Drafting and Conveyancing Relating to Various Deeds and Documents- I- Drafting, Pleadings and Appearances Important Questions

Question 1.
Explain the following; Force majeure.
Answer:
A non-performance of a contract due to the circumstances or events beyond the control of the party, which could not have been avoided with due diligence would fall under force majeure.

Effect of force majeure:

Upon occurrence of such events neither party shall be entitled to terminate this contract nor shall either party have any claim for damages against the other in respect of such non-performance or delay in performance.
It would entitle a party to delay or refuse the performance of the contract, without incurring liability for damage.

It is usual to list the exact circumstances or events, in which genuinely a delay or impossibility of the performance of the obligations by either party may be caused. Such a clause is known as a force Majeure clause.

Performance of the contract upon force majeure:
Performance of the contract shall be resumed as soon as practicable after such event has come to an end.
Following are the events covered under force majeure: War, hostility, acts of the public enemy, civil commotion, sabotage, fires, floods, explosions, epidemics, quarantine restrictions, strikes, lockouts, power failure or acts of God etc.

Clause of force majeure is drafted as follows:
“If at any time during the continuance of this contract, the performance in whole or in part by either party or any obligation under this contract is prevented or delayed by reason of any war, hostility, acts of the public enemy, civil commotion, sabotage, fire, floods, explosions, epidemics, quarantine restrictions, strikes, lockouts, power failure or acts of God (hereinafter referred to as events), provided notice of the happenings of any such event is given by either party to the other within 21 days from the date of occurrence thereof, neither party shall by reason of such events, be entitled to terminate this contract nor shall either party have any claim for damages against the other in respect of such non-performance or delay in performance, and performance of the contract shall be resumed as soon as practicable after such event has come to an end.”

Question 2.
Comment on the following statements; Terms and conditions in the I agreement to sell/purchase.
Answer:
Following are the important terms and conditions to be incorporated in an agreement to sell and purchase:

The vendor has a marketable title in the property agreed to be sold/ I and has produced the title deeds relating to the property to the purchaser for his inspection.

If the property agreed to be sold is a part of a larger property, an Agreement as to retention of a particular or all the title deeds to the property by a party should be incorporated if the agreement to sell/purchase.

If the property is subject to any prior charge or encumbrance, the parties must agree that the sale is to be subject to such encumbrance or price payable under the agreement included the sum due under the encumbrance.

The mode of payment of the price or the balance thereof, if some earnest money or deposit has been paid, should also be stipulated in the agreement.

Whether the vendor or the purchaser shall be liable to pay rates, rents, taxes etc. for the period commencing from the date of execution of deed.

Interest at a particular rate shall be payable by the vendor on the earnest money paid in the event of his delaying the execution of the conveyance deed.

Purchaser shall pay interest at a particular rate, to the vendor, if he fails to pay the balance amount of consideration at the agreed date and the execution of the conveyance deed is delayed on that account.

The point of time when possession of the property should be handed over by the vendor to the purchaser.
Who shall bear the cost and expense of execution and registration of the sale deed; and if both the parties have to bear the same, in what precise proportions they shall bear.
If any brokerage is payable and by whom and at what rate, and at what point of time.

Question 3.
In light of judicial pronouncements, discuss the following; In a contract, if the material terms of the agreement are clear and specific, omission of 1 minor or basic details will not invalidate the agreement.
Answer:
An agreement between the parties is an instrument whereby the parties freely agree to perform certain acts or refrain from doing something, unilaterally or bilaterally. Nothing should be introduced or left out, which would make the agreement void.

Following should be kept in mind while preparing an agreement:-

While preparing agreements it is necessary and important that the intention of the parties should be set forth explicitly so as not to leave g any room for doubt or future controversy.
The language should be simple and the words used should be definite and precise.
The use of loose expressions such as “proper”, “reasonable”, should, as far as possible, be avoided.

Omission of minor or basic details:
A deed is perfectly valid if it is updated or the date given is an impossible one, e.g. 30th day of February. If no date is given, oral evidence will always be admissible to prove the date of execution. However, it is of great importance to know the date from which a particular deed operates.

In the case of Ramchandra v. Chinnubhai AIR 1945 Mad. 10, it was held that:
“If the material terms of an agreement are clear and specific, omission of certain details, which can be worked out by consent of the parties j or in its absence be settled by court will not invalidate the agreement.

Therefore, the purpose of the instrument is to bind the parties to the terms and conditions agreed upon. The agreement should, therefore, be drafted as deed and nothing material should be left out. However, if the material terms of the agreement are clear and specific, omission of minor or basic details will not invalidate the agreement.

Question 4.
Aviksh is the owner of a flat No. 304, admeasuring 1500 sq.ft, in Poor naprajna Co-operative Housing Society Ltd. the ownership of the said flat ! is evidenced by Share Certificate No. PP37. Aviksh now proposes to sell this flat to Sudharshini for a total consideration of ₹ 45 lakh. It is agreed that ₹ 15 lakh would be paid as earnest money at the time of execution of j agreement to sell and balance amount of ? 30 lakhs would be paid upon j the execution of the deed of conveyance. Draft an agreement to sell based on the above facts. Assume other data, where necessary.
Answer:
THIS AGREEMENT OF SALE executed on the 3rd day of July 2018, at New Delhi between Aviksh, S/o ………….. R/o ……… (hereinafter called the “vendor”) of the one part.

AND

Sudharshini, D/o………….. R/o………….. (hereinafter called the “purchaser”) of the other part.

(The expressions “vendor” and “purchaser” wherever they occur shall unless the context otherwise admits, also mean and include their respective heirs, executors, administrators, legal representatives and assigns).

WhereAs the vendor is the sole and absolute owner of the property more fully set out in the Schedule I hereunder.

And WhereAs the vendor wishes to sell the property as he is shifting his base from India.
And WhereAs it is agreed that the vendor shall sell and the purchaser 1 shall purchase the said property for a sum of ₹ 4500000/- (Rupees Forty-five lacs) free from all encumbrances, Now This Agreement Of Sale

Now This Agreement of sale Witnesseth As Under:
1. The vendor states that the vendor holds a marketable title of the property and that the property is free from all encumbrances,

2. The purchaser has paid to the vendor this day, a sum of ₹ 15,00,000 | (Rupees Fifteen lacs) by way of earnest money for the due performance of the agreement and the receipt whereof, the vendor do hereby admit and acknowledge.

3. The time for performance of the agreement shall be three months from the date hereof and it is agreed that the time shall be the essence of this agreement.

4. The purchaser shall pay to the vendor the balance sale price of j ? 30,00,000 (Rupees Thirty lacs) at the time of registration of the conveyance deed.

5. The vendor agrees that he will deliver vacant possession of the property to the purchaser on

6. The vendor shall execute the conveyance deed in favour of the purchaser on

7. The cost of execution and registration of the sale deed shall be borne by the purchaser.

8. The brokerage of ₹ 50000 (Rupees Fifty thousand) shall be paid equally by both the parties.

9. The vendor shall hand over all the title deeds of the property to the purchaser/his advocate within fifteen days from the date of this agreement for scrutiny of title deeds. The purchaser shall duly intimate the vendor about the approval of title within ten days of delivery.

10. If the vendor’s title to the property is not approved by the purchaser, the vendor shall refund the purchaser the earnest money received and on failure to do so within ten days, he shall be liable to repay the same with interest at the rate of 9 per cent per annum.

11. The vendor shall not sell, dispose of or alienate the property on and from this date of execution of this agreement.

12. If the purchaser commits a breach of the agreement, he shall forfeit the earnest amount of ₹ 1500000 (Rupees Fifteen Lakhs) paid by her to the vendor.

13. If the vendor commits a breach of the agreement, the vendor shall j refund the earnest money of ₹ 1500000 (Rupees Fifteen lakhs paid to him by the purchaser but shall also pay to the purchaser an equal sum by way of liquidated damages.

14. If at any time during the continuance of this contract, the performance in whole or in part by either party or any obligation under this contract is prevented or delayed by reason of any war, hostility, acts of the public enemy, civil commotion, sabotage, fires, floods, explosions, epidemics, quarantine restrictions, strikes, lockouts, power failure or acts of God (hereinafter referred to as events), provided notice of the happenings of any such event is given by either party to the other within 21 days from the date of occurrence thereof, neither party shall by reason of such events, be entitled to terminate this contract nor shall either party have any claim for damages against the other in respect of such non-performance or delay in performance, and performance of the contract shall be resumed as soon as practicable after such event has come to an end.

15. If any party commits a breach of the agreement, the other shall be entitled to file a suit for specific performance of the contract.

16. Any notice may be sent through the post to the last known place of abode or business of the party to whom it is given, and if so sent under a certificate of posting shall be taken to be sufficient service thereof.

Schedule Of Property:
Flat No. 304, admeasuring 1500 sq. ft, in Poornaprajna Co-operatives Housing Society Limited, the ownership is evidenced by Share Certificate No. PP 37. Bound on its:-
North is ……………………….
South is ……………………….
East is ……………………….
West is ……………………….

