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How to Incorporate OPC (One Person Company)

As per Section 2(62) of the Company’s Act 2013, a company can be formed with just one Director and one member. It is a form of a company where the compliance requirements are lesser than that of a private company.

By: Akshat Badjatya, Renaissance Law College.

Introduction

A new concept has been introduced in the Company’s Act 2013, about the One Person Company (OPC). In a Private Company, a minimum of 2 Directors and Members are required whereas in a Public Company, a minimum of 3 Directors and a minimum of 7 members. A single person could not incorporate a Company previously.

As per Section 2(62) of the Company’s Act 2013, a company can be formed with just 1 Director and 1 member. It is a form of a company where the compliance requirements are lesser than that of a private company.

One Person Company (OPC): Process of Registration

Step 1: Apply for DSC *

Step 2: Apply for DIN **

Step 3: Name Approval Application

Step 4: Documents Required

Step 5: Filing Forms with MCA

Step 6: Issue of certificate of Incorporation

1. Apply for DSC: The first step is to obtain the Digital Signature Certificate (DSC) of the proposed Director which required the following documents:

  • Address Proof
  • Aadhaar card
  • PAN card
  • Photo
  • Email Id
  • Phone Number

2. Apply for DIN: Once the Digital Signature Certificate (DSC) is made, the next step is to apply for the Director Identification Number (DIN) of the proposed Director in SPICe Form along with the name and the address proof of the director. Form DIR-3 is the option only available for existing companies. It means with effect from January 2018, the applicant need not file Form DIR-3 separately. Now DIN can be applied within SPICe form for up to three directors.

3. Name Approval Application: The next step while incorporating an OPC is to decide on the name of the Company. The name of the Company will be in the form of “ABC (OPC) Private Limited”.

There are 2 options available for getting name approved by making application in Form SPICe 32 or by using RUN Web service of MCA by giving only 1 preferred name along with the significance of keeping that name. However, with effect from March 23, 2018, Ministry has decided to permit two proposed Names and one re-submission (RSUB) while reserving Unique Names (RUN Service) for the Companies.

Once the name is approved by the MCA we move on to the next step.

4. Documents Required: We have to prepare the following documents which are required to be submitted to the ROC:

a. The Memorandum of Association (MoA) which are the objects to be followed by the Company or stating the business for which the company is going to be incorporated.

b. The Articles of the Association (AoA) which lays down the by-laws on which the company will operate.

c. Since there are only 1 Director and a member, a nominee on behalf of such person has to be appointed because in case he becomes incapacitated or dies and cannot perform his duties the nominee will perform on behalf of the director and take his place. His consent in Form INC – 3 will be taken along with his PAN card and Aadhar Card.

d. Proof of the registered office of the proposed Company along with the proof of ownership and a NOC from the owner.

e. Affidavit and Consent of the proposed Director of Form INC -9 and DIR – 2 resp.

f. A declaration by the professional certifying that all compliances have been made.

5. Filing of forms with MCA: All these documents will be attached to SPICe Form, SPICe-MOA and SPICe-AOA along with the DSC of the Director and the professional, and will be uploaded to the MCA site for approval.

After uploading, Form 49A and 49B will be generated for the PAN and TAN generation of the Company which have to be uploaded to MCA after affixing the DSC of the proposed Director.

6. Issue of the certificate of Incorporation: On verification, the Registrar of Companies (ROC) will issue a Certificate of Incorporation and we can commence our business.

  • Who is eligible to act as a member of an OPC?

Only a natural person who is an Indian citizen and resident in India shall be eligible to act as a member and nominee of an OPC.

For the above purpose, the term “resident in India” means a person who has stayed in India for a period of not less than one hundred and eighty-two days during the immediately preceding one financial year.

  • A person can be a member in how many OPCs?

A person can be a member of only one OPC.

  • Is there any tax advantage on forming an OPC?

There is no specific tax advantage to an OPC over any other form. The tax rate is flat 30%, other tax provisions like MAT & Dividend Distribution Tax applies as they apply to any other form of company.

