Monthly Archives: September 2013

Contingent Interest under Section 21 of The Transfer of Property Act, 1882

Contingent Interest (Section 21)
Where, on a transfer of property, an interest therein is created in favour of a person to take effect only on the Happening of a Specified Uncertain Event, or if a specified uncertain event shall not happen, such person thereby acquires a Contingent Interest in the property. Such interest becomes a vested interest, in the former case, on the happening of the event, in the latter, when the Happening of the Event becomes Impossible.

Exception : Where, under a transfer of property, a person becomes entitled to an interest therein upon attaining a particular age, and the transferor also gives to him absolutely the income to arise from such interest before he reaches that age, or directs the income or so much thereof as may be necessary to be applied for his benefit, such interest is not contingent.

A Contingent Interest is one in which neither any Proprietary Interest nor a right of enjoyment is given at present, but both depend upon Future Uncertain Events.

Three Characteristics of Contingent Interest :

1. Its depend upon the Fulfillment of condition.

2. If the Transferee dies before obtaining possession, the Contingent Interest fails and the property Reverts to the Transferor.

3. It is Transferable. It is quite different from a mere chance ( space succession)

(Mayait v. Official Assignee, 57 I.A.10)

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Vested Interest under Section 19 of The Transfer of Property Act, 1882

Vested Interest (Section 19)
Where, on a transfer of property, an interest therein is created in favour of a person without specifying the Time when it is to take effect, or in terms specifying that it is to take effect forthwith or on the Happening of an Event which Must Happen (Bound to Happen), such Interest is Vested, unless a Contrary Intention appears from the terms of the transfer.

A Vested Interest is Not Defeated by the Death of the Transferee Before He Obtains Possession.

Explanation : An intention that an interest shall not be vested is not to be inferred merely from a provision whereby the enjoyment thereof is postponed, or whereby a prior interest in the same property is given or reserved to some other person, or whereby income arising from the property is directed to be accumulated until the time of enjoyment arrives, or from a provision that if a particular event shall happen the interest shall pass to another person.

Three Main Characteristics of Vested Interest :

1. A Vested Interest does not depend upon Fulfillment of a Condition and it Creates a          Present and Immediate Right.

2. A Vested Interest is not Defeated by the Death of Transferee before obtaining Possession, it will pass on to his Heirs.

3. A Vested Interest is Transferable as well as Heritable

(Elokasee v. Darponarain, 5 Cal. 59)

Unborn Person also acquires the Vested Interest under Section 20 of The Transfer of Property Act, 1882 which states that if an interest created the benefit of an unborn person that interest he acquires upon his Birth.

Valuation by REGISTERED VALUERS under Section 247 of The Companies Act, 2013

(1)  Where a valuation is required to be made in respect of any property, stocks,
shares, debentures, securities or goodwill or any other assets (herein referred to as the
assets) or net worth of a company or its liabilities under the provision of this Act, it shall be valued by a person having such Qualifications and Experience and Registered as a Valuer in such manner, on such terms and conditions as may be prescribed and Appointed by the Audit Committee or in its absence by the Board of Directors of that company.

(2) The valuer appointed under Sub-Section (1) shall,—
              (a) Make an impartial, True and Fair Valuation of any assets which may be                                  required to be valued;
              (b) Exercise due Diligence while performing the functions as Valuer;
              (c) Make the valuation in accordance with such rules as may be prescribed; and
              (d) Not undertake valuation of any assets in which he has a direct or indirect
                   interest or becomes so interested at any time during or after the valuation of                      assets.

(3) If a Valuer Contravenes the Provisions of this section or the rules made there under,
the Valuer shall be Punishable with fine which shall not be less than Twenty-Five Thousand Rupees but which may extend to One Lakh Rupees:
Provided that if the Valuer has Contravened such Provisions with the Intention to
Defraud the Company or its Members, he shall be Punishable with Imprisonment for a term which may extend to One year and with Fine which shall not be less than One Lakh Rupees but which may extend to Five Lakh Rupees.

(4) Where a valuer has been Convicted under Sub-Section (3), he shall be liable to—
        (i) Refund the Remuneration received by him to the company; and
        (ii) Pay for Damages to the company or to any other person for loss arising out
            of incorrect or misleading statements of particulars made in his report.

Central Government to specify Audit of items of Cost in respect of certain companies. (Cost Audit under Section 148 of The Companies Act, 2013)

(1) Notwithstanding anything contained in this Chapter, the Central Government
may, by order, in respect of such class of companies engaged in the production of such
goods or providing such services as may be prescribed, direct that particulars relating to the utilization of material or labor or to other items of cost as may be prescribed shall also be included in the books of account kept by that class of companies:
Provided that the Central Government shall, before issuing such order in respect of
any class of companies regulated under a special Act, consult the regulatory body constituted or established under such special Act.
(2) If the Central Government is of the opinion, that it is necessary to do so, it may, by
order, direct that the Audit of Cost Records of Class of Companies, which are covered under Sub-Section (1) and which have a Net Worth of such amount as may be prescribed or a Turnover of such amount as may be prescribed, shall be conducted in the manner specified in the order.

(3) The Audit under Sub-Section (2) shall be conducted by a Cost Accountant in
practice who shall be appointed by the Board on such remuneration as may be determined by the members in such manner as may be prescribed: Provided that no person appointed under Section 139 as an Auditor of the company shall be appointed for conducting the audit of cost records: Provided further that the Auditor conducting the cost audit shall comply with the Cost Auditing Standards

Explanation.—For the purposes of this sub-section, the expression “Cost Auditing Standards” mean such standards as are issued by the Institute of Cost and Works Accountants of India, constituted under The Cost and Works Accountants Act, 1959, with the Approval of the Central Government.