In Witness Whereof, the parties aforementioned have signed this deed | on the date above mentioned in token of acceptance of the terms thereof J in the presence of the following witnesses:
Witness I
Name:
Father’s Name:
Address:
Signature:

Vendor

Witness II
Name:
Father’s Name:
Address:
Signature:

Purchase

Question 5.
Explain building contracts.
Answer:
Building contracts are contracts executed between owners of land and developers /builders of land wherein the owner of the land agrees to get construction done at his land and the builder agrees to carry out such construction for the owner for a consideration.

Building contracts must be drawn in accordance with the provisions of the Indian Contract Act, 1872.

Such contracts must contain the following: –

These contracts must contain the essential ingredients of a contract, such as a proposal, acceptance, lawful consideration, lawful object, competence of parties to the contract, free consent etc.
Building contract should clearly state the full names, addresses to which all communications, including notices and judicial processes can be sent.
The capacity of each of the contracting parties and, in the case of firm, partnership or company, the name or complete style of the firm, partnership or company, its legal status, the date and place of its incorporation, registered office must be stated.
It must contain construction details, timelines for completion, clauses for default, payment schedules, responsibility for obtaining municipal permits etc.
In such contracts time is the essence of the contract.

Question 6.
Write a short note on del credere Agency.
OR
Explain the following; distinguishing feature of contract of del credere agency. Comment on the following statements; how is a del credere agent different from other types of agents?
Answer:
Commercial agency contract Various businesses are conducted by the traders through the agency of independent agents appointed for the purpose. Therefore contracts executed between traders also known as principals and such agents j are known as commercial agency contracts. Such agents locate customers for the principal’s goods, have implied authority to deal with | the goods of the principal. They may allow credit terms to customers and receive payment from the customers on behalf of the principal.

Del credere agency:
This type of agency combines agency with guarantee A del credere j agent is one who, for an extra remuneration undertakes the liability to guarantee the due performance of the contract by the buyer.

By reason of his charging a del credere commission, he assumes responsibility for the solvency and performance of the contract by the vendee and thus indemnifies his principal against loss. He, therefore, gives an additional security to the seller.

Therefore, del credere commission is the premium or price given by the principal to the agent, which presupposes a guarantee. A del credere agent like any other agent is to sell according to the instructions of his principal, He is distinguished from other agents simply in this that he guarantees that | those persons to whom he sells, perform the contracts which he makes with them.

Question 7.
Examine and discuss the following; Ingredients of a contract of agency that must be specially incorporated in a contract,
Answer:
Various businesses are conducted by the traders through the agency of 2 independent agents appointed for the purpose. Contracts executed between traders/principals and agents are known as commercial agency contracts.

Ingredients that must be incorporated in a contract agency are as follows:

Authority should be given either expressly or impliedly to bind his principal.
While the principal should not be a minor, an agent could be a minor.
Consideration is not necessary for an agency contract.
For the acts of the agent, the principal is liable unless the principal has exceeded his authority.
The authority of an agent extends to the doing of all that is necessary and collateral to the doing of the main act.
The obligations under the contract of agency is not assignable unless:

The nature of the business necessitates such assignment.
Customs of usage of trade in the locality with regard to the busi¬ness permit such assignment.
Such assignment is expressly permitted by the contract of agency.

Question 8.
Write note on the following collaboration agreements.
Answer:
Collaboration agreements:
Agreements where two parties join hands for exchange of technical know-how, technical designs and drawings, training of technical personnel of one of the parties in the manufacturing or research and development divisions of the other party are said to enter into “col-laboration agreements”.

Foreign collaboration agreement:
Collaboration between a party within India and a party abroad is known as foreign .collaboration agreement.

Foreign collaboration in Indian Economy:
A large number of Indian industrialists have already entered into long and short-term collaboration arrangements with foreign companies, H firms etc. for seeking all possible avenues for obtaining technical know-how in the fields of industry, agriculture, mining, oil exploration, 5 power generation, etc. for the development of the nation.

Question 9.
Mention important guidelines which are required to be followed while entering into a foreign collaboration agreement.
Answer:
Collaboration agreement between a party within India and a party abroad is known as foreign collaboration agreement.
Important guidelines required to be followed while entering into a foreign collaboration agreement are as follows:-
1. Investment: Where in a foreign collaboration agreement, equity participation is involved, the value of the shares to be acquired about be brought in cash.

2. Lump sum payment: The amount agreed to be paid by an Indian party to a foreign collaborator for technology transfer should be paid in three instalments as follows:

One-third to be paid after the agreement has been approved by the Central Government.
One-third on transfer of the technical documents.
One-third on the commencement of commercial production.

3. Royalty: Royalty is a form of consideration payable to a foreign collaborator ranging from 3-5%.

4. Duration of agreement: These types of agreements are made for eight years subject to maximum of ten years. The period is approved by the Government usually for five years from the date of the agreement in the first instance or five years from the date of commencement of commercial production; the total period, however, not exceeding eight years from the date of the agreement.

5. Renewal or extension of agreement: The Central Government may consider an application for renewal of a foreign collaboration agreement or for extension of its period on merit.

6. Remittances: Remittances to foreign collaborators are allowed only on the basis of the prevailing exchange rates.

7. Sub-licensing: The terms of such sub-licensing will be as mutually agreed between allthe concerned parties including the foreign collaborator. Sub-licensing is, however, subject to the Central Government’s approval.

8. Exports: No foreign collaboration agreement shall be allowed to contain any restriction on the free export to all countries, except in a case where the foreign collaborator has licensing arrangements in which case the countries concerned shall be specified.

9. Technicians: The terms of service, remuneration etc. of technicians to be deputed must be agreed. They are subject to approval of the Reserve Bank of India.

10. Training: Provision shall be made in the agreement for adequate facilities for training of Indian technicians for research and development.

Question 10.
Dinson Inc. a Malaysian food processing company intending to expand its business in India plans to form a joint venture with Himalaya Agro Pvt Ltd. a company incorporated under the Companies Act, 2013, engaged in the business of processing and marketing of food products. You are required to draft a specimen joint venture agreement for establishing the business with assumed data.
Answer:
This Agreemnet is made on 3rd day of July 2015 between DINSON INC., incorporated under the appropriate laws of the Malaysia having its office at 5 Seventh Street, Malaysia (hereinafter referred to as DENISON) of the ONE PART.

AND

Himalaya Agro Pvt Ltd Company registered under the Companies Act, 2013 having its registered office at 99 Chowringhee Road Calcutta, West Bengal-700071 (hereinafter referred to as Himalaya Agro) of the Other Part.

WhereAs Dinson carries on business of food processing and intends to extend its market here in India and elsewhere.
And whereas Himalaya Agro carries on business of processing and marketing of food products and intends to extend its market here in India and outside India.

And WhereAs Dinson and Himalaya Agro intend to co-operate in manufacturing/dealing in and exporting food products in India and abroad for mutual benefit by setting up a new joint venture company.

Now This Deed Witnesses As Follows:
1. A Joint-stock company would be formed under the name and style of Indo Malaysian Company Pvt. Ltd. under the Companies Act, 2013 having its Registered Office at 99 Chowringhee Road, Calcutta – 700071.

2. DINSON and three of its nominees and HIMALAYA AGRO and three of its nominees would be the subscribers to the Memorandum and Articles of Association of the said company to be incorporated.

3. The shareholding in the Share Capital of the said company to be incorporated would be in equal proportions between DINSON and HIMALAYA AGRO.

4. The Memorandum and Articles of Association of the company pro¬posed to be incorporated would be settled in mutual consultation and the same would govern the rights and obligations of DINSON and HIMALAYA AGRO in relation to the said proposed company.

5. DINSON will be allotted shares in the said new company partly in cash and partly towards the cost of plant, machinery and equipment to be supplied by DINSON to the new company.

6. DINSON will furnish necessary technical assistance and expertise to the new company for assembling, installation, start-up and for smooth running of the manufacturing and selling processes as might be required by the new company from time to time.

7. DINSON will furnish to the new company all other technical assistance and advice in relation to the operation of the plant and machinery, repairs thereof, testing facilities, training facilities and Research &

AND

Himalaya Agro Pvt Ltd a Company registered under the Companies Act, 2013 having its registered office at 99 Chowringhee Road Calcutta, West Bengal-700071 (hereinafter referred to as HIMALAYA AGRO of the Other Part.

WhereAs Dinson carries on business of food processing and intends to extend its market here in India and elsewhere.

And Whereas Himalaya Agro carries on business of processing and marketing of food products and intends to extend its market here in India and outside India.

And Whereas Dinson and Himalaya Agro intend to co-operate in manufacturing/dealing in and exporting food products in India and abroad for mutual benefit by setting up a new joint venture company.

2. DINSON and three of its nominees and HIMALAYA AGRO and three of its nominees would be the subscribers to the Memorandum and Articles of Association of the said company to be incorporated.