  • Is there any threshold limits for an OPC to mandatorily get converted into either private or public company?

In case the paid-up share capital of an OPC exceeds fifty lakh rupees or its average annual turnover of immediately preceding three consecutive financial years exceeds two crore rupees, then the OPC has to mandatorily convert itself into a private or public company.

  • What is the mandatory compliance that an OPC needs to observe?

The basic mandatory compliance are:-

a. At least one Board Meeting in each half of calendar year and time gap between the two Board Meetings should not be less than 90 days.

b. Maintenance of proper books of accounts.

c. Statutory audit of Financial Statements.

d. Filing of business income tax return every year before 30th September. 

e. Filing of Financial Statements in Form AOC-4 and ROC Annual return in Form MGT 7.

  • Who cannot form a One Person Company?

A minor shall not eligible becoming a member

a. foreign citizen

b. Non Resident

c. Any person incapacitated by contract

How To?

How to deal with a Breach of Warranty

Breach of warranty refers to the failure of a seller to fulfill the terms of a promise, claim, or representation made concerning the quality or type of the product. The law assumes that a seller gives certain warranties concerning the goods that are sold and that he/she must stand behind these assertions. In case of breach of such warranty, the buyer has two options; one to file a civil suit and the other to file a complaint. The article discusses the process involved in both these actions and the respective outcomes along with the terminology used

By: Tanushree G. L. from Sastra Deemed to be University

Introduction

Every person is a buyer since a buyer is someone who promotes the seller to continue his sale but a question arises that what promotes a buyer to buy the goods? The simple answer to this question would be that the usage, quality, and lifetime of the goods bought, promote the buyer to buy the goods. So, when a seller gives an acknowledgement that all these aspects are present in the product, but the buyer at a later point of usage finds out it is not, then there is a breach of warranty. There is one question which every person would have come across in their life which is what to do when a product despite being good fails before the warranty period.

Terminology

  1. Sec.2(1) of The Sale of Goods Act,1930 states, “buyer” means a person who buys or agrees to buy goods.
  2. Sec.2(7) of The Sale of Goods Act,1930 states, “goods” means every kind of moveable property other than actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale.
  3. Sec.2(13) of The Sale of Goods Act, 1930 states, “seller” means a person who sells or agrees to sell goods.
  4. Sec.12(3) of The Sale of Goods Act, 1930 states a “warranty” is a stipulation collateral to the main purpose of the contract, the breach of which gives rise to a claim for damages but not to a right to reject the goods and treat the contract as repudiated. 
  5. Sec12(4) mentions whether a stipulation in a contract of sale is a condition or a warranty depends in each case on the construction of the contract. A stipulation may be a condition, though called a warranty in the contract.

Importance of the Question

The concept of Caveat emptor which mentions that “Let the buyer beware” cannot be used here because a buyer cannot foresee the lifetime of a product and the buyer believes in the warranty period.

The warranty period is basically an assurance regarding the lifetime of the product.

So, the consumer of a product feels betrayed when the life of the product does not reach the warranted time-period. Every buyer has an implied warranty regarding the quality of goods which they buy. Such a situation calls for legal action.

Cause of Action and Limitation

The Cause of Action in case of a civil suit arises when the buyer faces the breach of warranty. The limitation period in case of a civil suit is governed by the Limitation Act,1963. The limitation period is 3 years from the date on which the right to sue accrues, in case of a tort claim.

The Consumer Protection Act has its limitation period set for two years from the date of cause of action. The appeal shall be made within 30 days to State Commission.

Appropriate Authority or Forum

The appropriate authority or forum in the case of a civil suit is Civil courts or Munsif court and in case of an appeal, the parties can approach the High Court and the Supreme Court is the ultimate authority in deciding such cases.

A case pending in civil court does not bar the jurisdiction of consumer forums in the same matter.

