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How to file for Bankruptcy

In India, filing for bankruptcy is not very popular, but it can be a good option for those who are heavily indebted and cannot see any chances of repayment in the future. This article gives you a gist on how to file for bankruptcy.

By: Melena Janet Jeen R., 4th Year, BBA.LLB (Finance and Business Hons.), Alliance University.

Bankruptcy 

Anyone unable to pay-back the debts in any way will have to declare them ‘bankrupt’. This relives the person/company (the debtor) from the legal obligation to pay the creditors.

There are two types of insolvencies –

Cash flow insolvency – The debtor suffers the lack of financial liquidities which makes it impossible to repay debts.

Balance sheet insolvency – This type of insolvency occurs when a person or an organization does not acquire enough assets to pay all their debts.

Steps to file for bankruptcy:

  1. Balance-Sheet: Prepare a balance sheet. The courts will want to confirm that the company or individual is not in a position to pay off the debts in any alternative way. The balance sheet acts a proof of the transactions and shows if there are any assets left in the company.

2. Legal Advisor: Always consult a professional i.e. a legal advisor in this case. The advisor will study your company’s balance sheet and look into the possibilities of winning the case at court. Having better field knowledge, the advisor will be able to give us more insights into the case.

Law Suit: Final step is to file a law-suit for bankruptcy status. If you have debts of more than 500 INR, you can file for bankruptcy in court. The company will have to hire a lawyer and file the case under the Provincial Insolvency Act (If you live in Mumbai, Kolkata, or Chennai, you will be governed by the Presidency Towns Insolvency Act, 1909; for all other places in India, you will be governed by the Provincial Insolvency Act, 1920) and take the case to court. If the judgement is in the favor, then the company will be relieved from all the debts. While the insolvency proceedings are pending before the court, you can apply for a minimum maintenance amount for your own and your family’s survival.

How To?

How to file a suit for the Dissolution of Partnership

The dissolution of a partnership firm takes place when the relationship between the partners of a firm is dissolved or terminated. The article discusses the primary ways of dissolution i.e by Court intervention or otherwise. And further, the steps involved in both the ways have been briefly explained in the article to facilitate the dissolution process.

By: Naman Gujral, Delhi Metropolitan Education.

 In India, it is very often that the partners of a partnership firm have arguments or disputes among each other which results in the dissolution of a partnership. 

The dissolution of a partnership firm is a process in which the relationship between partners of a firm is dissolved or terminated. If a relationship between all the partners of a firm is dissolved then it is known as the dissolution of the firm.

The dissolution of a partnership generally occurs when one of the partners ceases to be a partner in the firm.

Other causes of dissolution are the Bankruptcy or death of a partner, an agreement of all partners to dissolve, or an event that makes the partnership business illegal. A suit can be filed in the Court for the dissolution of the firm to have a final decree.

Section 44 of the Partnership Act, 1932 provides a provision for the dissolution of the firm by Court.

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

  • Dissolution without the intervention of the Court.
  • Dissolution by Court

A. Dissolution without the intervention of Court

  1. By Agreement
  2. Compulsory Dissolution
  1. Insolvency of Partners
  2. Unlawful Business
  3. Dissolution on the happening of contingent event
  1. Expiry of Fixed Period
  2. On achievement of a specific task
  3. Death of Partner
  4. Insolvency of Partner
  5. Resignation of Partner
  6. Dissolution by notice

B. Dissolution by Court

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

  1. Insanity of Partner
  2. Incapacity of Partner
  3. Misconduct of Partner
  4. Constant breach of the agreement by partner
  5. Transfer of Interest
  6. Continuous Losses
  7. Just and Equitable

Dissolution by Mutual Agreement 

In the case of Dissolution of Firm by mutual agreement, the following steps would be required to be followed:

1. Prepare a Dissolution Deed in which the consent of all partners is there.

2. An advertisement needs to be given in at least two local newspapers.

3. It will be published in the official gazette.

4. It would also be required to submit documents along with the NIL balance sheet to the registrar of Firms.

Dissolution by Court

In the case of Dissolution of Firm by a court, the following steps would be required to be followed:

  1. Review your partnership agreement.
  2. Discuss with other partners.
  3. File dissolution papers.
  4. Notify others.
  5. Settle and close out all accounts. 

Lastly, don’t forget that it’s always best to consult with an experienced business lawyer. Because certain rules vary by state, you’ll want to ensure that you’re upholding all your legal obligations and that all steps are properly taken.

How To?