3. The shareholding in the Share Capital of the said company to be incorporated would be in equal proportions between Dinson and Himalaya Agro.

4. The Memorandum and Articles of Association of the company proposed to be incorporated would be settled in mutual consultation and the same would govern the rights and obligations of Dinson and Himalaya Agro in relation to the said proposed company.

5. Dinson will be allotted shares in the said new company partly in cash and partly towards the cost of plant, machinery and equipment to be supplied by Dinson to the new company.

6. Dinson will furnish necessary technical assistance and expertise to the new company for assembling, installation, start-up and for smooth running of the manufacturing and selling processes as might be re¬quired by the new company from time to time.

7. Dinson will furnish to the new company all other technical assistance and advice in relation to the operation of the plant and machinery, repairs thereof, testing facilities, training facilities and Research & Development facilities for successful running of the business of the new company.

8. The shares that would be allotted by the new company should not be transferred by either Dinson or Himalaya Agro within a period of five years from the date of allotment and thereafter if any of the parties intends to transfer any share then the same shall be offered first to the other party at a price to be determined by a valuer to be appointed by mutual agreement and in absence by application to the Indian Chamber of Commerce.

9. The new company will manufacture food products and the same would be marketed in India and exported to other countries under the name and style of

10. Dinson will buy 75% of the products of new company for exporting; to other countries through its own organisations or outlets at a remunerative price hot below the price at which the products are sold in India.

11. Neither party shall carry on their own business in a manner which will directly adversely affect the business and profitability of the new company.

12. The expenses for the setting up and promotion of the new company would be shared equally by Dinson and Himalaya Agro.

13. The consideration for allotment of shares of the new company to Din- son shall be paid in cash and in-kind such as by transfer of immovable properties for the new company. The valuation of such immovable properties including office accommodation would be’ decided by mutual agreement between Dinson and Himalaya Agro.

14. Any disputes or differences arising in relation to this agreement, its construction, validity, performance, breach or any other question shall be referred to the Indian Chamber of Commerce for settlement by Arbitration or Conciliation in Calcutta and the decision of the said Arbitrator shall be final and binding on both the parties.

15. This agreement is made subject to obtaining approvals of the Indian Government and other concerned authorities.

16. In the event certain additions or alterations are required under this agreement due to imposition of certain terms and conditions by Government of India or appropriate authority granting the approval shall be incorporated in this agreement by way of a supplemental agreement and if required the Memorandum and Articles of Association of the new company would also be in conformity with such directions or approvals of the appropriate authorities.

In witness Where Of the parties hereto have signed, sealed and delivered these presents on the day, month and year first above written.
Witness 1 Mr ………………………………
Pursuant to the Board Resolution
Dated…. of DINSON INC Signature
Witness 2 Mr ………………………………
Pursuant to the Board Re solution
Dated ……………………………… of Himalaya Agro Pvt Ltd.

Question 11.
Ultra Vision Textiles Ltd. is entering into a foreign collaboration with Omega Inc. USA for technical know-how and assistance for the proposed textile machinery manufacturing project. Draft a suitable foreign collaboration agreement
Answer:
This Agreemnet is made on this 3rd day of July 2010 between Omega Ltd Inc. incorporated under the appropriate laws of the United States of America having its office at 5 Seventh Street, New York (hereinafter referred to as OMEGA LTD) of the One Part

AND

Ultra Vision Ltd. is a company registered under the Companies Act, 2013 having its office at 99 Chowringhce Road Calcutta 700071 (hereinafter referred to as Ultra Visions) of the Other Part.

WhereAs Omega Ltd carries on business of technical know-how and assistance for the proposed textile machinery manufacturing and has worldwide market and intends to extend its market here in India and elsewhere.

And WhereAs Ultra Vision Ltd. carries on business in India and intends to collaborate with Omega Ltd.

Now This Deed Witnesses As Follows:
1. A Joint-stock company would be formed under the name and style of Indo-American Company Pvt. Ltd. under the Companies Act, 2013 having its Registered Office at 99 Chowringhee Road, Calcutta 700 071.

2. Omega Ltd and three of its nominees and Ultra Vision and three of its nominees would be the subscribers to the Memorandum and Articles of Association of the said company to be Ultra incorporated.

3. The shareholding in the Share Capital of the said company be in equal proportions between Omega Ltd and Ultra Vision.
4. The Memorandum and Articles of Association of the company proposed to be, would be settled in mutual consultation and the same would govern the rights and obligations of Omega Ltd and Ultra Vision in relation to the said proposed company.

5. Omega Ltd will be allotted shares in the said new company partly in cash and partly towards the know-how to be supplied by Omega Ltd to the new company and in consideration for assignments by Omega Ltd of its Patent Rights, Trade marks, Trade Names and Licences in favour of the new company.

6. Omega Ltd. will furnish necessary technical assistance and expertise to the new company for assembling, installation, start-up and for smooth running of the manufacturing and selling processes as might be required by the new company from time to time.

7. The shares that would be allotted by the new company should not be transferred by either Omega Ltd or Ultra Vision within a period of five years from the date of allotment and thereafter if any of the parties intends to transfer any share then the same shall be offered first to the other party at a price to be determined by a Valuer to be appointed by mutual agreement and in absence by application to the Indian Chamber of Commerce.

8. Ultra Vision Ltd will buy 75% of the products of new company for exporting; to other countries through its own organisations or outlets , at a remunerative price not below the price at which the products are sold in India

9. Neither party shall carry on their own business in a manner which will directly adversely affect the business and profitability of the new company.

10. The expenses for the setting up and promotion of the new company would be shared equally by Omega Ltd and Ultra Vision.

11. The consideration for allotment of shares of the new company to Ultra Vision shall be paid in cash and in-kind such as by transfer of immovable properties for the setting up of factory and making arrangements for the office accommodation of the new company. The valuation of such immovable properties including office accommodation would be decided by mutual agreement between Omega Ltd and Ultra Vision.

12. Any disputes or differences arising in relation to this agreement, its construction, validity, performance, breach or any other question shall be referred to the Indian Chamber of Commerce for settlement by Arbitration or Conciliation in Calcutta and the decision of the said Arbitrator shall be final and binding on both the parties.

13. This agreement is made subject to obtaining approvals of the Indian Government and other concerned authorities.

In Witness Whereof the parties hereto have signed, sealed and delivered these presents on the day, month and year first above-written in the presence of:

1.
2.

Omega Ltd
Ultra Vision Ltd.

Question 12.
Write a note on the following; arbitration agreements. Comment on the following; aims and prerequisites of arbitration.
Answer:

Aim of Arbitration: Civil litigation takes years and years to settle simple disputes. Arbitration is a means devised to quick and economical settlement of a dispute between two contracting parties. It saves time, energy and j money of the parties and leads to a speedy settlement of disputes.

Pre-requisites of Arbitration:
Every arbitration must have the following three pre-requisites:
a. A dispute between parties to an agreement, requiring a settlement.

b. Its submission for a settlement to a third person in writing: A submission is an agreement between two contracting parties to take decision from a third mutually agreed party, to whom they refer the dispute. The arbitration pre-supposes that the arbitrator must accept the office of arbitrator to perfect his appointment.

c. A decision by such third person according to his own judgment based on the facts and circumstances of the dispute, which is binding on both the parties.

Question 13.
Explain the following; Utility of arbitration.
Answer:
Arbitration is an alternate dispute resolution mechanism. Following are the benefits of arbitration:-
Is a means devised to quick and economical settlement of a dispute between two contracting parties, who also agree as part of the main agreement to refer dispute or difference arising out of the terms and conditions of the agreement to a third person, known as an arbitrator to give his award, which shall be binding on both the parties.

Civil litigation takes years and years to settle simple disputes. Rigorous procedures of civil Courts given under Code of Civil Procedure, 1908 are not applicable on Arbitration proceedings. The parties can agree upon the procedures to be followed in arbitration. Thus, arbitration ‘ is a method to ensure settlement of disputes and helps in saving time and money.

Question 14.
Write note on the following; Arbitration award.
OR
Requirements of a valid award.
Answer:
Decision of an arbitrator is called an award. Awards can be final or interim.
Prerequisites of an award.
The general requisites of an award are:-

It must be consistent with the submission.
It must be certain.
It must be fair to the parties.
It must be final.
Its implementation must be possible.

According to Section 31 of Arbitration and Conciliation Act, 1996, following are the contents of an award:-

Must be in writing
Must state reasons for award unless otherwise agreed by the parties.
Must be dated and signed by the arbitrator
Must state the place of arbitration
Signed copy of the award must be delivered to all the parties.

Structure of award:
A structure of award contains the recitals, operative part, costs if any, date and place of award.

Section 35 of Arbitration and Conciliation Act, 1996:
An award shall be final and binding on the parties and persons claiming under it.

Question 15.
An award given by the Arbitrator is not always final and binding upon the parties.
Answer:
Arbitration is a means devised to quick and economical settlement of a dispute between two contracting parties, who also agree as part of the main agreement to refer dispute or difference arising out of or touching upon the terms and conditions of the agreement to a third person to give his judgment, which shall be binding on both the parties.