The consumer redressal machinery has three forums:

  1. District Forum having a pecuniary jurisdiction up to Rs. 20 lakh.
  2. State Commission having a pecuniary jurisdiction from Rs. 20 lakh to 1 crore and appeals from the District Forum.
  3. National Commission having a pecuniary jurisdiction above Rs. 1 crore and appeals from the State Commission

Parties

1. In case of a civil suit:

  1. Plaintiff – The buyer of the product who has experienced a breach of warranty shall be the plaintiff in this case.
  2. Defendant- The seller who is alleged to have committed a breach of warranty shall be the defendant in the case.

2. In case of a complaint under The Consumer Protection Act: 

  1. Complainant- A complainant is a person who has been affected by the defect of the good and the breach of warranty.
  2. Defendant- A defendant is a person who has sold a defective good and has committed a breach of warranty.

Procedure

1. In case of a civil suit, the following procedure is to be followed:

  • A plaint is to be filed and it should be filed satisfying all the requirements stated in Order VII Rule 1 of The Civil Procedure Code.
  • The second stage is filing a Vakalatnama, by which, the party authorizes an advocate to appear on behalf of him in the court.
  • Then, a summon shall be served upon the defendant and the defendant shall appear and he has to file a written statement.
  • Then, the court frames the issues.
  • Then comes the stage of filing evidence and summoning other witnesses.
  • After that, the final arguments of both parties are heard and then the judgement is pronounced by the court.

An appeal shall be filed by the parties, if aggrieved and if there is no appeal, then, execution of a decree for enforcement of the judgment should be considered.

2. In case of filing the complaint under the Consumer Protection Act,1986 the procedure under Sec.12 of the Consumer Protection Act should be followed. It enumerates the following steps:

  • A complainant is a person who is defined under Sec.2(1)(b) of the Consumer Protection Act, 1986. So, the complainant can file the complaint in any district forum for the loss suffered due to the breach of guarantee.
  • The complaint filed under Sec.12 of the Consumer Protection Act, 1986 should be accompanied by the court fees.

Following the Principles of Natural Justice, the complaint shall either be accepted or rejected and the admissibility of the complaint shall be decided within 21 days.

3. In the case of admissibility of a complaint, the procedure under Sec.13 of the Consumer Protection Act, 1986 should be followed which is as follows :

  • The opposite party shall be sent the admitted complaint and the opposite party shall deny or dispute the allegations and should represent the case.
  • The sample of the defective good shall be sent to the appropriate laboratory and an appropriate fee shall be paid by the complainant.

So, the report shall be sent to both the complainant and the respondent. The complainant or the respondent shall either agree or dispute the report.

Outcome

1. In civil cases:

According to Sec.59 of The Sale of Goods Act, 1930, two remedies in case of breach of warranty are available, which are:

  1. The buyer can set up against the seller the breach of the warranty in diminution or extinction of the price.
  2. The buyer can sue the seller for damages for breach of warranty.

So, the outcome may be either of the two in case of a civil suit.

2. In Case of a Complaint:

A breach of warranty shall be considered as an “unfair trade practice” from the point of view of the Consumer Protection Act.

Sec. 14 of the Consumer Protection Act clearly lays down the remedies in case of Unfair trade practice and they are: 

  1. to remove the defect, 
  2. to replace the goods, 
  3. to return to the complainant the price, 
  4. to pay compensation for loss or injury, 
  5. to discontinue the unfair trade practice 
  6. production and selling of hazardous goods etc. 

Any of these remedies would be the outcome of the complaint in the Consumer forums.

Cases and illustrations

  1. Bettini vs. Gye1 is a case that clearly defines the difference between condition and warranty. In this case, there was a contract by a musician with the Director of an opera to sing at a concert in London. The musician agreed that he would be in London for rehearsal 6 days before the commencement of the performance. He arrived only 2 days before the date fixed for the performance. The director wanted to put an end to the contract but his right to do so would depend upon whether the stipulation was a condition or a warranty. It was held that it was not a term essential to the main purpose of the contract and was, therefore only a warranty.
  2. Kurji Holy Family Hospital vs. Boehringer Mannheim India Ltd. & Ors.2 is a case in which a machine bought by the buyer was not functioning during the warranty period. It was argued that the complaint is not maintainable because the machine was purchased for commercial purposes.

