Monthly Archives: December 2010

The law relating to Adoptions in India

In our country, many matters relating to marriage, family and children are governed entirely by religion specific laws. For Muslims, for example, the Sharia law is applicable, which is derived entirely from Islamic texts on the interpretation of the Quran.

Adoption is one such matter which is entirely governed by religion specific laws. And as per law in India, only Hindus can adopt a child as their own child. A Muslim or a Christian can become the legal guardian of a child, but only a Hindu can adopt a child. (In Indian law, the word ‘Hindu’ includes Buddhists, Jains and Sikhs as well, but not Parsis and Jews.)
This may sound unfair, but the reason is that Islam does not recognize adoption, and neither do the personal laws of Christianity, Judaism or Zoroastrianism. In Mohammed Allahdad Khan v. Mohammad Ismail, it was held that there was nothing in the Mohammedan Law similar to adoption as recognized in the Hindu System. Hinduism is the only religion that gives its followers the freedom to adopt and give their child in adoption. An exception made is that a Muslim or Christian, or even a Parsi or Jew, can adopt from an orphanage, as long as the consent of the Court has been taken.

Which law applies?

A Hindu adoption is governed by the Hindu Adoption and Maintenance Act, 1956. Before this Act was introduced, only a male child could be adopted, but the Act makes a provision that a female child can also be adopted.

Who can adopt?

For an adoption to be valid, the person adopting has to be capable of adopting, and there are specific rules as to who is capable of adopting a child. The law is quite simple and equitable.

If you are a man, you must have attained majority (unless you have a legal guardian, you attain majority the moment you reach the age of 18) and must not be mentally unsound. If you are married, you must take your wife’s consent, unless has converted from Hinduism to another religion, or has been declared by a Court to be mentally unsound. Finally, although this is very rare, if your wife has completely renounced the world, you need not take her consent either.
For women, the requirements are quite similar. If you are married, then the adoption must be by your husband. A married woman cannot adopt, her husband alone can adopt, after she gives him her consent. If your marriage has ended, or your husband has passed away, or converted out of Hinduism, or renounced the world, you can adopt independently. Also, like for women, if your husband has been declared mentally unsound, you need not take his consent and can adopt independently. (Even if you think so, it doesn’t matter! A Court must declare him so)

Who can give a child on adoption?

Only the father, mother or guardian of the child can give it on adoption. However, if the child is an orphan, or if his/her parents have renounced the world, or abandoned the child, or become mentally unsound, the legal guardian of the child can give it on adoption. This adoption has to be approved by the Court, which will check that the adoption is for the welfare of the child. If the child is old enough to understand and give its opinion, the Court will even ask the child whether he/she wants to be given on adoption.

The husband can adopt, provided his wife consents, and the same requirements mentioned above for a man adopting a child apply to a husband giving his child on adoption. (should not have converted out of Hinduism, renounced the world or been declared mentally unsound.) A mother can give her child in adoption independently only if her marriage has ended or husband has died, renounced the world, converted or become mentally unsound.

Finally, adoption is an act driven by a desire to bring up a child and show it love and affection. The human element is critical in adoption, so a Court will not allow an adoption where there is even a hint of reward or compensation, unless the Court sanctions it.

Can any child be adopted?

After the Hindu Adoptions and Maintenance Act, 1956, both boys and girls can be adopted. However, only a Hindu child can be adopted, not one born to Muslim, Christian, Jewish or Parsi parents. Also, the child must be less than fifteen years of age, unless there is a local custom in that community according to which even older children can be adopted. Naturally, (unless there is a custom to the contrary) a married person cannot be adopted. A child which has been adopted once, cannot be adopted again.

Finally, are there any other things I must be aware of?

Yes, just a few. If the adoption is of a son, the man or woman adopting him must not have a Hindu son, son’s son or son’s son’s son living at the time of adoption. If the adoption is of a daughter, the adoptive father or mother by whom the adoption is made must not have a Hindu daughter or son’s daughter living at the time of adoption. This can get a little confusing, but read it slowly and carefully, and it is actually quite simple.

If the adoption is by a male and the person to be adopted is a female, the man adopting must be at least twenty one years older than the person to be adopted. This is to discourage sexual relationships between the man and the girl being adopted. Similarly, if the adoption is by a female and the person to be adopted is a male, the adoptive mother must be at least twenty one years older than the person to be adopted.

