[aaykarbhavan] Business standard news updates and legal digest and Business line uptdates 3-2-2014

Howto make awill that is tamper- proof

NEHA PANDEY DEORAS Last week, the Bombay High Court ( HC) adjourned hearing till March 10 the dispute between two sons of the late Bal Thackeray over their father's will. On that date, the court will hear an interim application filed by Jaidev Thackeray to restrain younger brother Uddhav and other executors from alienating the properties in question. The HC posted to April 7 the question of framing of issues in the case. It appears Bal Thackeray signed his will nearly a year before he died on November 17, 2012 ( that is, in December 2011). Uddhav, third of four sons, had moved the HC for a probate of the will. According to reports, acopy of the will which is attached with his petition says Bal Thackeray had appointed Uddhav, Sena leader and lawyer Anil Parab, former Sena MP and noted lawyer Adhik Shirodkar, architect Shashi Prabhu and his personal assistant, Ravindra Mhatre, as executors of the will. Jalil Parkar, his personal physician, is the witness in whose presence Bal Thackeray had signed the will. The court certified the will as valid in the probate petition. But then, Jaidev, the second son, objected last June. There is no clarity on whether this will was registered or not. Even if it was, it might or might not have helped Udhhav Thackeray's case. Uddhav Thackeray's lawyer, Parab, did not respond to phone calls or text messages. Registering a will Even if not mandatory, it is a good practice to register a will, especially if immovable property is part of what is being bequeathed. Several authorities, such as the municipal corporation, insist on a registered will to transfer immovable property to legal heirs. The registration can be done at the office of the registrar or sub- registrar for a nominal fixed amount. The custody is with the registrar's office. A will can be written even on plain paper and registered. No stamp duties are payable for writing or registering awill. "Registering a will is not mandatory. It only authenticates a will but it can be contested," says R N Gupta of SN Gupta & Associates. A registered will can be modified only by a codicil, a supplement to a will, or by a fresh will. Both these must be registered to be considered valid. If not registered To be able to transfer property, if a will is not registered, it requires a probate or succession certificate from the court. The cost of getting these might run up to four per cent of the property value. In the Thackeray case, Uddhav had filed a probate petition in the HC, which got contested by Jaidev; it has now become adispute or suit. Says Bheru Choudhary of IC Legal, those who own assets in Mumbai, Chennai and Kolkata, irrespective or whether or not they stay in these cities, require the executor of the will to take a probate. A probate proves the will is genuine. " When aprobate petition is filed, the court asks its officer( s) to make a citation to all the heirs of the deceased. If any heir has an objection, they can file a caveat in a certain time period after filing probate petition. Then such cases become a suit," he explains. Problems in unregistered wills In the Thackerays' case, Jaidev objected to the point in Uddhav's petition that the properties and bank deposits willed by his father were valued at ₹ 14.85 crore. He said the Bandra bungalow where Bal Thackeray lived was alone worth ₹ 40 crore. He also noted the Shiv Sena Bhawan and party mouthpiece Saamana's office had not been added to the list of family properties. This apart, Jaidev questioned the language in which the will was written, English. He says Bal Thackeray fought for Marathi through his life and could never write his will in English. The will has Bal Thackeray's signature in Marathi. Lawyers say these points —wrong valuation of assets, non- inclusion of a few assets or language — cannot be used to set aside a will. These could at best be used as circumstancial evidence to prove the will was forged or not original. "Wills can be challenged on grounds like it has not been attested by at least two people, if proved that witness( es) were not present when the testator signed or if proved that the will was not signed by the testator at all or if the testator was not mentally fit to make a will," says Choudhary. Lawyers say in Bal Thackeray's case, he was not mentally unfit in his final year ( 2011- 12), only physically weak. Additionally, even if he propagated the use of Marathi, he knew under pressure or influence to pass on more wealth to any one person is very difficult. A doctor can be of help if one has all the health reports of the deceased. An example is the Priyamvada Birla- Lodha case. Lawyers say as Birla was lonely and unwell in her last days and only Lodha took care of her, there are chances that she might have been influenced to give a him a share in her assets. But proving it will be very difficult. It is also so with proving the properties valued in the will are wrong. Especially when the will is not made very close to the death of the testator. Some lawyers note out the Rajesh Khanna case, where his will mentions the value of his Juhu bungalow at ₹ 20 crore, when Anita Advani ( with claims on the estate) has said it is worth ₹ 100 crore. The intention of the testator is what the court will go by to come to a conclusion, adds Gupta. For instance, if a will says " I wish to distribute my assets equally between my sons", the court will see the value of the property on that day and distribute it equally between the children. If a will says, "I wish to give my property worth ₹ 20 Similarly, some write, " I wish to give my bigger house to my son and smaller house to my daughter", the court will conclude the daughter was not supposed to get more. As for Jaidev Thackeray's point about non- inclusion of certain assets, these may be looked at and decided upon in line with Section 8 of the Hindu Succession Act, 1953. This says the property of a Hindu ( male) dying intestate ( without a will) shall be passed on to heirs, agnates ( descended from the same male ancestor) or cognates ( blood relative, especially on the mother's side) of the deceased. "Typically, lawyers put a residual clause in wills, which says ' all properties at the time of my death will be bequeathed'. If there is no residual clause and some property has not been included, the court considers it under the Hindu Succession Act and distributes accordingly," says Choudhary. Hence, it helps to have a videographed will, says Gupta, as it is also a permitted document in Court ( see box: How to avoid disputes over your will). Here are ways to ensure your children and other legal heirs don't tear at each other when you're gone but your wealth hasn't KEY TERMS TO KNOW |TESTATOR: The person who makes a will |EXECUTOR: The person who is responsible for dividing the testator's wealth among the beneficiaries |DYING INTESTATE: To die without making a will |PROBATE: The official proving that a will is authentic or valid by the court |AGNATE: Anymale relation on the father's side |COGNATE: Arelation by blood or descended from a common maternal ancestor HOW TO AVOID DISPUTES OVER YOUR WILL |Once you've made a will, show it to your children/ beneficiaries |Take a consent letter/ affidavit from them, saying theyhave seen the will and theyagree to it |If not, then make sure the will is registered |Have at least two witnesses (called attesting witnesses) at the time of signing the will |Take an affidavit from attesting witnesses about the same |Attach affidavit to the will Suggestions by Ameet Hariani, managing partner, Hariani & Company

