The necessity of Legal Due Diligence in India

The necessity of Legal Due Diligence in India

Legal Due Diligence means taking all precautions to safeguard ones’ interest in a particular transaction. The transaction can be the sale of a property, buying a property, signing a contract etc. Its purpose is:

  • To identify the risks involved
  • To minimize those risks

The essence is to know the fact which one ought to know. It is presumed that a certain degree of prudence will be exercised for one’s own sake.

Read More: Selling a Property through a General Power of Attorney – Is it even valid?

How to carry out due diligence

It involves the collection of information and data that can influence the decision, like

  • Verify the credentials of the person or company involved in the transaction.
  • Handle the documentation part carefully. It is crucial to obtain legal advice (professionals/law firms) for proper documentation of complex transactions, especially property-related matters. It is necessary to read and understand the contents of the document.
  • Property transactions generally involve scrutiny of revenue records and search of title.
  • While dealing with a company, records maintained at the office of Registrar of Companies must be cross-checked. The financial health of the company also matters.
  • It is significant to know the reputation of the person or company as it exists. In the housing business, the image of the builder always has a substantial impact on the mind of the investors/buyers. It helps to ascertain whether the builder is making fake promises or is a genuine person.

Read More: Transfer of ancestral property and registration of transfer deed

Due Diligence has become significant nowadays:

Some of the reasons could be-

  • Adherence to Law is imperative. So far as the legal provisions or statutory requirements are concerned, the parties to the transaction must conform to the rules and regulations. It is the duty of the parties to take care that the statutory requirements have been complied with. For instance, a buyer must ensure that the builder has obtained the necessary approvals for constructing the residential flats.
  • There is an increase in the number of frauds in almost any business. In property matters, scams by impersonation and frauds by forging documents/title deeds, are prevalent. In such a scenario, some precaution will help to avoid the loss. Thus a particular standard of care is legitimately expected. For instance, in the case of buying a property, the buyer must ensure that the title is clear and the property is free from encumbrances.
  • Documentation is also another major area where the party needs to be attentive. There is an upsurge in forgery and frauds by impersonation. It becomes more important to carefully analyze the documents and ensure the authenticity of the same.
  • When a considerable amount is invested, the risk is higher, and one cannot afford to be negligent.
  • Some statutes require the exercise of due care. e.g. Transfer of Property Act. A duty is cast upon the buyer to make an effort to verify the essential facts about the property.
  • There are areas where it is mandatory to be vigilant. The consumer law and the law of contracts is based on the theory of “Caveat Emptor”. The buyer is expected to know the difference between latent and patent defects.  
  • Even the Courts in India, recognize the concept of due diligence for deciding the quantum of compensation. In cases where a party seeks compensation for the loss suffered in a transaction, the Courts are interested to know if the party has exercised due diligence and has tried to minimize its loss.

Read More: Sale deed: What you should know!

The extent of Due Diligence:

The amount of investigation required for collecting the relevant information and precautions to be taken for a transaction varies from case to case.

How to cancel Illegal Registration of ancestral property

How to cancel Illegal Registration of ancestral property

Registering a property means recording the ownership of the property and other transactions related to it in a public record.

Ancestral property is a one in which a person has a share which accrues to him by birth. If a person is entitled to get a share in the ancestral property, he cannot be excluded from it. A father cannot exclude his son from the ancestral property although he can gift his self acquired property to anyone. 

Ancestral property can not be divided or gifted or transferred, excluding the descendants/legal heirs having right to it.

For registering ancestral property, share and title of each family member must be clear.  The property is partitioned and transferred in the name of each descendant as per the share. The partition deed is registered, which confirms the ownership of the share.