How to Draft and Send a Notice under section 80 of CPC

Mentioned in Section 80 of the Civil Procedure Code, 1908, it is mandatory to serve notice to the government or the public officers if any act done by the officer in the capacity of his office has caused a loss of any kind to the plaintiff.

By: Nishtha Srivastava, 4th year BBA LLB specialisation in Corporate Laws, UPES, Dehradun.

Introduction

The legal framework of our country provides us the right to sue any individual or group of individuals in case the legal rights of the former have been violated.

Generally, in case of an institution of any legal proceedings against any individual or private parties to claim relief from any mishap caused to the former, the law doesn’t mandate to give notice to the other party. However, the scenario changes as soon as anybody looks forward to instituting a suit against the government or any public officer who commits any act in the capacity of his public office.

Section 80 of CPC provides 2 months to respond to the notice served to the government or public officer who has acted prejudicially to the interest of the plaintiff in the capacity of his public office. Thus, through this section, an attempt has been made by the legislature to amicably settle the matter in issue instead of knocking the door of the Court. Moreover, it saves them time, resources, and money which would be wasted by the plaintiff as well as the authorities in the institution of the suit.

Section 80(1) of CPC enlists the offices wherein the notice has to be given in writing and delivered to or left at as per the category they belong to:

a) If the suit is against the Central Government: office of the Secretary to that Government except if the case is against railways.

b) If the suit is against the Central Government relates to a railway: office of the General Manager of that railway;

c) If the suit is against the Government of the State of Jammu and Kashmir: office of the Chief Secretary to that Government or any other officer authorised by that Government in this behalf;

d) If the suit is against any other State Government: office of a Secretary to that Government or the Collector of the district;

e) In the case of a public officer, delivered to him or left at his office, stating the cause of action, the name, description, and place of residence of the plaintiff and the relief which he claims.

In Bihari Chowdhary v. State of Bihar[i], Supreme Court has stated that “The object of the section is the advancement of justice and the securing of public good by avoidance of unnecessary litigation”.

Essential Requirements

To constitute notices under section 80 CPC, the following things must be adhered to:

   I. name, description, and place of residence of the person giving notice;

  II. a statement of the cause of action; and

   III. the relief claimed by him.

   IV. Summary of the legal basis for the relief claimed

In the case of State of A.P. v. Gundugola Venkata[ii], certain requirements were laid down which need to be looked upon by the Court to check the whether the notice contains essential requirements or not which are as follows:

  1. Whether the details relating to name, description, and residence of the plaintiff have been given in such a manner to provide the authority the identification of the person giving the notice?
  2. Whether the cause of action and the relief claimed by the plaintiff has been put out in the notice as per the essential particulars?
  3. If the mode of delivery of written notice has been by actual delivery or left at the office of the appropriate authority mentioned in the section? and
  4. Whether the suit has been instituted after the expiration of two months after the service of notice and a statement stating that the notice has been so delivered or left is contained in the plaint?

Procedure:

A notice under this section is specifically sent to bring to the information of the government or public official against whom the suit has to be filed about the alleged act committed by it which has caused wrongful loss to the plaintiff.

Though the Code doesn’t prescribe any particular form in which the notice under section 80 should be served, certain things must be kept in mind while drafting the same.

Step 1:

Writing the letterhead– It consists of the names, addresses, and contact details of the person who is serving the notice/ advocate and to whom the notice has to be served. It should be specific and clear to reach the concerned authority or officer to commence the notice within time.

Step 2:

The first paragraph shall contain the name and address of the plaintiff apprising the service of the notice under section 80 of CPC,1908.

Step 3:

 Followed by a paragraph containing the details of the cause of action that has led to such circumstances.

Step 4:

The last paragraph shall consist of the relief claimed and a specified time period generally a period of 15 to 30 days which is given to the defendants to reply to the same. Also, the future set of actions that shall be taken by the petitioner in case of dishonour of notice is also to be mentioned in this paragraph itself.

Step 5:

Signature– The notice has to be finally signed by the plaintiff if he himself drafts the notice. However, if an advocate drafts the notice, it should contain his signature followed by the signature of the client. This will work as an estoppel against the plaintiff in case he denies supplying the details mentioned in the notice.

Mode of Service

A notice must be delivered or left at the office of the appropriate authority as per section 80 CPC.

However, it can also be personally delivered at the office of such authority to make the latter sign the acknowledgment of receiving it.

It is usually sent through registered A.D. or courier because it ensures that the acknowledgment is retained.