Finality of award:
According to Section 35 of Arbitration and Conciliation Act, 1996, an award shall be final and binding on the parties and persons claiming under it. However, if the same is not acceptable to either of the parties, then objections can be made under section 34 of the Arbitration and Conciliation Act, 1996.

Question 16.
An arbitration award is required to be registered.
Answer:
Decision of an arbitrator is called an award. Awards can be final or interim. Arbitration award is a determination on the merits by an arbitration tribunal in arbitration and is analogous to the judgment in the Court of Law.

Registration of Award:
According to Arbitration and Conciliation Act, 1996: An arbitration award is not required to be registered.

According to Registration Act, 1908: If any non-testamentary document purports or operates to create, declare, assign limit or extinguish, any title, right or interest in any immovable property, the same is required to be registered. Hence, if an award purports to impact any immovable property it is required to be registered.

Question 17.
In order to solve certain disputes among the partners, arbitrator has been appointed, but there is no arbitration clause in the partnership deed, except only communication through electronic means among the partners relating appointment of arbitrator One partner challenges the appointment of arbitrator Decide.
Answer:
An ‘arbitration agreement’ under the Arbitration and Conciliation Act, 1996 means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of defined legal relationship whether contractual or not Such an agreement:

May be in the form of an arbitration clause in a contract or in the form of a separate agreement. It has to be in writing.
Is considered to be in writing if it is contained in a document signed by the parties, or in an exchange of letters, telex telegrams or other means of telecommunication including communication through, electronic means which provide a record of the agreement, or in an exchange of statements of claim and defence in which the existence of agreement is alleged by one party and not denied by the other.

Conclusion:
Thus in the present case communication through electronic means among the partners relating appointment of arbitrator will be considered appropriate and the appointment of arbitrator in the question challenged by one partner will not sustain.

Question 18.
Draft a specimen arbitration agreement to refer a dispute to two arbitrators.
Answer:
This Agreement is executed on 3rd day of January 2020 at New Delhi between Mr. X, S/o…. R/o……. (hereinafter known as ‘First Party’) of the One Part and Mr. Y S/o… R/o… (hereinafter known as ‘Second Party’) of the Other Part.

where as differences and disputes have arisen between the parties above- mentioned regarding the matter of supply of goods and the parties could not mutually settle the matter. And Whereas the parties agree that the matter be referred to arbitration j to obtain an award:

Now, This Deed Witnesseth As Under:
1. For the purpose of final determination of the dispute, the matter will be referred to Mr……. nominated by one party and Mr………. nominated by the other party as arbitrators and their award shall be final and binding on both the parties.

2. If differences should arise between the said two arbitrators, the said arbitrators shall select an umpire and the award to be given by the umpire shall be final and binding on both the parties.

3. A reasonable time limit may be fixed after the proceedings to be carried out by the arbitrators.

4. The provisions of the Arbitration and Conciliation Act, 1996 shall be applicable.

5. Both the parties agree that they would co-operate and lead evidence etc. with the arbitrators and if any of the parties does not co-operate § or remains absent, the arbitrators would be at liberty to proceed with gj the reference ex parte.

6. The reference to arbitration would not be revoked by death of either party or any other cause.

7. If the arbitrators or anyone of them as chosen under this agreement become incapacitated either by death or sickness or other disability, the parties retain the right of nominating substitutes and no fresh agreement thereof would be necessary.

8. It is an express stipulation that any award passed by the said arbitra¬tors shall be binding on the parties, their heirs, executors and legal representatives.

In Witness WhereOf, the parties aforementioned have signed this deed on the date above mentioned in token of acceptance of the terms thereof in the presence of the following witnesses:-
Witnesses:
Name:
Father’s Name:
Address:
Signature:

First Party

Name:
Father’s Name :
Address:
Signature:

Second Party

Question 19.
Explain legality of an arbitration agreement of the parties on the subject matter already pending in the court.
Answer:
Legality of an arbitration agreement of the parties on the subject matter already pending in the Court:-
The parties can enter into an arbitration agreement during pendency of proceeding before the Court. Existence of an arbitration agreement before the case is brought to the Court is not necessary.

P. Anand Gajapathi Raju v. PVG Raju (2000) 4 SCC 539:
During the pendency of the appeal before Supreme Court, all the parties enter into an arbitration agreement and agreed to refer their dispute to retired Supreme Court Judge as sole arbitrator. The agreement was in the form of an application and had been signed by all the parties. It was held that the agreement need not already be in existence.

The phrase:-‘which is the subject of an arbitration agreement’ does not y necessarily require that the agreement must already be in existence before the action is brought in the Court-the phrase also connotes an arbitration agreement being brought into existence while the action is pending.

In the light of the aforesaid case law, it is therefore obligatory for the Court j to refer the parties to arbitration in terms of their agreement.

Question 20.
A contract of guarantee is a contract to perform the promise. Comment.
Answer:
According to Section 126 of the Indian Contract Act, 1872, a “contract of guarantee” is a contract to perform the promise, or discharge the liability, of a third person in case of his default.

A contract of guarantee may be:

Oral or in writing.
Express or implied i.e. it can be inferred from the course of conduct of the parties concerned.

Following are the parties in a contract of guarantee:-
a. Surety: The person who gives the guarantee is called the “surety”;
b. Principal Debtor: The person in respect of whose default the guarantee is given is called the “principal debtor”.
c. Creditor: The person to whom the guarantee is given is called the “creditor”.

Consideration in a contract of guarantee:
According to section 127 of the Indian Contract Act, 1872 consideration for guarantee means anything done, or any promise made, for the benefit of the principal debtor may be a sufficient consideration to the surety for giving the guarantee.

It is, however, not necessary that the consideration should flow from the creditor and be received by the surety. Consideration between the creditor and the principal debtor is a valid and good consideration for the guarantee given by the surety.

Question 21.
Write a note on the following; continuing guarantee.
Answer:
According to section 129 of Indian Contract Act, 1872, a guarantee which extends to a series of transactions is called a “continuing guarantee”.
For example: A guarantees payment to B, a tea-dealer, to the amount of ₹ 100, for any tea he may from time to time supply to C. B supplies C with tea of X 100, and C pays B for it. Afterwards B supplies C with tea to the value of ₹ 200. C fails to pay. The guarantee given by A was a continuing guarantee, and he is accordingly liable to B to the extent of ₹ 100

Revocation of continuing guarantee:

According to section 130 of Indian Contract Act, 1872, a continuing guarantee may at any time be revoked by the surety, as to future transactions, by notice to the creditor.
According to Section 131 of the Indian Contract Act, 1872, the death of the surety operates, in the absence of any contract to the contrary, as a revocation of a continuing guarantee, so far as regards future transactions.

Question 22.
Write a note on the following; Bank guarantee.
Answer:
A “bank guarantee” is a guarantee given by a bank on behalf of its client or account-holder to another person. It secures the third party as in case of default by the debtor all the liabilities of the debtor will be discharged by the Bank.

Bank guarantee enables the individuals to recover their debts by avoiding the long strands of legal proceedings and if there will always be any judicial intervention then it will defeat its very purpose.

Liability of Bank in a Bank Guarantee:
The liability of the bank is secondary which means that the Bank can only be held liable in case of default of the Debtor.

Question 23.
Write a note on the following; Fidelity guarantee.
Answer:
Fidelity guarantee:
A guarantee, guaranteeing an employer against the misconduct of an employee or to answer for the debt or default of another, is called a “fidelity guarantee”.

Fidelity guarantee insurance:
Fidelity guarantee insurance is an insurance policy designed to indem¬nify the Insured ie. the employer for the loss of money or property sustained as a direct result of acts of fraud, theft or dishonesty by an employee in the course of employment.

Fidelity coverage, or a fidelity bond, protects*the business owner from employee theft. It might be money, property, forgery or credit card fraud, embezzle or siphon in any other manner. All of these actions fall within the perils covered by a fidelity bond.

Discharge of surety:
If the employer of an employee whose fidelity has been guaranteed continues to employ an employee even after a proved act of dishonesty without notice to the guarantor, the surety is discharged. Therefore, if the employer wants to continue a dishonest servant after his dishonesty has been proved then he must give the guarantor notice of the fact of infidelity so that the guarantor may get an opportunity to say whether he would continue his guarantee or not for a man whose infidelity has been proved.

Question 24.
Write notes on the following; subrogation of surety of the right of creditors.
Answer:
According to Section 140 of the Indian Contract Act, 1882, where the principal debtor has committed default and the surety pays the guaranteed debt on behalf of the debtor, he is invested with all the rights which the creditor has against the principal debtor. In other words the surety steps into the shoes of the creditor. Such a right is known as “right of subrogation”. After the payment of the debt to the creditor, the surety is subrogated to the rights of the creditor i.e., he has the same rights as those of the creditors. Therefore, he can sue the principal debtor to exercise those rights.