Illegal registration can occur in numerous ways. Some of the most often used methods are:

  • Forgery – Signatures are forged, or fake documents are prepared
  • Impersonation- Someone else appears before the Registering Authorities as Owner
  • Misuse of POA – People give power of attorney to family members for effecting transactions on their behalf. POA can be misused. POA has to be very specific and clear.
  • Misrepresentation/Suppression of facts

NRIs are easy targets for illegal registration as:

  • They are not present in India physically for every transaction related to their property
  • Regular inspection of the property is not conducted.
  • Family members are generally given POA who misuse the same

Illegal Registration: The way out

The first step is the cancellation of illegal registration. It is advisable to get legal advice on the issue as cancellation requires careful analysis of the documents and filing an appropriate lawsuit in a civil court.

After cancellation, the next step is mutation.  It is essential to update the municipal records or land records so that the name of the owner is reflected correctly in public records.

Also Read: How to save title of your property from illegal occupants?

A police complaint can be filed for cheating and fraud.

A complaint also lies to the Revenue Authorities or concerned local bodies (Sub Registrar) bringing to their notice the illegal registration and requesting for cancellation of illegal registration.

Corruption in the office of registration is also a significant issue which leads to illegal registration of property. A criminal complaint can be filed with the police against the erring official.

How to cancel a registered document:

Once a document is registered, it is cancelled by filing a suit for cancellation in Civil Court.

The court satisfies itself regarding the illegality in the document.  Cancellation is not ordered at the whims and fancies of the party seeking it. The element of fraud, misrepresentation etc. which renders the document illegal must be present. There must be reasonable chances that if the document is not corrected, it will result in harm to the party.

The suit can be filed within three years from the date of knowledge of the fact of the document being illegal.

The court sends a copy of the decree passed in the lawsuit to the Registering Authorities which record the fact of cancellation of the registered documents in the record and correct the record.

Registering Authority is not empowered to cancel the registered document. The cancellation deed is also registered.

CAN A GIFT DEED BE CHALLENGED IN INDIA

CAN A GIFT DEED BE CHALLENGED IN INDIA

Yes. A Gift deed being an instrument for transferring the rights in the property can be challenged in India.

Gift:                A gift is a gratuitous transfer of property by a donor to a donee voluntarily.

Gift Deed:     A legal document describing the transfer of property. A gift deed is an agreement between the two parties (donor and donee) for transfer of right in the property.

Essentials to make a gift valid:

  • Property: The property to be gifted can be moveable or immovable. It must be an existing property. Future property cannot be transferred
  • Acceptance of gift: The gift has to be accepted by the donee or on his behalf. If the gift is not accepted during the lifetime of the donor, it is invalid. If the donee dies without accepting the gift, it becomes void.
  • Parties must be competent to contract: Donor has to be a person capable of making a contract.  A minor cannot be a donor. However, a minor can be a donee. In such a case, the gift has to be accepted by a guardian on his behalf.
  • Consideration:  There is no consideration in gift. There can be a conditional gift such that the condition is not based on donor’s will or pleasure. The conditional gifts are incomplete until conditions are complied with. 
  • Voluntarily: Gift has to be made with free consent. Free consent implies the absence of :
  • Fraud
  • Coercion
  • Misrepresentation
  • Undue influence
  • Registration: A gift deed made for transferring immovable property has to be registered compulsorily as per The Registration Act, 1908.  The gift deed has to be signed by the parties and attested by two witnesses.

When we gift any moveable property, gift deed is not mandatory. The gift deed even if made, may or may not be registered but delivery and acceptance is a must.

Grounds for challenging the Gift Deed:

A gift deed can be challenged if any of the above mentioned legal requirements for making a gift transaction valid have not been complied with, like:

  • Consent was not free.
  • Gift deed not executed and registered as per legal provisions
  • Parties not competent to contract
  • Consideration is present.
  • Acceptance not made
  • If the gift is conditional and the condition is not fulfilled, gift deed can be revoked.