As long as these requirements are met, you can adopt in peace. An adoption, even after completing these requirements, is complete once the child is actually physically taken by the adopting parents. A ceremony called data homam is usually performed, but the validity of the adoption does not depend on this.

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Starting an NGO in India? Read this first

  • In India today, the maximum work in the social sector happens through Non-Governmental Organisations (NGOs). As the name suggests, these organisations do the work which is the responsibility of a Government in a welfare state, such as education, healthcare and support to the underprivileged, destitute or ill, but are not connected to the Government except perhaps by financial support.

    A person keen on contributing to society can start his own NGO as a means of rendering service. The law gives you three options. You can register the NGO as a ‘Public charitable trust’, as a ‘Society’ or even as a ‘Not for profit Company’. No matter how you start the NGO, you can seek exemption from tax, and also allow people who contribute to your NGO to be exempted.

    To register as a Trust, you need to execute a Trust Deed under the Indian Trust Act, 1882. You have to mention there the objective of the trust), how the trust will be managed, how many trustees you intend to have (a minimum of 2 members are required) and how they will be appointed and replaced. Legal formalities have to be complied with while preparing the trust deed.

    A Society is created under the Society Registration Act, 1860. Here too, a document needs to be created to form the society, but unlike a trust, a Society must have a minimum of 7 members in the managing committee of the society.

    A not for profit company can be created under Section 25 of the Companies Act for the purpose of promoting commerce, art, science, religion, charity or any other socially beneficial purpose. A member of this company will not receive any dividend, since such a company is not for profit and all the income of the company has to be used for promoting the objects of the company. The documentation and procedure to be followed is more extensive while creating a Section 25 company, but it brings with it benefits too.

    It is recommended that you consult a lawyer, and get legal advice based on your specific requirements, before starting your NGO.

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    Workplace Woes: A brief introduction to the Indian law on sexual harassment at work

    Sexual harassment of a woman can range from teasing and irritation (sexual innuendoes, inappropriate sexual gestures and propositions for dates or sexual favours) to actual and unwanted physical contact (pinching, grabbing, hugging, patting, brushing against and touching). With more and more women going out to work, the risk of their being subjected to some sexual harassment at their workplace has also increased.

    This is not a new phenomenon however. A famous case, dating back to 1985, involved an airhostess at Saudi Arabian airlines, who refused to accept the pilot’s advances. Instead of taking action against the pilot, the airline fired the woman. She filed a case which after eight years was decided in her favour, but later stayed by the High Court of Mumbai. A shocking six out of ten women have reportedly faced some annoyance in their workplace from a male co-worker, and the law in India took its own sweet time catching up.

    What is the position of the law today?

    As a matter of fact, Parliament has yet not enacted a sound law, and the Supreme Court finally out of frustration passed 12 guidelines.

    The guidelines make it mandatory for every employer to have a ‘sexual harassment committee’ in the workplace. At least half the members must be women and it must be headed by a woman. Intelligently, an NGO must be a part so that the senior staff does not influence the committee.

    Every organization must allow women workers to speak out against sexual harassment, as per the guidelines. A woman must be given an opportunity to present a complaint, which will be examined by the ‘sexual harassment committee’. In serious cases, the employer must be proactive and file a criminal complaint.

    Does the law do enough?

    It would be better if there was a clear cut law, like the law on Domestic Violence, for sexual harassment as well, since a working women spends most of her day, and life, at the workplace. Till such a law comes, these guidelines will have to be used efficiently. Also, measures on the part of women, like dressing appropriately, and strongly resisting any advances the first time itself, can help.

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    Adultery and (the long arm of) the law

    Adultery is the act of having sex with a woman or a man outside of marriage. We commonly refer to it as ‘extramarital sex’, and most people are surprised when they hear that it is actually a crime under Indian law, like robbery or dacoity. The word adultery is derived from the words ‘ad’, which means towards and ‘alter’, which means other in latin. According to some studies, as many as 27% of women and 50% of the men in the U.S.A have engaged in extramarital sex. And if we take the view of the Bible, “But I tell you that anyone who looks at a woman lustfully has already committed adultery with her in his heart. (Matthew 5:28)”, it will be almost 100% of mankind.