Question 25.
A contract of counter-guarantee is different from a contract of fidelity guarantee or performance guarantee.
Answer:
Following are the differences between counter-guarantee and fidelity guarantee:-
Counter guarantee
A guarantee given by the principal debtor to the surety providing him continuing indemnity against any loss or damage that the surety may suffer on account of default on the part of the principal debtor is called “counter-guarantee”.

Fidelity guarantee:
A guarantee, guaranteeing an employer against the misconduct of an employee or to answer for the debt or default of another, is called a “fidelity guarantee”.

If the employer of an employee whose fidelity has been guaranteed continues to employ an employee even after a proved act of dishonesty without notice to the guarantor, the surety is discharged. –

Question 26.
Distinguish between the counter-guarantee and performance guarantee.
Answer:
Following are the differences between counter-guarantee and performance guarantee:-
Counter guarantee
A guarantee given by the principal debtor to the surety providing him continuing indemnity against any loss or damage that the surety may suffer on account of default on the part of the principal debtor is called “counter-guarantee”.

Performance guarantee
A guarantee which ensures the contracted performance of another person and under which the surety undertakes to compensate the person in whose favour the guarantee is given, in the event of failure on the part of the person on whose behalf the guarantee is given, is known as “performance guarantee”.

Question 27.
Distinguish between performance guarantee and fidelity guarantee.
Answer:
Following are the differences between fidelity guarantee and performance guarantee:-
Performance guarantee:
A guarantee which ensures the contracted performance of another person and under which the surety undertakes to compensate the person in whose favour the guarantee is given, in the event of failure on the part of the person on whose behalf the guarantee is given, is known as “performance guarantee”.

Fidelity guarantee:
A guarantee, guaranteeing an employer against the misconduct of an employee or to answer for the debt or default of another, is called a “fidelity guarantee”.

If the employer of an employee whose fidelity has been guaranteed continues to employ an employee even after a proved act of dishonesty without notice to the guarantor, the surety is discharged.

Question 28.
Distinguish between the following; Bank guarantee and hypothecation.
Answer:
Following are the differences between bank guarantee and hypothecation:-
Bank guarantee:
A bank guarantee is a guarantee given by a bank on behalf of its ” client or account-holder to another person with whom the client has entered into a contract to perform some job or to do and call upon the bank to pay the guaranteed amount in the event of the contingency, mentioned in the guarantee, happening or not happening, as the case may be.
Bank guarantee enables the individuals to recover their debts by avoiding the long strands of legal proceedings.

Hypothecation:
According to section 2(n) of Sarfaesi Act, “hypothecation” means a charge in or upon any movable property, existing or future, created by a borrower in favour of a secured creditor without delivery of possession of the movable property to such creditor, as a security for financial assistance and includes floating charge and crystallisation of such charge into fixed charge on movable property.

Hypothecation is used for creating charge against the security of movable assets.
It is a form of transfer of property in goods.
It is a document by which legal property in goods passes to the person who lends money on them, but the possession does not pass.
The possession of the security remains with the borrower itself.
The legal title vests in the lending institution by virtue of the hypothecation agreement.

Default by borrower:
In case of default by the borrower, the lender i.e. to whom the goods have been hypothecated will have to first take possession of the security and then sell the same. Hypothecation is resorted to mostly by banks and other financial institutions for securing their loans.

Question 29.
Distinguish between surety and security.
Answer:
Following are the differences between surety and security: –
Surety:
A contract of guarantee is a contract to perform the promise or discharge the liability of a third person in case of his default. There are three parties in a contract of guarantee; surety, principal debtor and creditor. The person who gives the guarantee to the creditor on behalf of the principal debtor is called the surety.

Upon default by the principal debtor, the surety pays the debt due to the creditor. After the payment of the debt to the creditor, the surety is subrogated to the rights of the creditor ie., he has the same rights as those of the creditors. Therefore, he can sue the principal debtor to exercise those rights.

Security:
A property charged and assured for re-payment of debt is referred as security. It is an asset that is pledged by the borrower as protection in case he or she defaults on the repayment. ‘

Under the loan agreement, the lender could have the right to take ownership of the asset in place of the repayment, or he or she might have the right to insist that the asset is sold to repay the outstanding loan and interest with the remainder of the proceeds returned to the borrower. In case of hypothecation movable properties act as security. In case of mortgages immovable properties are kept as security.

Question 30.
Distinguish between continuing guarantee and counter-guarantee.
Answer:
Following are the differences between continuing guarantee and counter-guarantee:-
Continuing guarantee
According to section 129 of Indian Contract Act, 1872, a guarantee which extends to a series of transactions is called a “continuing guarantee”.
For example: A guarantees payment to B, a tea-dealer, to the amount of t 100, for any tea he may from time to time supply to C. B supplies C with tea of ₹ 100, and C pays B for it. Afterwards, B supplies C with tea to the value of 1200. C fails to pay. The guarantee given by A was a continuing guarantee, and he is accordingly liable to B to the extent of ₹ 100.

Revocation of continuing guarantee:
According to section 130 of Indian Contract Act, 1872, a continuing guarantee may at any time be revoked by the surety, as to future transactions, by notice to the creditor.

According to Section 131 of the Indian Contract Act, 1872, the death of the surety operates, in the absence of any contract to the contrary, as a revocation of a continuing guarantee, so far as regards future transactions.

Counter guarantee
A guarantee given by the principal debtor to the surety providing him continuing indemnity against any loss or damage that the surety may suffer on account of default on the part of the principal debtor is called counter-guarantee.

Question 31.
Draft a Bank guarantee by a bank in favour of State Government on behalf of ‘Y’ Ltd. for performance of a construction.
Answer:
This Deed Of Guarantee executed on 3rd day of 2011 between the XYZ Bank (hereinafter called “the Bank”) of the One part.
And
The State of Rajasthan represented by the authorised representative of Governor, Mr. A (hereinafter called as “the State”) of the Other part.

Whereas by acceptance of Tender No….. dated……….. made between Y Ltd., a company incorporated under the Companies Act, 2013 having its Registered Office at……….. It has been agreed by the Company Y Ltd with the State for the supply of plant, machinery and equipment in accordance with the terms, specifications and conditions therein contained which inter Alia to ……… 96 of the total value of the contract price, such payment to be secured by a Bank guarantee.

And Whereas the bank has, at the request of the Company Y Ltd, agreed to stand surety for and guarantee refund of the said advance in case the plant, machinery and equipment of the value of aforesaid is not delivered to the State in accordance with the terms and conditions of the said agreement, and the State agreed to make the said advance on such bank guarantee as aforesaid:

Now This Deed Witnesses As Follows:
1. In consideration of the State of ……… having agreed to advance a sum of ₹………. to the Company Y Ltd, through the Bank, for the purpose hereinafter indicated, the bank, does hereby guarantee that in case the Company Y Ltd shall fail and/or neglect to supply the State, the plant, machinery and equipment of the value of ₹……….. in accordance with the terms, specifications and conditions contained in the Accep-tance of Tender dated…………. , the bank shall repay to the State such amount or amounts as the bank may be called upon to pay subject to the maximum limit of ₹…….. .

2. This guarantee of the Bank shall be effective immediately upon receipt of the sum of ₹ …………. from the State for and on behalf of the Company Y Ltd and shall continue in force until the supply of plant, machinery and equipment of the value of ₹ ……….. aforesaid is fully executed.

3. The guarantee hereinbefore contained shall not be affected by any ‘ change in the constitution of the bank or of the Company Y Ltd nor in the event of any winding up being made against the Company Y Ltd.

In Witness Whereof the parties hereto have set and subscribed their respective hands and seals the day, month and year first above-written.

Witness 1 For and on behalf of the Bank
Witness 2 For and on behalf of the State of Rajasthan.

Question 32.
Hypothecation is an extended form of pledge. Explain the statement and make suggestions for improvement In the law of hypothecation citing case laws.
Or
Comment on the following; Hypothecation is a form of transfer of property in goods.
Answer:
Hypothecation is used for creating charge against the security of movable assets. It is a form of transfer of property in goods. It is a document by which legal property in goods passes to the person who lends money on them, but the possession does not- pass. Thus, the possession of the security remains with the borrower itself. The legal title vests in the lending institution by virtue of the hypothecation agreement.
For example: Car Loans wherein vehicle remains with the borrower but the same is hypothecated to the bank/financer.

Following are the key points on hypothecation:
Movables: Hypothecation agreements cover movable machinery, equipment, stocks of finished and semi-finished goods, raw materials, consumable stores, present and future available in factories and godowns of the borrower and also en route to the borrower’s factories and book debts.

Laws: Hypothecation is not regulated in India by any statute. Neither the Transfer of Property Act, 1882, nor the Indian Contract Act, 1872, nor the Sale of Goods Act, 1930, recognize this, thus the rights and remedies of the parties are regulated by the courts according to the general law of contract. Thus court is thrown back upon principles of equity and justice.

Default: In case of default by the borrower, the lender (i.e. to whom the goods/security has been hypothecated) will have to first take „ possession of the security and then sell the same.