Revocation of gift deed:

  • Gift deed can be revoked by the donor for any legally valid reason as available for rescinding the contract.
  • Revocation by agreement – Donor and donee may agree at the time of making the gift that the gift can be revoked on the happening of an event which is not dependent on the will of the donor. The condition for revoking the gift should be made clear to the donee at the time of executing the gift deed. The unilateral revocation of the gift is not possible.
  • If the gift is incomplete and the title remains with the donor, the gift deed can be cancelled by the donor.

When to file suit for cancellation of gift deed:

A civil suit for cancellation of a gift deed can be filed within three years of coming to the knowledge of the fact that there exists a ground to challenge the gift deed.

A gift deed can also be cancelled by executing a cancellation deed if both parties agree.

Section 377 verdict- Victory long-awaited

Section 377 verdict- Victory long-awaited

The world is changing for sure – Law is a reflection of what happens in Society and what is needed too. Therefore it will always change when society is transforming. One of the most striking examples of this has been the abolishing of major aspects of Section 377 of India Penal Code, a Colonial period law, which criminalized homosexuality besides other unnatural acts of carnal intercourse.

The change – Morality is not what the majority thinks

Post the landmark judgement on September 6, 2018, Lesbians, Gays, Bisexuals and Transgender (LGBT), are recognised as people with a distinct and separate identity, who deserve all rights guaranteed under the Constitution as available to any other citizen. They have a right to live with dignity which was to a certain extent barred by Section 377 which brought these under a microscopic criticism. They cannot be discriminated against for their sexual orientation. There is nothing unnatural about their attraction towards the same gender. Their right to privacy cannot be denied to them just because they are in the minority.


Also Read: Rights of Transgender in India


What was the Section 377 of IPC?

Section 377 of Indian Penal Code provides for punishment and fine, for sexual acts against the “order of nature.” As per the Section, unnatural acts like buggery, sodomy and bestiality are punishable. Consensual same-sex relation is also a criminal offence.

“Order of nature” is consensual sexual acts between man and woman only.

The constitutional validity of Section 377 and the Recent Verdict

The story started with the initiative of the NAZ Foundation, an NGO, in challenging the Constitutional validity of Section 377. It stated that the Section 377 so far as it criminalises consensual sexual acts between adults in private, violates the articles of Indian Constitution:

  • Article 14 (equality)
  • Article 19(1)(d) (freedom of speech, assembly, association and movement)
  • Article 21 (right to life and personal liberty)

It was argued that the section had been misused against homosexuals. It is unreasonable and arbitrary to criminalise non-procreative sexual relations. The term “unnatural” act has no nexus with procreative or non-procreative sexual acts.

Earlier the Hon’ble Supreme Court of India had turned down the argument of NAZ foundation and upheld the Constitutional validity of Section 377 stating that it does not criminalise particular orientation or identity. It only identifies certain acts which constitute an offence under Section 377.

  • In 2017, in Puttuswamy’s case, it was affirmed that the right to privacy is a fundamental right and it includes one’s sexual orientation. This decision opened the gates for the recent verdict.
  • The recent verdict of SC, reflects the sentiments of many people in India who now consider homosexuality as natural. SC has read down Section 377 so that consensual sexual relation between homosexuals in private is not a crime.

The ruling has brought cheers to the LGBT community. They have long been deprived of their right to privacy and the right to equality. Progressive International Community has also hailed the verdict as it has provided what everyone expected out of world’s largest democracy.

Section 377 – partially struck down

Section 377 has not been struck down as a whole. Consensual sexual relations among adult homosexuals have been taken out of the purview of the term “against the order of nature”.

Other acts covered under the section remain an offence:

  • Unnatural sex with animals
  • Unnatural sex with children
  • Sex among homosexuals without the consent of any of them

Read: Other Judgement


New Hope

The judgment has given a new hope to LGBT community that their other rights will also fall in place now. They will be respected and loved the way they are irrespective of their sexual orientation. They will be treated at par. No prejudices, no discrimination and no ostracism for being homosexual. More than just the legal victory or change that this decision symbolizes, it is the sentimental achievement that is worth mentioning. This surely will go down in the history of Indian Law as a milestone.