Moreover, there shall be 2 copies kept by the petitioner, one for himself and one for the advocate if the latter has been consulted for the drafting of the notice. 

With the amendment of 1976, even the presence of technical defects in the notice doesn’t make it invalid which ensures that justice is delivered to the aggrieved party at all times[iv].

Conclusion

There is no doubt that the provision of serving notice to the government or public officer for any act done purportedly to be done by him in his official capacity before the institution of the suit against them, is a very useful step for both the plaintiff and the authorities. However, the practice of avoiding this notice has now become a ritual for these authorities, which makes the very existence of this provision questionable. Nevertheless, it is advisable to take help from an advocate for the drafting of such notice to be well written with legal intricacies.

End Notes:

[i] AIR 1984 SC 1043

[ii] AIR 1965 SC 11

[iii] NOTICE OF SUIT UNDER SECTION 80, CODE OF CIVIL PROCEDURE (Sept 19, 2020, 06:43 PM), http://www.aadisol.in/aca/sa/forms/2332.pdf

[iv] Section 80, Civil Procedure Code, 1908.

How To?

How to register a trademark

A trademark is a logo or a symbol used by an owner to represent his business. With a registered trademark, you can stop others from using your trademarked business name/logo, etc. with regards to goods or services it is registered. The article discusses the steps involved in the registration of the trademark and the importance of registration of a trademark.

By: Akshat Badjatya, Renaissance Law College

Introduction

Trademark is a brand name. A trademark or service mark includes any word, name, symbol, device, or any combination, used or intended to be used to identify and distinguish the goods/services of one seller or provider from those of others, and to indicate the source of the goods/services.

What is a trademark?

In simple terms, a trademark is a brand or logo which represents your business.

A visual symbol like a word signature, name, device, label, numerals, or combination of colors used by the owner of the trademark for goods or services or other articles of commerce to distinguish it from other similar goods or services originating from different businesses. A trademark can be a word, symbol, logo, and brand name, wrapper, packaging labels, tagline, or a combination of these and are used by manufacturers or service providers to identify their products and/or services. It is used to distinguish the owners’ products or services from those of its competitors.

Example of trademarks

Coca-cola and Pepsi are two trademarks from the same industry (beverages) which distinctly identify the source or origin of the goods as well as an indication of quality.

Trademarks in India are registered by the Controller General of Patents Designs and Trademarks, Ministry of Commerce and Industry, Government of India.

Trademarks are registered under the Trademark Act, 1999, and provide the trademark owner the right to sue for damages when infringements of trademarks occur.

However, any trademark, which is identical or deceptively similar to an existing registered trademark or trademark for which application for registration has been made, cannot be registered. Also, a trademark that would likely cause deception or confusion or is offensive may not be registered.

Who can apply for a trademark?

Any person which can be an individual, company, proprietor, or legal entity claiming to be the owner of the trademark can apply. The trademark application can be filed within a few days and you can start using the “TM” symbol. And the time required for the trademark registry to complete formalities is 18 to 24 months. You may use the “®” (Registered symbol) next to your trademark once your trademark is registered and the registration certificate is issued. 

Once registered, a trademark is valid for 10 years from the date of filing, which can be renewed from time to time.

Functions of a trademark 

  • It identifies the service or product and its source
  • It guarantees its quality
  • helps in Advertisement for service or product

Different types of trademark

  • A name (including personal or surname of the applicant or predecessor in business or the signature of the person).
  • A coined word or an invented word or any arbitrary dictionary word or words, not being directly descriptive of the character or quality of the goods/service.
  • Alphanumeric or Letters or numerals or any combination thereof.
  • Image, symbol, monograms, 3-dimensional shapes, letters, etc.
  • Sound marks in audio format.

Documents required for filing a Trade Mark Application in India

  • Trademark or logo copy.
  • Applicant details like name, address, and nationality, and for company; the state of incorporation.
  • Goods or services to register.
  • Date of first use of the trademark in India, if used by you before applying.
  • Power of attorney to be signed by the applicant.

The procedure for registering a trademark in India

Step 1: Trademark Search

(Time: about 4 hours) Cost: Rs 0 to Rs. 500

This search is to check whether your business name or logo is similar to other already registered trademarks. Generally, a trademark agent or attorney conducts this search with the Trademark Office to check if there are any similar trademarks already registered under that particular class. There are two kinds of search: online and offline. It is recommended that you get both the searches done. Once found to be unique, you can proceed to the next step

Step 2: Create a Trademark Application

(Time required: 2-3 days)

Based on the results of the search conducted, the trademark attorney will draft the trademark application, provided that your business name/logo is found to be unique. If someone already has the same or similar trademark, you need to change yours. Or if you are of opinion that the trademark is rightfully yours and you are using it for a long time even before other party trademark registration.