It was held that the complaint is maintainable even if it was bought for commercial purposes if it is within the warranty period and if there is a defect, then it shall be considered as an “unfair trade practice.”

Conclusion

The legislation in India is not clear in terms of warranty breach. There is a need for legislation like The Consumer Protection Act to be more precise about warranty breach as every product has a warranty period. When such aspects are given more importance, consumerism rises to the next level and the extent to which consumers are protected from fake warranties and similar incidents shall reduce. Awareness regarding such laws is also necessary.

End Notes:

  1. 1876 (1) QB 183
  2. III(2007) CPJ 371(NC)

References:

  1. G.C.V. Subba Rao’s Law of Contracts I and II, 11th edition. 
  2. http://www.mondaq.com/india/x/654652/Civil+LawProcess+Of+Trial+Of+Civil+CasesSuits+In+India.
  3. https://www.azbpartners.com/bank/india-product-liability/
How To?

How to file a defamation suit

It is a bailable, non-cognizable offence, which means that no police officer has the power to register a case and investigate into such an offence without the authority given by a Judicial Magistrate.

By: Sneha Rajeevan, 2A Honors Arts, University of Waterloo

Defamation is an injury to the reputation of a person. Whether the said statement is defamatory depends on ‘would the words tend to lower the plaintiff in the estimation of right-thinking members of society?’ The Constitution of India assures the victim’s claim to restitution for being subjected to scorn.

It is crucial to substantiate for defamation, as this should not be based on circumspection to trepidation.

Types of Defamation

a. Libel- It is a defamatory statement in some permanent form like any writing, picture, statue, or effigy.

b. Slander- It is a defamatory statement in some transient form like speeches or gestures.

Mandated Checklist before Filing for a Defamation Lawsuit:
  • The defamatory statement must refer to the plaintiff.
  • This ludicrous false statement of fact must be published, i.e., it needs to be communicated to a third party other than the plaintiff himself.
  • A copy of the statement is required, written, or online.
  • For monetary reimbursement on the loss of money or an income opportunity, bank statements, contract termination notices, etc. must be provided as proof of evidence.

In India, defamation is considered as both, a civil wrong, and a criminal offence.

Procedure for Filing a Civil Defamation Lawsuit:
  • Under the Law of Torts, an offended person can approach the District or High Court for receiving financial reparation for the damages caused to him.
  • On procuring the necessary documents, an attorney will verify its validity, and after the initial investigation, an official complaint is lodged.
  • The defendant is served with the lawsuit documents and will get a sufficient time frame, within which he can write a response to it.
  • The court then issues a scheduling order for all the important deadlines.
  • When the “discovery” phase begins, each party through their attorneys send written questions called interrogations, which are answered under oath. It helps the opposing party to understand more about the person, potential witnesses, and facts relating to the case.
  • Later, a “deposition” will be conducted by the opposing party. It is an interview to determine how strong a witness you would make in a trial at court and to see how strong your claims are.
  • Settlement negotiations begin after the completion of the discovery process. Whether to settle the case out of court or to take it to trial depends on what the client wishes to proceed with.
Procedure for Filing a Criminal Defamation Lawsuit:
  • An aggrieved person can file a criminal case against the accused with the Magistrate.

It is a bailable, non-cognizable offence, which means that no police officer has the power to register a case and investigate into such an offence without the authority given by a Judicial Magistrate.

  • To be convicted for criminal defamation, the offence must be proven beyond a reasonable doubt, including that the malicious statements were made with actual knowledge of falsity and with an intent to cause harm to the party claiming to be defamed.
  • Under Section 499 and 500 of the Indian Penal Code, both libel and slander, are criminal offences.
  • If convicted, the punishment can be imprisonment for up to 2 years, or fine, or both.
Actions that Do Not Entitle to a Defamation Lawsuit:
  • A bona fide statement issued to serve the public interest.
  • Statements entitling public opinion.
  • Publication of court proceedings entailing trial or verdict.
How To?