Parties: Hypothecation is resorted to mostly by banks’ and other financial institutions for securing their loans.

Documentation: Along with the hypothecation agreements, banks have a plethora of other documents executed by the borrowing companies e.g. demand promissory note, collateral personal guarantees of managing directors, and others having substantial interest in the borrowing entities.

Question 33.
Distinguish between the following; Hypothecation and pledge.
Answer:
Following are the differences between hypothecation and pledge:

BASIS	PLEDGE	HYPOTHECATION
1. Meaning	The pledge can be defined as the form of bailment in which goods are held as security for the payment of the debt or the performance of an obligation.	Hypothecation is used for creating charge against the security of movable assets.
2. Legal pro-vision	The pledge is defined under section 172 of the Indian Contract Act, 1872.	Hypothecation is defined under section 2(l)(n) of SAR- FAESI Act.
3. Possession	In the pledge, the possession of the asset is transferred.	In the case of hypothecation, possession lies with the debtor only.
4. Parties	Parties to the contract of the pledge are called as pawnor (borrower) and Pawnee (lender).	In case of hypothecation, the parties are known as hypothecation (borrower) and hypo the catee (lender).
5. In case of Default	In the pledge, when the borrower defadults in payment, the lender can exercise his right to sell the asset to recover the debt amount.	In hypothecation, the lender does not have the possession of goods so he can file a suit to realize his dues to take the possession first and then dispose it.

Question 34.
Explain in brief the essentials of a hypothecation agreement. Draft a j specimen agreement on behalf of a firm Excel & Co. to hypothecate goods -j to execute fixed loan from Rich Bank.
Or
Draft a specimen agreement on behalf of a firm M /s ABC to a hypothecate j goods to secure fixed loan from Axis Bank. Assume data.
Or
Draft a Specimen Deed of Hypothecation of Goods to Secure Fixed Loan Granted by a Bank.
Answer:
Hypothecation is a form of transfer of property in goods. Hypothecation agreement is a document by which legal property in goods passes to the person who lends money on them, but the possession does not pass. Hypothecation agreements usually cover movable machinery, equipment, stocks of finished and semi-finished goods, raw materials, consumable stores, present and future available in factories and godowns of the borrower and also en route to the borrower’s factories and book debts.

While these items as movable assets remain in the possession of the borrower and he has absolute right to convert them, sell them and deal with them in any manner 1 the borrower likes in the course of his business, the legal title vests in the [ lending institution by virtue of the hypothecation agreement.

Specimen Agreement To Hypothecate Goods To Secure Fixed Loan
The Manager,
Axis Bank,
Safdarjung Branch
New Delhi
Sir,
1. In consideration of your Bank advancing to me on loan, the sum of
₹ ……….. I hereby agree to hypothecate movable security, more fully described in the schedule I, for the repayment of the aforesaid loan amount along with payment of interest of …….. % per annum as described under Schedule II.

2. I declare that movable shall be stored in my godown situated at …………….. I hereby agree to furnish a full and correct statement of particulars of all goods so held under lien to the Bank, with the market value thereof respectively on the last day of every month.

3. All goods from time to time held by me under lien to the Bank in terms of this agreement shall be kept separate and apart from all other goods in my possession.

4. No moneys shall be borrowed by me from any company, firm or – person on the security of such goods stored in the same godown.

5. It is understood that I shall be at a liberty, from time to time in the ordinary course of business, to sell all or any of the goods from time to time held under lien to the Bank under this agreement provided that no such sale shall reduce the value of the goods held under lien below the amount of my said debt to the Bank plus the margin of 10 per cent.

6. I empower the bank or anyone authorised by the Bank to enter the godowns in which the goods held under lien to the bank under this agreement for the purpose of inspecting and taking an account of the said goods.

7. I further agree that so long as any money advanced by the bank under this agreement remains unpaid, the bank shall be at a liberty to take possession of any goods from time to time held by me under lien to the Bank under this agreement and no notice to me of such sale shall be necessary.

8. I hereby further agree to sign all documents, furnish all information and do all acts and things necessary for the purpose of enabling the Bank to sell any goods.

9. I undertake to keep all securities held under lien to the Bank under this agreement, insured against fire to their full value, and to produce and deposit the policies with the Bank any time on demand.

10. It is understood that the Bank’s lien on the goods, so held under this agreement shall extend to any other sum or sums of money for which I may become indebted to the bank.

Schedule I
Securities
Schedule II

Instalments for the repayment of the loan amount.

Yours faithfully,
Mr. A
New Delhi
Dated …………..

Question 35.
Answer:
Outsourcing is the contracting out of a company’s non-core, non-revenue producing activities to specialists. It differs from contracting in that outsourcing is a strategic management tool that involves the restructuring of an organization around what it does best – its core competencies.
A good outsourcing agreement is one which:-
Provides a comprehensive road map of the duties and obligations of both the parties – outsourcer and service provider.
Minimizes complications when a dispute arises.

Following are the common types of outsourcing:-
a. Information Technology (IT) outsourcing
b. Business Process Outsourcing (BPO): BPO includes out-sourcing related to accounting, human resources, benefits, payroll, and finance functions and activities.
c. Knowledge Process outsourcing (KPO) includes outsourcing related to legal, paralegal, and other highly skilled activities.

Question 36.
Business and knowledge process outsourcing has emerged as a key growth driver in the Indian services sector. Discuss the factors to be considered in drafting of an outsourcing agreement.
Or
Outsourcing is the contracting out of a company’s non- core and non-revenue generating activities to specialists. Before signing an outsourcing agreement, what are the factors that must be addressed?
Answer:
Before signing an outsourcing agreement, the following factors must be properly addressed:
1. Duties and obligations of Outsourcer: Parties must be clear about the duties and obligations of the outsourcer and must be clearly mentioned in the agreement.

2. Duties and obligations of service provider: Parties must be clear about the duties and obligations of the service provider and must be clearly mentioned in the agreement.

3. Legal compliance: Parties must be clear as to which party will fulfil the legal compliances.

4. Fees and payment terms: Fees and payment terms must be agreed upon before executing the contract.

5. Proprietary rights: These rights must find a clear mention in the contract.

6. Auditing rights: These rights must find a clear mention in the contract.

7. Applicable law to outsourcing agreement: If the contract is between parties situated in different countries; law of which country shall prevail must be agreed upon beforehand.

8. Term of the Agreement: Tenure for which the agreement shall be valid
shall be agreed upon.

9. Dispute Resolution Mechanism: In case of disputes arising between the parties, it should be clear as to which form of dispute resolution mechanism shall be preferred by the parties. Arbitration which is governed by Arbitration and Conciliation Act is the speediest and effective form of dispute resolution mechanism.

10. Time limits: Time limits within which the disputes shall be raised by the parties. (Note: The given list of rules is inclusive, not exclusive):

Question 37.
Distinguish between the following; BPO and KPO type of outsourcing.
Answer:
Following are the differences between BPO and KPO:-

BASIS	OUTSOURCING KNOWLEDGE PROCESS OUTSOURCING	BUSINESS PROCESS
1. Kind of service	BPO provides services like customer care, technical support through voice processes, telemarketing, sales, etc.	KPO provides in-depth knowledge, expertise and analysis on complex areas like Legal Services, Business and market Research, etc.
2. Stands for	Business Process Outsourcing	Knowledge Process Outsourcing
3. Requires	Good communication skills and basic computer knowledge	Specialized knowledge
4. Services	Low end services	High-end services
5. Process	Pre-defined process	Requires application and understanding of business
6. Employees	Not so qualified employees	Skill and expertise of knowledge employees
7. Expertise in	Process	Knowledge
8. Relies on	Cost arbitrage	Knowledge arbitrage
9. Driving force	Volume driven	Insights driven

Question 38.
What is meant by ‘outsourcing’? Draft a specimen of outsourcing agreement.
Answer:
Outsourcing Agreement For Converting Hard Copies Of A Book In A Compact Disc (CD)
This Agreement For Outsourcing executed on 3rd Day of July 2017 at New Delhi between the Golden Law Publishing Co. Pvt. Ltd. incorporated under Companies Act, 2013, having their Office at ……………….. represented by Mr. X, Manager, appointed vide Resolution dated ……………….. (hereinafter referred to as “GLP Pvt. Ltd.”)

AND

M/s Bluetec Web Services Pvt. Ltd, a Company registered under the Companies Act, 2013 having their office at represented by Mr………. Director, M/s Bluetec Web Services Pvt. Ltd, (hereinafter referred to as the “M/s Bluetec Pvt. Ltd.”)

Whereas the GLP Pvt. Ltd. has published the book Intellectual Property Protection in India it has decided to convert the hard copies of above-mentioned book into a soft copy version by getting the book digitized and thereafter put the contents of the book in a CD.

Whereas the GLP Pvt. Ltd. floated a tender for this book vide tender document with closing date 2017 and after evaluating the bids of various parties, the GLP Pvt. Ltd. has decided to award the project to M/s Bluetec Pvt. Ltd.

