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Showing posts from January, 2014

Enforceability aspects of a Memorandum of Understanding (MoU)

The question whether a MoU is binding or non-binding is a question of general contract law. As is the case in a contract a MoU will be binding if there is a valid offer and acceptance, consideration and intention to be bound by the agreement. The most important pre-condition for a MoU to be legally binding is that it should be certain. The courts do not expect commercial documents to be drafted with strict precision. However, for an MOU to have legal effect, the essential terms must be sufficiently clear and certain.
Arguments in favour of enforceability of a MoU
When the terms of a MoU are clear and conclusive and a contrary intention not to be bound by its terms does not exist a MoU should be given effect to as a normal contract.Merely because a MoU is a preliminary agreement by which the terms agreed upon are to be put in a more formal shape does not prevent a binding contract.(See, Kollipara Sriramulu (dead) by L.R. v T. Aswatha Narayana (dead) by L.R., AIR 1968 …

Non-Banking Financial Companies (NBFC)

A Non-Banking Financial Company (NBFC) is a  company registered under the Companies Act, 1956 and is engaged in the business of loans and advances, acquisition of shares stock/bonds/debentures/securities issued by Government or local authority or other securities of like marketable nature, leasing, hire-purchase, insurance business, chit business but does not include any institution whose principal business is that of agriculture activity, industrial activity, sale/purchase/construction of immovable property. A non-banking institution which is a company and which has its principal business of receiving deposits under any scheme or arrangement or any other manner, or lending in any manner is also a non-banking financial company (Residuary non-banking company). Advantages of NBFC a)it can provide loans and credit facilities, b)it can trade in  money market instruments c)it can do wealth management such as Managing portfolios of stocks and shares d)it can underwrite stock and shares and oth…

Legal aspects & Power Projects in India

Energy is one of the essentials to our life and the quantity of energy consumed per capita can be used as an indicator of a country’s development level. The growth of population is one of the major force driving towards the increase in energy demand globally and India, being the second most populous country in the world, the demand for energy has increased in manifold. It is been estimated that by 2022, India would require 327 GW of power generation capacity. In India, power projects present a promising business opportunity which has not been tapped with full potential in India. With the liberalization of market, private players have also marked their presence alone or in conjunction with the Government. The general framework governing the implementation of power projects by private participation depends upon: (a)The segment of the power sector that the project intends to develop; (b)The main fuel for the power project, if the project involves the establishment of a generating station; (c)…

Aggregator under National Pension Scheme

National Pension System NPS is an easily accessible, low cost, tax-efficient, flexible and portable retirement savings account. Under the NPS, the individual contributes to his retirement account and also his employer can co-contribute for the social security/welfare of the individual. NPS is designed on a defined contribution basis wherein the subscriber contributes to his account, there is no defined benefit that would be available at the time of exit from the system and the accumulated wealth depends on the contributions made and the income generated from investment of such wealth. NPS Lite NPS Lite is a model of NPS which is low-cost, feature optimized model, aimed at economically disadvantaged sections of the society. The NPS Lite model has been developed by PFRDA to provide a uniform platform for old age income security to all sections of society and facilitate economically weaker sections of the society to join the NPS platform. NPS Lite is intended to reach its target population…

Domestic Enquiries & Employment Law

The very basis of any well organized establishment is discipline and the management must take prudent measures in upholding this. Disciplining a workman is one of the key methods of curtailing disputes amongst them and achieving maximum productivity.  However, the power to supervise this discipline should not be used as tool to arbitrarily dismiss or punish a workman, which would be indeed be very unfair to them. Every establishment is expected to maintain Model Standing orders or Standard Standing Orders which lay down the bye laws of the industry including those dealing with misconduct and discipline. With the growing importance of human rights, its enforcement and the notions of equality and fairness for all, law has made it necessary for an employer to work in a just and fair manner towards its workers knowing that it is the weaker party in industrial relations. It is for this purposes its mandatory for employers to hold domestic enquiries. It has been held by Hon’ble Supreme Court o…

Nidhi Companies in India

This article enumerates the brief transaction procedure involved in the establishment of a Nidhi Company and the laws relating to Nidhi Company in force in India. It shall be noted that the activities described hereunder covers various relevant legislations, regulations and rules, for the time being in force in India and the legal entity has to obtain approval/register itself with Ministry of Corporate Affairs (“MCA”).
Preface In the Indian financial sector, Nidhi Company refers to any mutual benefit society notified by the MCA. They are created mainly for cultivating the habit of thrift and savings amongst its members. The amount of business conducted by Nidhi Companies is not as big as commercial banks or deposit taking Non-Banking Finance Companies. Nidhi Companies are highly localized and mostly single office institutions. They are also referred to as mutual benefit societies, because they accept deposits and give loans to only their own members; and membership is limited to individ…