect the proceedings, in other words, it may be said that if some facts could lead the court to refuse the grant of certificate concealment of those facts may be taken as materially affecting the case. Likewise if because of concealment of some facts the court could not safeguard the interest of some relatives of the deceased, those facts materially affect the case.

Article 137 of the Limitation Act, 1963, which requires the application to be filed within 3 years from the date when the right to apply accrues.

Ramesh Nivrutti Bhagwat Vs Surendra Manohar Parakhe MANU/SC/1392/2019

When the relation between all the partners of the firm comes to an end, this is called dissolution of the firm. Section 39 of the Indian Partnership Act, provides that “the dissolution of the partnership between all the partners of a firm is called the dissolution of a firm.” It implies the complete breakdown of the relation of partnership between all the partners.

Dissolution of a partnership firm merely involves a change in the relation of partners; whereas the dissolution of firm amounts to a complete closure of the business. When any of the partners dies, retires or become insolvent but if the remaining partners still agree to continue the business of the partnership firm, then it is dissolution of partnership not the dissolution of firm. Dissolution of partnership changes the mutual relations of the partners. But in case of dissolution of firm, all the relations and the business of the firm comes to an end. On dissolution of the firm, the business of the firm ceases to exist since its affairs are would up by selling the assets and by paying the liabilities and discharging the claims of the partners. The dissolution of partnership among all partners of a firm is called dissolution of the firm.

Dissolution of a Partnership firm may be effected in the following ways:

• Dissolution without the intervention of the Court.

• Dissolution by Court.

Dissolution without the intervention of Court:-

1. By Agreement (Section 40):- A partnership firm can be dissolved any time with the consent of all the partners whether the partnership is at will or for a fixed duration. A partnership can be dissolved in accordance with the terms of the Partnership Deed or of the separate agreement.

2. Compulsory Dissolution (Section 41):- In case, any of the following events take place then it becomes compulsory for the firm to dissolute;

  • Insolvency of Partners:- In case all the partners or all the partners except one become insolvent.
  • Unlawful Business:- In case the firm’s business become unlawful on the happening of a subsequent event. e.g. trading with enemy country

3. Dissolution on the happening of contingent event (Section 42) A firm may be dissolved on the happening of any of the following contingent event:-

  1. Expiry of Fixed Period:- If the firm is constituted for fixed period, then the firm is dissolves automatically.
  2. On achievement of specific task:- If the firm has been constituted for the achievement of specific task, on achievement of that task, firm ceases to exist, unless there is an agreement to the contrary.
  3. Death of Partner:- Death of any of the partner dissolves the partnership.
  4. Insolvency of Partner:– in the absence of a contract to the contrary, the insolvency of any of the partner may dissolve the firm. The rule shall apply even though the partnership has been constituted for a fixed term and the term has not yet expired or has been constituted for particular venture and the same has yet not been completed.
  5. Resignation of Partner:- Resignation by any of the partners dissolves the partnership.

4. Dissolution by notice (Section 43) :In case of partnership at will, a partner can dissolve it by giving written notice of dissolution to other partners duly signed by him. Notice must be very clear and certain. A notice once given cannot be withdrawn without the consent of other partners. Banarsidas v. Kanshi Ram A.I.R. (1963) S.C. 1165 In those cases where a partner has given notice of dissolution at a time when dissolution will give him some advantage over the other partners, he may be held in the firm till the pending transactions are completed.

Dissolution by Court:-

The court may order for the dissolution of the firm on the following grounds:-

  • Insanity of Partner:- On the application of any of the partner, court may order for the dissolution of the firm if a partner has become of an unsound mind. Lunacy of a partner does not itself dissolve the partnership but it will be a ground for dissolution at the instance of other partners. It is not necessary that the lunacy should be permanent. In the case of a dormant partner the court may not order dissolution even on the ground of permanent insanity, except in special circumstances.
  • Incapacity of Partner:- If a partner has become permanent in capable of discharging his duties and obligations then court may order for the dissolution of firm on the application of any of the partner. Where a partner is imprisoned for a long period of time the court may dissolve the partnership.
  • Misconduct of Partner:- If any partner other than partner suing is responsible for any loss to the firm, which amounts to misconduct and prejudicially affects the carrying on of business then the court may order for the dissolution of the firm.
  • Constant breach of agreement by partner:- The court may order for the dissolution of the firm if the partner other than the suing partner is found guilty for constant breach of agreement regarding the conduct of business or the management of the affairs of the firm and it becomes impossible to continue the business with such partner.
  • Transfer of Interest:- When any of the partner other than the suing partner transfers whole of its share to the third party for permanently.
  • Continuous Losses:- The court may order for dissolution if the firm is continuously suffering losses and there is no more capital available for the future growth of the firm.
  • Just and Equitable:- The court may order for dissolution on any other ground which court think is just, fair and equitable. e.g. loss of total confidence between the partners.

Indian Contract Act, 1872

The Indian Contract Act, 1872 defines the term “Contract” under its section 2 (h) as “An agreement enforceable by law”. In other words, we can say that a contract is anything that is an agreement and enforceable by the law.

This definition has two major elements in it viz – “agreement” and “enforceable by law”. So in order to understand a contract in the light of The Indian Contract Act, 1872 we need to define and explain these two pivots in the definition of a contract.

Agreement

The Indian Contract Act, 1872 defines what we mean by “Agreement”. In its section 2 (e), the Act defines the term agreement as “every promise and every set of promises, forming the consideration for each other”.

Promise

Section 2(b) which defines the term “promise” here as: “when the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. Proposal when accepted, becomes a promise”.

In other words, an agreement is an accepted promise, accepted by all the parties involved in the agreement or affected by it. This definition thus introduces a flow chart or a sequence of steps that need to be triggered in order to establish or draft a contract. The steps may be described as under:

  • The definition requires a person to whom a certain proposal is made.
  • The person (parties) in step one have to be in a position to fully understand all the aspects of a proposal.
  • “signifies his assent thereto” – means that the person in point one accepts or agrees with the proposal after having fully understood it.
  • Once the “person” accepts the proposal, the status of the proposal changes to “accepted proposal”.
  • “accepted proposal” becomes a promise. Note that the proposal is not a promise. For the proposal to become a promise, it has to be accepted first.

Thus, in other words, an agreement is obtained from a proposal once the proposal, made by one or more of the participants affected by the proposal, is accepted by all the parties addressed by the agreement. To sum up, we can represent the above information below:

Agreement = Offer + Acceptance.

Enforceable By Law

Agreement to change into a Contract as per the Act, it must give rise to or lead to legal obligations or in other words must be within the scope of the law. Thus we can summarize it as Contract = Accepted Proposal (Agreement) + Enforceable by law (defined within the law)

Communication when complete

Section 4 provides that, the communication of a proposal is complete when it becomes to the knowledge of the person to whom it is made. 

The communication of an acceptance is complete – as against the proposer, when it is put in a course of transmission to him so at to be out of the power of the acceptor; as against the acceptor, when it comes to the knowledge of the proposer. 

The communication of a revocation is complete – as against the person who makes it, when it is put into a course of transmission to the person to whom it is made, so as to be out of the power of the person who makes it; as against the person to whom it is made, when it comes to his knowledge.

Difference Between Agreement And Contract

AgreementContract
A promise or a number of promises that are not contradicting and are accepted by the parties involved is an agreement.A contract is an agreement that is enforceable by law.
An agreement must be socially acceptable. It may or may not be enforceable by the law.A contract is only legally enforceable.
An agreement doesn’t create any legal obligations.A contract has to create some legal obligation.
An agreement may or may not be a contract.All contracts are also agreements.

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