Now, This Deed Witnesseth As Under:
1. M/s Bluetec Pvt. Ltd. would perform the job of digitalization of the book including other incidental works such as tagging according to search parameters, linking, indexing etc.

2. M/s Bluetec Pvt. Ltd. would be developing a search engine as per the GLP’s requirement. The search engine would be licensed to the GLP Pvt. Ltd. for its perpetual use. The GLP Pvt. Ltd. would further be free to use this Search Engine for any purpose and would not be liable to pay to M/s Bluetec Pvt. Ltd. any additional amount for such usage.

3. The copyright of the contents of the CD, marketing rights and all other rights pertaining to the said CD would solely vest with the GLP Pvt. Ltd.

4. M/s Bluetec Pvt. Ltd. undertakes to complete the assignment within a period of 100 days from the date of execution of this agreement.

5. After the completion of the job M/s Bluetec Pvt. Ltd. would give sufficient training including technical aspects to the people deputed by, the GLP Pvt. Ltd. to facilitate to use the search engine independently.

6. The total project cost to be paid to M/s Bluetec Pvt. Ltd. would be as Follows.

Cost of developing the Search Engine – ₹ ……………… (Rupees ……………. only)
Digitization cost for each page (in hard copy) – ₹ …………….. per page
Conversion cost for each page (in soft copy) – ₹ ………….. per page
Total cost of each CD including the manual, jewel case, packing, printing and security features ₹ …………… per CD
It is to be noted that the original CD lot would be of 750 CDs only.
For the purpose of page count, 50% or more coverage would be treated as one full page and less than 50% would be ignored and would not be taken in counting.

7. M/s Bluetec Pvt. Ltd. would be paid 25% of the total project cost after the stage of completion of the Master CD and subject to the satisfaction of the GLP Pvt. Ltd.

8. M/s Bluetec Pvt. Ltd. agrees to keep the hard copies of the book given for digitization in good shape.

9. For updating the CD, the GLP Pvt. Ltd. reserves the right to either conduct the updation in part on its own or the GLP Pvt. Ltd. may assign this job to M/s Bluetec Pvt. Ltd. or any other agency.

10. Both the parties Le. the GLP Pvt. Ltd. and M/s Bluetec Pvt. Ltd. agrees to abide by all remaining terms and conditions of the original tender document floated by the GLP Pvt. Ltd. for the said job.

11. Any notice or request or communication given or required to be given under this contract shall be given to in case of M/s Bluetec to, Mr…………….., Director, M/s Bluetec Web Services Pvt. Ltd. at ……………. And in case of GLP Pvt. Ltd. to: Mr, Manager, Golden Law Publishing Co. Pvt. Ltd. at …………….

12. M/S Bluetec Private Limited Agrees To Keep indemnified the GLP j Pvt. Ltd. against any loss or damage that the GLP may sustain as a j result of the failure or neglect of M/s Bluetec

13. This Agreement can be terminated by the GLP Pvt. Ltd. by giving three month’s notice in writing of ………….. days.

14. If at any time during the continuance of this contract, the performance or any obligation under this contract is prevented or delayed due to acts beyond the control of either party beyond 180 days, both parties shall consult each other regarding the termination of the contract on agreed equitable terms or otherwise devise future course of action.

15. All disputes, claims and demands arising under or pursuant to or \ concerning this contract shall be referred to the sole Arbitrator to be appointed by mutual consent of both the parties. The award of the Sole Arbitrator shall be final and binding on both the parties. The arbitration proceedings shall be held under the provisions of the Arbitration and Conciliation Act, 1996 as amended till date. The place of arbitration shall be…………….. .

In Witness Whereof, the parties aforementioned have signed this deed on the date above mentioned in token of acceptance of the terms thereof in the presence of the following witnesses:-
Name:
Father’s Name:
Address:
Signature:

GLP Pvt. Ltd.

Name:
Father’s Name:
Address:
Signature:

Bluetec Pvt. Ltd.

Question 39.
X Co. Ltd. intends to hire the operational staff like Malis, sweepers, security guards, typists etc. for its office in New Delhi. As a Company 1 Secretary in practice, advice the management of X Co. Ltd. about the j benefits of outsourcing the staff rather than direct recruitment. Also, draft a specimen of the outsourcing agreement to be entered into with the service j provider company.
Answer:
Outsourcing is the contracting out of a company’s non-core, non- revenue-producing activities to specialists. It is a strategic management tool that involves the restructuring of an organization around what it does best – its core competencies.

The benefits of outsourcing are as under:
1. Direct hiring of the staff becomes a permanent liability. It is very difficult to select right type of persons and it is equally difficult to remove IE them in case of any trouble.

2. Recruitment and selection is costly and time-consuming. Hiring through outsourcing is comparatively very convenient and cost-effective.

3. Lot of flexibility is there for hiring through outsourcing whereas indirect recruitment, there is hardly any flexibility.

4. Staff hired through Service Provider is more sincere, active and efficient as compared to own staff.

Outsourcing Agreement:
This Agreement is made on this 3rd day of July 2017 between ABC Co. Ltd. (hereinafter referred to as the “Outsourcer”), registered under the Companies Act, 2013, having registered office at Orchard Road, Modern Complex, New Delhi and acting through Mr. Mohan, Managing Director of the Company.

And

M/s Lotus Service Providers (hereinafter referred to as “Service Provider”), a Partnership Firm having its office at S6- Defence Enclave, New Delhi and | acting through Mr. Karan, Managing Partner of the Firm.

Whereas the Company is in need of the operational staff like typist, malis, sweepers, security guards, etc. for its registered office at Orchard Road, New Delhi.
Whereas the Service Provider has approached the Outsourcer for hiring | and providing of the desired operational staff on outsourcing basis.

And Whereas the outsourcer has agreed to outsource the work of hiring staff to the service provider.
Now it is agreed by and between the parties hereto as follows:
1. Obligations of the Service Provider

That the service provider will hire and depute requisite number of staff like typists, sweepers, security guards, etc. as and when I demanded by the Outsourcer.
That the staff to be hired and deputed should be in the age group of 25-35 years of age and should have a minimum of 2 years experience.
That due compliance of labour laws like contribution to PF, ESI, etc. will be the responsibility of the service provider. Proof for the j payment of PF and ESI contribution will have to be submitted along with the monthly bills to be raised for claiming the wages j of the deputed staff.
That the staff so deputed should have proper police verification j and resident/identity proof.
That the Service Provider will be liable for the work and conduct of the staff deputed with the company. If case any request is received for change or substitution of any person, the same is, attended immediately.

2. Obligations of the Outsourcer

That the Outsourcer will pay wages equivalent to the minimum I wages as fixed by the Labour Department from time to time.
That the Service Provider will be allowed commission of 10% on the total salary/wages bill for each month based upon the j minimum wages fixed by the Labour Department.
That the Outsourcer will make demand for the require staff at least 10 days in advance to the Service Provider so as to enable j it to hire and depute the staff.
That the staff deputed by the Service Provider would be eligible for weekly off and other holidays as per the rules of the Outsourcer.

3. This agreement shall be liable to be terminated by either party by giving 15 days notice to the other party without assigning any reason j or cause.

4. If disputes arise between the parties, such disputes shall be referred to Arbitration. The proceedings will be governed by Arbitration and I Conciliation Act. Place of Arbitration will be New Delhi.

5. If at any time during the continuance of this contract, the performance of any obligation under this contract is prevented or delayed due to acts beyond the control of either party beyond 180 days, both parties shall consult each other regarding the termination of the contract on agreed equitable terms or otherwise device future course of action.

6. Any notice may be sent through the post to the last known place of abode or business of the party to whom it is given, and if so sent under a certificate of posting shall be taken to be sufficient service thereof.

7. Any notice may be sent through the post to the last known place of abode or business of the party to whom it is given, and if so sent under a certificate of posting shall be taken to be sufficient service thereof.

In Witness Whereof, both the parties set their hands, this ………….. day of ………………. 2017.
Witness 1. For and on behalf of the Company
Witness 2. For and on behalf of the Service Provider

Question 40.
Explain the following; Electronic or e-contracts.
Write notes on the following; Essentials of E-contracts.
OR
Critically comment on the following; Formation of e-contracts, being paperless, lies outside the Fowler’s rules of drafting.
Answer:
“Electronic contracts” are those contracts which are not paper-based and are made and executed in electronic form. These types of contracts are mostly formed in the course of e-commerce, by the interaction of two or more individuals using electronic means, such as e-mail, the interaction of an individual with an electronic agent, such as a computer program, or the interaction of at least two electronic agents that are programmed to recognize the existence of a contract.

Evolution of Electronic contracts:
These contracts are born out of the need for speed, convenience and efficiency. Example: Imagine a contract that an Indian exporter and an American importer wish to enter into. One option would be that one party first draws up two copies of the contract, signs them and couriers them to the other, who in turn signs both copies and couriers one copy back.