(4) An audit conducted under this section shall be in addition to the audit conducted
under Section 143.
(5) The qualifications, disqualifications, rights, duties and obligations applicable to
auditors under this Chapter shall, so far as may be applicable, apply to a Cost Auditor appointed under this section and it shall be the duty of the company to give all assistance and facilities to the Cost Auditor appointed under this section for auditing the cost records of the company: Provided that the report on the audit of cost records shall be submitted by the Cost Accountant in practice to the Board of Directors of the company.

(6) A company shall within Thirty days from the date of receipt of a copy of the Cost
Audit Report prepared in pursuance of a direction under Sub-Section (2) furnish the Central Government with such report along with full information and explanation on every reservation or qualification contained therein.

(7) If, after considering the Cost Audit Report referred to under this section and the
information and explanation furnished by the company under Sub-Section (6), the Central
Government is of the opinion that any further information or explanation is necessary, it may call for such further information and explanation and the company shall furnish the same within such time as may be specified by that Government.

(8) If any Default is made in complying with the provisions of this section,—
            (a) The company and every officer of the company who is in default shall be
                 Punishable in the manner as provided in Sub-Section (1) of Section 147;
            (b) The Cost Auditor of the company who is in default shall be punishable in the
                 manner as provided in Sub-Sections (2) to (4) of Section 147.

Appointment of Company Liquidator under Section 275 of The Companies Act, 2013

(1) For the purposes of Winding up of a company by the Tribunal, the Tribunal at
the time of the passing of the order of winding up, shall appoint an Official Liquidator or a liquidator from the panel maintained under Sub-Section (2) as the Company Liquidator.

(2) The Provisional Liquidator or the Company Liquidator, as the case may be, shall be
appointed from a panel maintained by the Central Government consisting of the names of Chartered Accountants, Advocates, Company Secretaries, Cost Accountants or Firms or Bodies Corporate having such Chartered Accountants, Advocates, Company Secretaries, Cost Accountants and such other Professionals as may be notified by the Central Government or from a firm or a body corporate of persons having a combination of such professionals as may be prescribed and having at least Ten years’ experience in company matters.

(3) Where a Provisional Liquidator is appointed by the Tribunal, the Tribunal may limit
and restrict his powers by the order appointing him or it or by a subsequent order, but
otherwise he shall have the same powers as a liquidator.

(4) The Central Government may Remove the name of any person or firm or body corporate from the panel maintained under Sub-Section (2) on the grounds of Misconduct, Fraud, Misfeasance, Breach of Duties or Professional Incompetence: Provided that the Central Government before removing him or it from the panel shall give him or it a Reasonable Opportunity of being heard.

(5) The terms and conditions of appointment of a Provisional Liquidator or Company Liquidator and the fee payable to him or it shall be specified by the Tribunal on the basis of task required to be performed, experience, qualification of such liquidator and size of the company.

(6) On appointment as Provisional Liquidator or Company Liquidator, as the case may
be, such liquidator shall file a Declaration within Seven Days from the Date of Appointment in the prescribed form disclosing conflict of interest or lack of independence in respect of his appointment, if any, with the Tribunal and such obligation shall continue throughout the term of his appointment.

(7) While passing a winding up order, the Tribunal may appoint a Provisional Liquidator,
if any, appointed under Clause (c) of Sub-Section (1) of Section 273, as the Company Liquidator for the conduct of the proceedings for the winding up of the company.

Mumbai Police File Charge Sheet against the Accused of Shakti Mill Rape Case, Mumbai

Three weeks after the arrest of four persons in the Shakti Mills Rape Case, the Mumbai Police on Thursday, filed the Charge Sheet in the case against all four accused.  

The four, arrested within days of the attack, appeared at the Esplanade (Killa) Court in South Mumbai barefooted and dishevelled. A Separate Charge Sheet was filed against the fifth accused under the laws before a Juvenile Court. 

The 600-page Charge Sheet filed on Thursday has charged the accused under various sections of the Indian Penal Code (IPC) including Section 376 (d) (Gangrape), Section 377 (Unnatural Offence), Section 201 (Destruction of Evidence), Section 120 (b) (Criminal Conspiracy) and Section 34 (Common Intention) among others. The charge sheet has details of the Victim’s Ordeal, Statements of 86 Witnesses, Forensic Evidence from the spot, and DNA Analysis Reports, besides Phone Call Records.    

As Per The Companies Act, 2013 – FINANCIAL STATEMENT (CLAUSE 2(40)]

FINANCIAL STATEMENT as per the CLAUSE 2(40) of The Companies Act, 2013

• The term ‘financial statement’ has been defined to include:-
(i) A Balance Sheet as at the End of the Financial Year;
(ii) A Profit and Loss Account, or in the case of a company carrying on any activity
Not for Profit, an Income and Expenditure Account for the financial year;
(iii) Cash Flow Statement for the financial year;
(iv) A Statement of Changes in Equity, if applicable; and
(v) any Explanatory Note annexed to, or forming part of, any document referred to
in sub-clause (i) to sub clause (iv):
• The financial statement, with respect to One Person Company, Small Company
and Dormant Company, may not include the cash flow statement;

Signing of financial statement as per Clause 134 of The Companies Act, 2013

The financial statement, including consolidated financial statement, if any, shall be
approved by the Board of directors before they are signed on behalf of the Board at least
by the Chairperson of the company authorised by the Board or by two directors out of
which one shall be managing director and the Chief Executive Officer, if he is a director
in the company, the Chief Financial Officer and the company secretary of the company,
wherever they are appointed, or in the case of a One Person Company, only by one
director, for submission to the auditor for his report thereon.