How to file a suit for malicious prosecution

“A malicious prosecution consists of maliciously causing the process to be issued, whereas abuse of process is the employment of legal process for some purpose other than that which it was intended by the law to affect the improper use of a regularly issued process.”

By: Akshat Badjatya, Renaissance Law College, Indore.

Introduction

Malicious prosecution occurs when one party has knowingly and with malicious intent initiated baseless litigation against another party. This includes both criminal charges and civil claims, for which the cause of action is essentially the same. The main difference between claims based on criminal and civil actions has to do with evidence. For example, mental suffering is usually considered an element of general damages in a claim based on malicious criminal prosecution, with no special proof required. But for claims based on civil actions, the plaintiff must be able to prove quantifiable damages.

Meaning

“A malicious prosecution consists of maliciously causing the process to be issued, whereas abuse of process is the employment of legal process for some purpose other than that which it was intended by the law to affect the improper use of a regularly issued process.”

Essential Elements of Malicious Prosecution

Following are the essential elements which the plaintiff is required to prove in a suit for damages for malicious prosecution:-

· Prosecution by the defendant.

· Absence of reasonable and probable cause.

· Defendant acted maliciously.

· Termination of proceedings in the favor of the plaintiff.

· Plaintiff suffered damage as a result of the prosecution.

1. Prosecution by the defendant  

The first essential element which the plaintiff is required to prove in a suit for damages for malicious prosecution is that he (the plaintiff) was prosecuted by the defendant. The word “prosecution” carries a wider sense than a trial and includes criminal proceedings by way of appeal, or revision. In the case of Musa Yakum v. Manilal, it was held that it is no excuse for the defendant that he instituted the prosecution under the order of a Court if the Court was moved by the defendant’s false evidence to give the order.

2. Absence of reasonable and probable cause 

A suit for damages for malicious prosecution, the plaintiff is also required to prove that the defendant prosecuted him without reasonable and probable cause. The question relating to want of reasonable and probable cause in a suit for malicious prosecution should be decided on all facts before the Court.

In the case of Antara Jami Sharma v. Padma Bewa, it has been said that law is settled that in a case of damages for malicious prosecution, the onus of proof of the absence of reasonable and probable clause rests on the plaintiff.

3. Defendant acted maliciously

In a suit for damages for malicious prosecution, it is another essential element which the plaintiff is required to prove that the defendant acted maliciously in prosecuting him and not with a mere intention of carrying the law into effect. Malice need not be a feeling of enmity, spite, or ill will or spirit of vengeance but it can be any improper purpose that motivates the prosecutor, such as to gain a private collateral advantage.

4. Termination of proceedings in the favor of the plaintiff

In a suit for damages for malicious prosecution, it is essential to show that the proceedings complained of terminated in favor of the plaintiff. Termination in favor of the plaintiff does not mean the judicial determination of his innocence; it means the absence of a judicial determination of his guilt. Malice need not be a feeling of enmity, spite, or ill will or spirit of vengeance but it can be any improper purpose that motivates the prosecutor, such as to gain a private collateral advantage.

5. Plaintiff suffered damage as a result of the prosecution

In a suit for damages for malicious prosecution, it is another essential element which the plaintiff is required to prove that the plaintiff suffered damage as a result of the prosecution. In a claim for prosecution, the plaintiff can thus claim damages on the following three counts:-

· Damage to the plaintiff’s reputation,

· Damage to the plaintiff’s person,

· Damage to the plaintiff’s property.

Conclusion

It can be said that the malicious proceedings are that proceedings which are initiated with malicious intent. The elements (i.e. prosecution by the defendant, absence of reasonable and probable cause, defendant acted maliciously, termination of proceedings in the favor of the plaintiff and plaintiff suffered damage as a result of the prosecution) which are necessary to the plaintiff to prove in a suit for damages for malicious prosecution must be fulfilled.