    Despite that, many nations have taken very strict views against adultery. Many states in the United States still view it as an offence. It is amusing today that in the West, adultery was looked at a man’s property (his wife) being shared, and so he was entitled to compensation! In our times, the Islamic world is famous (infamous, really) for its very harsh stance on extramarital sex. In many Islamic countries, including our neighbor Pakistan, the punishment for adultery can extend to death.

    Indian law on adultery, as many people acknowledge, is quite outdated and unequal. The Indian law states that a person commits adultery, if “he has sexual intercourse with a woman who is and whom he knows or has reason to believe to be the wife of another man.” By using the word ‘he’, it limits itself to men only, and women cannot be even accused of the crime. Additionally, it is only limited to married women. Therefore, even if the man is unmarried, it can be adultery for him to have sex with a married women. Only if the woman’s husband consents to them having sex, it is not an offence. Naturally, if the woman is forced to have sex with the man, it is not adultery, but the much more serious crime of rape.

    To sum up, an act of adultery is committed when any man, married or unmarried has sex with a married woman
    1. Without the consent or connivance of the husband, and
    2. The woman consents to having sex with the man, i.e. it is not rape.

    Not only is it unequal, it is also quite severe. A man committing adultery can be put behind bars for as many as five years. A lady who suspects her husband of being in an adulterous relationship can therefore file a criminal complaint against him. One wonders however whether this is a workable solution in a country like India, especially when the punishment is so severe.

    A few changes must be introduced in the law to make it equitable and fair. First, it should be an offence to have sex by a married man even with an unmarried woman. If the objective is to punish a man for his disloyalty, it does not matter with whom the act of disloyalty is committed. If the objective is to somehow compensate the husband of the unfaithful woman, we need to re-examine our law, because such an objective is very unfair and regressive. Moreover, if that is the objective, then why not punish the woman as the abettor too? The punishment in that case must be extended to both sexes, if at all a punishment is to be imposed.

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    Franchising law in India: A brief introduction

    The Indian economy has really witnessed a revolution of sorts in recent times, and many ways of doing business are springing up in India. People start businesses themselves, in partnership with somebody or as companies. One difficulty people face when they start is marketing and familiarizing people with their brand. This is where ‘franchising’ becomes useful, since it gives an entrepreneur the benefit of someone else’s brand. A person starting a McDonald’s restaurant does not need to worry about marketing, for example. It also gives a young, inexperienced company the insights and experience of the company which they are franchising, instead of learning through trial and error.

    It is impossible to point to any one law governing franchising in India. Laws relating to contract, agency, distribution, leasing, investments, intellectual property, companies (in most cases), property, labour and investment, and also banking and insurance, may be used. Naturally, everything depends on the situation in that case, which is why the franchise agreement between the parties needs to be framed very carefully.

    Financial aspects: Royalty and taxation

    Royalty payment: If both the parties are Indian, the royalty fees are decided by a contract between them. If the company is foreign but the person taking the franchise is Indian, certain FEMA (Foreign Exchange Management Act) and RBI (Reserve Bank of India) rules apply.

    Tax payments by the franchisor and franchise taker (franchisee): As per law, if the franchisor charges royalty payment from the franchise, the company must pay tax on it, as income deriving from Indian soil. If either the franchisor or the franchise taker hire people and pay them salaries, tax may be deducted at source. The franchise will have to pay the local sales tax, property tax and other taxes applicable.

    This was just a brief introduction to the law governing franchises in India. If you are considering starting a franchise, we recommend that you consult a lawyer. Choose ‘Contracts and Commercial’ on to find a lawyer in your city to answer your franchise related questions.

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    I want to start a web-based business. What legal regulations must I keep in mind?

    The last decade has witnessed the very healthy phenomenon of many young people (and not so young people) turning to entrepreneurship and starting businesses of their own. Businesses create employment and wealth, and are vital to feed our large and burgeoning population.

    Whether you are receiving money through a payment gateway or a brick and mortar payment system like Cash on Delivery, a very essential legal formality is the filing of tax returns. Secondly, if you are providing content or using a logo/design, get the necessary Intellectual Property rights protection. It is very easy to copy a logo from a website, and unless you take precautions, you will have no remedy if someone copies it later.