 

Is CSR a sustainable business model? The concept of social responsibility and philanthropy has been a part of charitable initiatives of the Indian business houses, as also by the zamindars in the days of the permanent settlement as a tribute to God. A later phase was triggered by the Gandhian movement and the initiatives of industrialists of that time, such as, Birlas, Tatas, Modis and Dalmias who were inspired in undertaking similar initiatives as a part of the Gandhian philosophy starting with dharamshalas and places of worship. These initiatives were undertaken under the Indian Trust Act, based on the principles of trusteeship and the fiduciary requirement to provide a return for the gains of business. It is only in the new Companies Act ( 2013) that statutory provisions and responsibilities pertaining to corporate social responsibility ( CSR) have been made mandatory under law, requiring companies having a net worth of ₹ 1,000 crore or more to constitute a separate Corporate Social Responsibility Committee of the Board, of which one member has to be an independent director. As privatisation waned due to policy changes in the nationalisation era, the public sector became an active player in setting up schools and hospitals in their townships. Though the productivity of the public sector plummeted in the eighties, with privatisation, the public sector still remains active in its social initiatives and the large corporations, such as ONGC and Indian Oil Corporation continue to serve the community in various ways. The revival of CSR in the 1990s can be traced to the upsurge of environmental concerns, which fathered the initial public interest litigations, and more recently the Green Tribunal. Auto manufacturers and others engaged in industries which involve pollutants tend to be targeted, and the Mahindra's are one of the foremost in CSR as Maruti . The question is whether CSR is warranted and corporates are happy with CSR featuring in the Companies Act being made mandatory. There are divergent views. Certain companies believe CSR provides an opportunity for being inclusive and the process benefits the outlook of employees as well as customers. Essentially, it is the state's duty to provide welfare to society under the Constitution. It is another matter if a corporation decides to utilise its funds in social welfare, without being coerced by regulations. There is also a difference in green investing and social projects. If the company's activity involves production or use of alternative natural resources and other environmentally conscious business people or invest in given mutual funds, that itself goes alarge way. If the company's business is healthcare, then pro- bono work in that sector also has its positive business indicators. But the CSR schedule to the Act involves unwarranted expenditure by corporations in certain activities in respect of issues which are not within their domain expertise. There is also an element of intrusion of investor rights in introducing mandatory CSR. Both the investor and the corporation are taxpayers. Investment decisions are not made on the basis of CSR projects, but on the dividends issued by the company and the net value. In the zeal for corporate governance and other forms of compliances, lawmakers should not lose sight of the purpose of a limited liability company. For multinationals that operate in a global market, it is not possible to have separate approaches and staffing for their social responsibilities. Every jurisdiction has its specific regulations for companies and their compliances. In addition, there are international CSR standards and guidelines to comply with, all of which is a full time task, particularly, if it has no nexus with the corporations business. Undoubtedly, there are other worthy activities in which companies' funds may be deployed such as self- regulation and good governance. A business ethics initiative is more important for business and also a worthy cause. Businesses are fighting for survival in adverse conditions. This is not the appropriate time to engage in expenses which do not bring value addition to their businesses and eat into profits. Kumkum Sen is a partner at Bharucha & Partners Delhi Office and can be reached at kumkum. sen@ bharucha. in KUMKUM SEN   BRIEF CASEN Suing directors for loan recovery The Supreme Court last week ruled that though a mortgage of assets of a company which failed to return a loan may have come to an end with their sale, the contract of indemnity with regard to the loan would continue. They are independent contracts. The directors who stood guarantee will still be liable to return the full loan. Therefore, the financial institution which proceeded against the borrower firm can sue it and the guarantors for recovery of the balance of the loan if the sale proceeds are not sufficient to satisfy the claims of the secured creditors. The court reconciled two of its earlier judgments which were apparently contradictory in the new judgment, Deepak Bhandari vs Himachal Pradesh Industrial Development Corporation. In this case, the corporation issued recall notice to the firm in 1990 and sold the assets in 1994. But the amount recovered was not sufficient to meet the claims of the corporation and another secured creditor. Therefore, the directors of the firm were sued in the high court in 1994 for the balance of the dues. They opposed it arguing that the suit was beyond the time limit as the recall notice was in 1990 and the suit was filed four years later. It should have been within three years according to the law of limitation. The high court rejected the contention. One director appealed, but the Supreme Court upheld the high court view and asserted that the period of limitation starts from the date when the assets were sold ( 1994) and not when the recall notice was given ( 1990). >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Cane growers not paid for years The Supreme Court has dismissed the appeal of Anand Agro Chem Ltd seeking to restrain the arrest of its directors and its occupiers for not paying sugarcane farmers their dues of 2007- 2008, leading to prolonged litigation. Though the directors have made promises to the Cane Commissioner of Uttar Pradesh that they would pay the growers ₹ 16 crore, they were not kept " on one pretext or the other." Dismissing their pleas, the court said: " We regret to say that the amounts due to the farmers towards price of the sugarcane and incidentals remain to be paid for several years thereby accumulating