You can start using the “™” symbol as soon as you file the form of a trademark application.

Step 3: Trademark Registration

(Time 8 to 24 months)

Cost: Government fee is Rs. 4,500/- in case of Individual/ Startup/ Small Enterprise (it would be 9,000/- in all other cases) and trademark attorney professional fee is Rs. 3500/- per application per class.

  • The Trademarks Office will first check your application to see if it’s already been taken. If it has, a trademark objection will be raised.
  • If it has no objection, it makes an advertisement in the Trade Marks Journal.
  • If there is no opposition from other businesses in the next four months, your trademark is registered around six months later.

Steps you need to take to register your trademark in India

  • Select and authorize a trademark agent or attorney to represent you.
  • The trademark agent or attorney has to conduct a search.
  • Depending upon the results of the search, the trademark agent or attorney will draft your trademark application. In case someone already has the same or similar trademark, you may have to change yours.
  • The trademark agent or attorney will file your trademark application with the Trademark Office and send you the receipt.
  • After a few days, the trademark agent or attorney will send you the Original Representation Sheet of your trademark as it has been filed with the Trademark Office.

It can take anywhere between 8 months to 2 years for the Trademark Office to decide whether or not to grant you the trademark; if there are objections from the trademark office or anyone else, it may take longer.

A registered trademark is published in the Trademark Journal.

Why do you need to consider registering a trademark for your business?

  • Even the biggest businesses like Coca-Cola, Apple protect their business through trademark.
  • The trademark would be an important asset for your business and contributes to the goodwill generated.
  • With a registered trademark, you can stop others from using your trademarked business name/logo, etc. with regards to goods or services it is registered.
  • Trademark can be considered just like any other form of an asset like real estate, as it can be sold, licensed, or assigned.
  • It guarantees the identity of the origin of goods and services.
  • It stimulates further purchases.
  • It serves as a badge of loyalty and affiliation.
  • It may enable the consumer to make a lifestyle or fashion statement.
How To?

How to draft a Partnership Deed

A partnership deed is a document in which the respective rights and obligations of the members of a partnership are written. The partnership deed may be oral or written and is not necessarily required to be registered. However, registering the deed helps when disputes arise as partners can sue and be sued as per the terms of the deed.

By: Naman Gujral, Delhi Metropolitan Education.

Introduction

A partnership is a unique form of business in which partners work together to achieve common goals. Due to this feature of partnerships, the partners are allowed to decide the terms of their relationship with each other. In India, many people tend to work together in a partnership rather than being the sole proprietor and agree on some terms that they will share in the business between them. The documents in which they do so are called partnership deeds.

In India, Partnerships are governed by the Indian Partnership Act, 1932.

The Indian Partnership Act, 1932 governs the partnership form of businesses in India. This act contains several provisions defining the rights, duties, liabilities, and powers of partners. These provisions, however, are not always binding on them. Partners are free to bind themselves with contrary provisions. Partnership deed does not have to be mandatorily registered unlike the article of association of companies.

However, registration can ensure the prevention of legal challenges to its validity when disputes arise. 

How to create a Partnership Deed?

The document in which the respective rights and obligations of the members of a partnership are written is called the Partnership Deed.

A partnership deed agreement may be written or oral.

However, practically, an oral agreement does not have any value for tax purposes and therefore the partnership agreement should be written.

The following are the essential characteristics of a partnership deed:-

  • Name and Address of the firm as well as all the partners
  • Nature of business to be carried on
  • Date of Commencement of business
  • Duration of Partnership (whether for a fixed period/project)
  • Capital contribution by each partner
  • The profit-sharing ratio among the partners

The above-mentioned are the minimum essentials that are required in all partnership deeds. The partners may also mention any additional clauses. Some of the examples of additional clauses which may be mentioned in the partnership deed are mentioned below: –

  • The interest on Partner’s Capital, Partners’ Loan, and Interest, if any, to be charged on drawings.
  • Salaries, Commissions, etc, if any, payable to partners
  • Method of preparing accounts and arrangement for audit
  • Division of task and responsibility i.e. the duties, powers, and obligations of all the partners.
  • Rules to be followed in case of retirement, death, and admission of a partner.
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