References

How To?

How to effectively read a Bare Act

A plain reading of the article shall help understand some tips to effectively read a Bare Act which shall help us in getting a better understanding of the law.

Reading and understanding a bare act is essential for all lawyers. It helps us to understand the laws- the exact text of the legislation by the legislature. The language used can often get confusing and can be interpreted in more than one way. To avoid misinterpretation, it is necessary to understand how to interpret a law, keeping in mind the purpose to be served and bring justice. Most students, teachers, lawyers and even judges face difficulties in understanding the text by reading bare acts.

For a clear understanding, here are certain techniques which can be followed while reading the Bare Act. These are as follows:

1. Understanding the purpose of the Act:

The first thing to bear in mind before starting the reading of the Bare Act is to understand the purpose or object of the particular enactment. You need to understand why the Act had been enacted by the legislature in the first place.

All Acts provide the purpose for which it has been enacted in their Preamble.

For example, the long title of the Consumer Protection Act is an Act to provide for the protection of the interests of consumers and for the said purpose, to establish authorities for timely and effective administration and settlement of consumers’ disputes and matters connected therewith or incidental thereto.”

This provides for the purpose for which it had been enacted that is to establish authorities for the effective administration of consumer disputes.

We need to try to relate every sections, clauses and illustration provided to the purpose of the Act.

2. Index/ Contents:

After knowing the purpose of the Act, it is advisable to go through the index/contents section of the Bare Act. 

Whenever you read a Bare Act, first go through the index, so that you can navigate to the exact section.

And many times, you will get answers to certain questions in the index itself. Then after reaching out to the page on which the section which you were looking for is located, you will get all the details of that section. 

3. Chapters/ Parts:

The Chapter/Parts Section of the Bare Act gives us a brief idea of the sections that shall be dealt with therein. For example- Chapter III of the Consumer Protection Act deals with the establishment of the Consumer Protection councils. By reading this, a clear picture of the matter dealt with in the Act shall be established and would make the understanding easier. It is even helpful at the times of research in knowing whether a particular Chapter is useful for research.

4. Reading the Interpretation clause/ definition clause:

Every Act provides an interpretation/definitions clause which helps define and understand the terminologies used in the context of the Act. In most of the Bare Acts, Section 2 deals with the definition clauses. In some cases, there may be some terms or words which have not been defined in the definition clause, in those cases, a reference shall be made to the General Clauses Act, 1891 to understand the same.

5. Sections:

While reading the section in the Bare Act, the following steps should be followed:

·  A plain reading of the sections

·  Marking important keywords in the section. If you are using some bare acts very frequently, then you can just mark some keywords of a particular section or write something there in your own words. So when you look at the markings you remember what the Section was about without having to read it again entirely

·  Sometimes, certain sentences might be difficult to comprehend. In such cases, break the long sentence in small parts, read slowly and carefully.

·  Always give a pause when you see a comma.

·  Special attention needs to be paid to words such as “ may”, “shall”, “and”, “or”, etc.

·  It should be read as it has been intended in the Act. It should not be guessed as to what other things it might imply.

·  Take the help of certain recommended books and commentaries.

·  Interlink sections that are related to each other.

6. Footnotes:

In the footnotes, any amendments made to the Act are known.

The substitutions, omissions, insertions of certain provisions or any references made are all mentioned in the footnotes.

7. Interpret literally:

The first principle of interpretation of a statute is the literal interpretation. It is widely followed by judges. The Bare Act must be read in its plain and ordinary meaning. It should be read as it is written.

The language of the Bare Act is sometimes not easy, if it is not understandable at certain times in the first, try reading it multiple times. Keep a dictionary open so that a quick search of any word not known can be made easily. It is suggested to break long, complex sentences for easier understanding of the text. The Bare Acts are also available in Hindi. You can go for the Hindi Bare Act, if you are good in Hindi or both so that you can easily compare and understand.

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