huge liability against the company. That is not a happy situation nor can repeated invocation of the process of law be a remedy for it." >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Charitable society can claim damages A charitable society whose members have renounced the world and have no family can claim compensation if a member dies in a road accident under the Motor Vehicles Act. The society will be deemed to be the legal representative of the deceased member, the Supreme Court held last week in the appeal, Montfort Brothers vs United India Insurance Co. According to the rules of the registered society, whatever a member, called 'brother, receives by way of salary, subsidies, gifts, pension or from insurance or other such benefits belongs to the community as by right and goes into the common purse. In this case, one of the brothers died in an accident in Aizawal when his jeep hit a Maruti Gypsy. The society demanded compensation, and the tribunal allowed it. However, the insurance company moved the Gauhati High Court which upset the order stating that the society had no locus standi. On appeal, the Supreme Court restored the tribunal's order. [1]M J ANTONY A weekly selection of key court orders India's IP environment has deteriorated in last 2 years' Did India's performance in the latest edition of the report take you by surprise? For the past two years, India's IP environment has deteriorated, from compulsory licences and patent revocations to the lack of any effective enforcement mechanism to curb IP infringement. India remains the global outlier on IP. Has there been deterioration in the IP environment since the previous survey in 2012? Iwould like to refer to the India section on the Index, particularly the following paragraph: "India's overall score has decreased from 25 per cent of the total possible score ( with a score of 6.24) in 2012 to 23 per cent in 2014. This is mainly due to the introduction of new indicators to the GIPC Index and the relative weakness of the Indian IP environment with regard to IP rights available for trademark holders, patentability requirements that are outside international practices, and IP- based barriers to accessing the Indian market. Moreover, India's overall IP environment has deteriorated particularly with regard to pharmaceutical patents, for which basic protection seems increasingly to be unavailable." How big a deterrent are India's IP laws for attracting foreign investment? If you look at India's foreign direct investment (FDI) numbers, you'll see a clearer picture of the hesitation of international business. India attracts less FDI than its BRICS counterparts and over the past 20 years has lagged behind other nations which started out on a similar footing with similar IP regimes and similar FDI intakes. You have been very critical of India's pharmarelated patent enforcement and resolution mechanism. What should the Indian government do to sensitise about copyright and rights related to copyrights? Our Index outlines a wide range of problems with Indias IP environment, not just pharmaceutical. Our Index provides a clear and objective roadmap for India to improve its IP environment. To that end, we hope that the GIPC Index would initiate dialogues among the Indian and US policy makers to build a better environment for India and for international trade. Any plans to engage in a dialogue with the Indian government and the industry on your concerns about the IP protection environment? We have reached out and would like to continue to engage on the same levels that we do with other key markets and to see progress on our mutual goals. In a scathing attack on India's intellectual property environment, New Yorkbased Global Intellectual Property Center ( GIPC) of the US Chamber of Commerce has ranked India at the bottom of the list of 25 countries in the 2014 International Intellectual Property ( IP) Index, for the second consecutive time. The report cited several reasons — patentability requirements in violation of TRIPS, weak data protection, poor enforcement, not being party to major international IP treaties, among others — for India continuing to have " the weakest IP environment of all countries included in the Index". JASPER MACSLARROW, executive director of International IP of the US Chambers Global Intellectual Property Center, in an email interaction with Sudipto Dey, explains why India continues to remain the global outlier in IP. Edited excerpts LEGAL EYE GIPC index scores, ( Top Source  Business line   Bonus ceiling for factory workers may be raised PTI       New Delhi, Feb 2:   An upward revision in the ceiling of bonus paid to employees of factories and other establishments is on the cards as a proposal in this regard would be taken up for consideration at the upcoming Indian Labour Conference (ILC) here next month. At present, employees drawing salary or wage not exceeding Rs. 10,000 per month are eligible for payment of bonus with a ceiling of Rs. 3,500 per month. Trade unions have been demanding removal of conditions on the payment of bonus as salary drawn by even a small time employee these days is much higher and therefore the limits hold little relevance. Members of Parliament have also raised the issue through private members Bill, desiring that at least all the workers should be entitled to get the bonus irrespective of their salary or wage under the Payment of the Bonus Act 1965. The proposal to consider the issue at the ILC was finalised at the 46th session of the Standing Labour Committee meeting held last Friday. The revision in the bonus would entail amendment to the Act. According to the proposal of the Labour Ministry, going by the current price index "there is a case in point to revise the calculation ceiling to Rs. 6,000 and also the eligibility limit to Rs. 18,000". A revision in the ceiling on the bonus paid was one of the demands of the trade unions during their two-day general strike in February last year. An amendment in the Act could benefit close to three crore employees. The ILC would also take up for consideration a proposal of extending social security benefits for workers both in the organised as well as unorganised sector and review on implementation of the recommendations of the previous three ILCs especially on the issue of contract labour and minimum wages. (This article was published on February 2, 2014) Keywords: bonus payment, ceiling on bonus for factory workers, Indian Labour Conference, labourers, employees, Standing Labour Committee, Bonus Act