Molestation – Definition and relevant Laws

Molestation – Definition and relevant Laws

When a Bollywood actress of the stature of Vidya Balan gives her opinion on Molestation, and it makes headlines in Newspaper sections, it catches attention –and thankfully manages to raise pertinent questions too. Not that we need celebrities to promote awareness on social issues all the time, but it helps if a prominent voice brings crucial aspects to the fore. Vidya’s concern is that ‘molestation’ as a term is not clearly defined and in fact loosely interpreted.

While we can have immense discussions on whether the term is defined clearly or not, the fact is that the menace itself has been a source of concern in the country for ages. In fact, Molestation is an offence that often gets ignored – not just in India but other parts of the world too. What exactly does it mean and how is it addressed in our country?

The term Molestation is used for situations when a woman’s “modesty” is at risk. The word “modesty” is not something that’s defined legally as such in the Indian Penal Code. One can only rely on Dictionary meanings of the term. The Shorter Oxford English Dictionary defines the word “modest” about a woman as follows: “Decorous in manner and conduct; not forward or lewd; shamefast.”

“Modesty” is defined as the quality of being modest, and in relation to a woman, dictionaries define it as “womanly propriety of behaviour; scrupulous chastity of thought, speech and conduct.”

“Modesty,” therefore, has some relation to the sense of propriety of behaviour in relation to the woman against whom the offence is said to have been committed. It refers to cases where an individual insults the modesty of a woman by way of lewd acts or using words, gesture, or acts that are intended to insult the modesty and dignity of a woman.

Let’s take the example of a city like the national capital of the country, Delhi. It has been reported that 5,192 cases of molestation and 1,444 cases of eve-teasing (the term for sexually-coloured remarks, street harassment, etc.) were reported till December 15, 2015, compared to 4,182 molestations and 1,282 eve-teasing cases in the corresponding period the previous year.

Analysis has suggested that 60 to 65 per cent of women victims are between 15-30 years old. Almost 39 per cent of molestation cases have been committed by friends and family members’ friends, something which cannot be prevented directly by the police. It would help if women and society in general becomes more aware of the issues involved. Collective efforts from the society can help solve this menace.

In various Sections of the Indian Law, the term molestation and its punishment get mentioned in different ways.  In 2013, law amendments were made with respect to rape and molestation and their definitions too were changed to accommodate the various instances of outrage that take place against women. Even cyber-stalking is now treated as ‘outraging modesty’. Smaller acts of obscenity have now been brought into the ambit of molestation and women are being heard more judiciously.

The following is the approach under various laws:

  • Under Section 294 of The IPC, the indecent act or singing, reciting, uttering of the obscene song done by the offender that causes annoyance of others in public and cause mental harassment will be considered molestation and is punishable.

Punishment:

  • Imprisonment for a period that may extend to three months or
  • Fine or
  • Both imprisonment and fine.
  • Under Section 509 of IPC, when the offender tries to insult the modesty of any woman by saying words, making gestures or sounds or displaying any object or intruding her privacy and his intention is that the word uttered or sound made is heard, object displayed or gesture made is seen is punishable.

Punishment:

  • Imprisonment for a period that may extend to one year or
  • Fine or
  • Both imprisonment and fine.
  • Under Section 354 of IPC, whoever uses criminal force or assaults any woman with the intention to outrage her modesty or knows his actions will outrage the lady’s modesty is punishable.

Punishment:

  • Imprisonment up to two years or
  • Fine or
  • Both imprisonment and fine.
  • Under Section 323 of IPC, whoever voluntarily causes hurt to the other person without any provocation as defined in Section 334 is punishable.

Punishment:

  • Imprisonment up to one year or
  • Fine up to Rs.1000 or
  • Both imprisonment and fine.