    Thirdly, even if the business exists in cyber space, the people who run it are very real. So you need to decide a suitable structure for your business. A Partnership is easier to start, needing only a registered (highly recommended) partnership deed, but your liability is unlimited. If you default on a debt, your house, car etc. can simply be taken away. If you see good prospects for your business, long term, it makes sense to create a private limited company. For this, you need to prepare necessary documentation, like the Memorandum and Articles of Association of the Company, among other formalities. The formalities are maximum in this option. Typically, your web based business may involve one ‘technical’ person, and one ‘marketing’ person, and the technical person may only bring his technical expertise to the firm, and no capital. This arrangement, if it applies to you, must be stated very clearly in writing at the outset.

    Since 2009, another form of starting an enterprise has come into existence, called a ‘Limited Liability Partnership’. Here, you can enter into a Partnership, but still suffer only limited liability. If something goes wrong, only your capital contribution to the partnership will be affected. This is an interesting animal, and you must definitely explore this option.

    The disadvantage is that expanding such an enterprise when business grows is a little more difficult than in a private limited company. In the latter, you can offer equity to investors and bring in funds, or ‘go public’ which means offering shares to the general public. A lot of small firms however are choosing to go the ‘Limited Liability Partnership’. If you are starting the business alone, you do not initially have to incorporate a company. Filing personal income tax returns and getting intellectual property rights protection is necessary, however.

    This, it must be remembered, is just a broad outline of the process. No general prescription can be made since every case is unique, so have your situation studied by an expert before deciding the best course of action. Writing sound software code is just part of the process, your understanding and application of the legal code has to be sound, too.

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    How do I create a Limited Liability Partnership in India?

    As it is typically understood, a Partnership is a form of business where the partners face ‘unlimited liability’. This means that if the firm owes money, say Rs. 1 crore to creditors, but the capital of the firm is only Rs. 50 lakh, the remainder can be recovered from the personal assets (house, cars etc.) of the partner. This is as opposed to a company where the shareholders face only a ‘limited liability’, limited to the extent of their shareholding in the Company. A Limited Liability Partnership (LLP) is an entirely new animal, where people start a firm, but their liability is limited to only their capital contribution to the Partnership, and their personal assets will not be affected.

    The Limited Liability Partnership Act (LLP), 2008 was published in the official Gazette of India on January 9, 2009 and came into force from 31 March 2009. The first LLP in India was incorporated in the first week of April 2009.

    Logic behind a ‘Limited Liability Partnership’

    A Limited Liability Partnership will be of great value to all those who want the flexibility and ease of a Partnership, with the security of a Company. Particularly, in a partnership, a partner is at risk of losing all his assets for no fault of his own. This is not the case in a LLP, where a partner will only lose the capital he contributed to the firm.

    Difference between a typical Partnership and an LLP

    The fundamental legal difference between the two is that a Limited Liability Partnership has to be incorporated by a written incorporation document, unlike a traditional Partnership which can even be created orally. The other critical difference is that a LLP has an independent existence. A Partner is an LLP is not affected by the wrong or illegal conduct of another partner. Moreover, he is free to deal with the LLP independently, while this is often not the case in a traditional partnership.

    In fact, in many ways, an LLP is more similar to a Company. Even the documents of an LLP are registered with the Registrar of Companies, and not with the Registrar of Firms, as is the case with a Partnership firm. The Registrar of Companies is also the central administrative body, and the Ministry of Corporate Affairs regulates the law relating to LLPs. Like a Company, the death or retirement of a partner does not affect it, unlike a traditional partnership, which would dissolve.

    Designated Partner

    A LLP can even have a Company or a body corporate as a Partner. It would create a lot of complexity if all the members of a LLP were Companies. The law therefore states that atleast two Partners in an LLP must be individuals, and they are called ‘Designated Partners’. A company can nominate an individual to be the ‘Designated Partner’, and every such Designated Partner gets a DPIN [Designated Partner Identification Number] from Central Government.

    LLPs around the world

    LLP as a concept has been have borrowed from the West, and they have been commonly used for atleast a decade in UK, the USA and more recently in Japan. The other major economy, Germany, has a peculiar structure with the suffix ‘GmbH and Co. KG’, which is a partnership with limited liability, and one of its members is a limited liability company (GmbH). Many countries also require one of the partners to be a ‘general partner’, who bears unlimited liability. In fact, this system is a better mix of partnership and company forms, since it ensures that you don’t have the cake and eat it too.

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