 

ESIC income ceiling limit increased to Rs.25,000

Correspondent

 

Construction of ESIC medical college in progress at Paripally

Union Minister of State for Labour and Employment Kodikunnil Suresh said the Employee's State Insurance Corporation (ESIC) board has decided to increase the income ceiling limit for employees, from the existing Rs.15,000 a month for coverage under the ESIC scheme to Rs.25,000 a month.

Talking to presspersons in Gulbarga city on Saturday, Mr. Suresh said the board, which met in January, had taken a decision in this regard after considering all options. A government order will be issued on February 28. This decision will help 32 lakh employees to become members of the ESIC scheme. At present there are 3 crore employees covered under the ESIC scheme. To a question, he said the board of trustees of the Provident Fund has also decided to increase the interest rate of Provident Fund contributions from the existing 8.5 per to 8.75 per cent.

Medical colleges

Of the 15 new ESIC medical colleges sanctioned, only the ones in Bangalore and Gulbarga could complete admissions for the first year MBBS course this academic year, he said. Construction of the college building was in progress at Paripally in Kerala, Chennai, Coimbatore in Tamil Nadu, Jhodka in West Bengal, and Haridwar in Himachal Pradesh. In the rest of the places, the construction work is yet to begin.

Mr. Suresh said the recruitment of full strength of teaching and non-teaching staff had not been completed in Gulbarga and Bangalore medical colleges and this process was continuing. The super-specialty hospital of the ESIC in Gulbarga city would start functioning in three months.

 

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CS A Rengarajan

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