The other option is that the two parties meet somewhere and sign the contract. In the electronic age, the whole transaction can be completed in seconds, with both parties simply affixing their digital signatures to an electronic copy of the contract. There is no need for delayed couriers and additional travelling costs in such a scenario.

Essentials of E-Contracts

1. An offer or proposal by one party and acceptance of that offer by another.	5. An intention to create legal relations or an intent to have legal consequences.
2. Lawful consideration.	6. Capacity of parties to contract.
3. Consent of parties.	7. Consideration.
4. The terms of the contract are certain.	8. The agreement is capable of being performed ie., it is not impossible of being performed.

As per Information Technology Act, 2000:
Section 10 of the IT Act, 2008 gives legislative authority to e-contracts. It provides that:
“Where in a contract formation, the communication of proposals, the acceptance of proposals, the revocation of proposals and acceptances, as the case may be, are expressed in electronic form or by means of an electronic record, such contract shall not be deemed to be unenforceable solely on the ground that such electronic form or means was used for that purpose.”

The offeror is called originator and the acceptor is called the addressee in e-contracts. The signatures in the e-contract may be made with digital signature certificate.

Question 41.
What are e-contracts? Discuss important points with regard to drafting of e-contract.
Answer:
“Electronic contracts” are those contracts which are not paper-based and are made and executed in electronic form. Electronic contracts are born out of the need for speed, convenience and efficiency.

Following are the important points with regards to drafting e-contracts are as under:
1. The contract must specify that by using the seller’s website, the customer becomes subject to the terms of a legal agreement between the customer and Seller. Customers must be informed that they must be of legal age to enter into the contract.

2. Acceptance of the terms of the contract.

3. The contract should clearly state that all content included on the website, such as text, graphics, logos, button icons, images, audio clips, digital downloads, data compilations, and software, is the property of Seller.

4. The contract should clearly lay down the duties and obligations of the customer.

5. The contract must forbid the customer from the copying, modifying, in respect of the said software.

6. The contract should clearly mention that the reviews, comments, photos etc. posted by customers should not be illegal, obscene, threatening, defamatory, invasive of privacy, infringing of intellectual property rights, or otherwise injurious to third parties.

7. The contract should clarify how the prices listed on the Seller’s website are computed. ‘

8. Seller’s has a shipping contract with various courier companies to
deliver the products to the customers. The contract should clearly state that once the products are handed over to the courier company, Seller’s liability ends.

9. The contract should mention the city/state and country whose law will prevail in this contract. The courts having exclusive jurisdiction over the disputes should also be mentioned Conditions relating to arbitration of disputes may also be mentioned.

10. The contract must clearly mention that the customer expressly understands and agrees that his use of the services is at his sole risk and that the services are provided “as is” and “as available”.

11. The contract must expressly disclaim all warranties and conditions if any.

Question 42.
Write notes on the following; Types of e-contracts.
OR
Write notes on the following; Click-wrap or Web-wrap Agreements.
OR
Write notes on the following; Shrink wrap agreement.
Explain Electronic Data Interchange. (EDI)
OR
Distinguish between the following: Click Wrap Agreements and Shrink Wrap Agreements
Answer:
“Electronic contracts” are those contracts which are not paper-based and are made and executed in electronic form. These types of contracts are mostly formed in the course of e-commerce, by the interaction of two or more individuals using electronic means, such as e-mail, the interaction of an individual with an electronic agent, such as a computer program, or the interaction of at least two electronic agents that are programmed to recognize the existence of a contract.

Following are the forms of e-contracts:-

Question 43.
Write notes on the following; Online shopping agreement between the service provider and manufacturer.
Answer:
Following are the important points in regard to Online shopping Agreement between the Service Provider and manufacturer:

Customer’s relationship with Service Provider
Acceptance of the terms of the contract
Copyright
Customers duties and obligations
License from Service Provider
Reviews and comments.
Risk of loss
Pricing
Prohibitions
Applicable Law
Limitation of liability
Exclusion of warranties
Ending the relationship between Service Provider and the customer

Question 44.
Comment on the following statement; A click-wrap agreement lacking bargaining power is not an enforceable contract in traditional sense.
Answer:
“Click-wrap agreements” are used while surfing internet such as “I AGREE” to the terms or “I DISAGREE” to the conditions.
Elements of Click- wrap agreement:

It is found as part of the installation process of software packages. It is also called a “click-through” agreement or click-wrap license.
A click wrap contract is a “take-it-or-leave-it” type of contract that lacks bargaining power.
The offer or is called originator and the acceptor is called the addressee in e-contracts. The signatures in
e-contract may be made with digital signature certificate.
There is no scope for negotiation either to be accepted entirely or rejected entirely.

Enforceability of click-wrap agreement:
Click-wrap agreements are valid and enforceable contracts as far as offer and acceptance is concerned. Click-wrap agreements are contracts formed entirely over the Internet.

Section 10 of the IT Act, 2008 gives legislative authority to E contracts. It provides that, “Where in a contract formation, the communication of proposals, the acceptance of proposals, the revocation of proposals and acceptances, as the case may be, are expressed in electronic form or by means of an electronic record, such contract shall not be deemed to be unenforceable solely on the ground that such electronic form or means was used for that purpose.”

Question 45.
Dilip, the owner of a bungalow in Salt Lake area of Kolkata, decided to let-out his bungalow with 1,000 sq. feet area abutting 60 feat wide main road to QRS Corporation, for a term of three years on a rent of ₹ 1,00,000 per month plus taxes, service charges, etc. thereon. The premises is to be used for office accommodation purposes only. Protecting the interests of all concerned parties, draft a specimen ‘agreement of licence’ to use the property. Assume supplementary data as may be required.
Answer:
THIS AGREEMENT is made on 3rd day of July 2016 between Dilipson – of ……….. R/o …………. (hereinafter referred to as the “owner”) of the One Part

And

QRS Corporation represented by Mr……………. its secretary being signatory to this agreement having its principal office at present at No …………… (hereinafter referred to as “occupiers”) of the Other Part.

Whereas the occupiers approached the owner for permission for using of his property, bungalow No in Salt Lake, Kolkata fully mentioned and described in the Schedule hereto for a period of three years only from the date of signing of this agreement.

And Whereas the owner has agreed to grant the permission to occupy the said premises reserving for himself the care, maintenance and services to property and on the basis of leave and license only.

Now, This Deed Witnesseth As Under:
1. This writing shall never be construed as any tenancy agreement or lease nor otherwise creating any other right or interest in the property in favour of the occupiers which is not at all the intention of the parties
but on the contrary merely a temporary agreement or arrangement simply to allow the occupiers to use and occupy portion of the premises for their office accommodation under the control and supervision of the owner.

2. The owner shall retain two rooms; one in the ground floor and another in the first floor.

3. The owner shall have his own staff in the said rooms for the care and supervision and maintenance of and services to the property.

4. The occupiers shall, in consideration of such accommodation shall pay to the owner a fixed sum of ₹ 1,00,000/- per month plus taxes, service charges etc. for the period of three years after deducting TDS as applicable.

5. The occupiers shall pay a security deposit for such payments and ob-servance of the covenants hereunder contained, kept with the owner a sum of ₹ 300000/- to be repaid without interest on revocation of license and surrender and deliver the possession of the said portion of the property subject to such deductions as the owner shall be entitled as against the occupiers, e.g., arrears of charges, unpaid taxes, electric bills, etc., as hereunder provided or otherwise permitted in law.

6. The occupiers shall on expiry of the period of 3 years or license having $ being revoked earlier, surrender the property and deliver the same to the owner when and in such an event he will be entitled to the refund of ₹ 300000/-subject to deductions.

7. In default of any payments to the owner or the Corporation of Kolkata or other appropriate authorities the owner shall be entitled to and shall have always the power to revoke the license hereunder granted at his absolute discretion and reoccupy the said portion of the property without subjecting himself to any liability.

8. The occupiers shall have no right to make any addition or alteration to the property, but shall be entitled to make interior decorations only by temporary wooden partitions which they shall remove at their own costs at the time of surrender of the property.

In Witness Whereof the parties have executed this Agreement on the date abovementioned in the presence of:
Witness
(1)
(2)

Owner
Occupier

Question 46.
Comment on the following; Every person of sound mind not being a minor, may dispose of his property by a will.
OR
Define ‘Will’ and explain its essential characteristics. Is there any requirement to get it stamped and registered?
Answer:
According to Section 2(h) of Indian Succession Act, 1925, “Will” is the legal declaration of a man’s intention which he wills to be performed after his death or an instrument by which a person makes a disposition of his property to take effect after his death.

The testator may make a Will only in a sound disposing state of mind. Soundness of mind denotes the mental capacity of the testator as to what he is doing, his capability of understanding his extent of his property.

Essential characteristics of will Following are the essential characteristics of will:-

The document must be in accordance with the requirements laid down under section 63 of Indian Succession Act, 1925; i.e., executed by a person competent to make Will and attested as required under the Act.
The declaration should relate to the properties of the testator, which he wishes to bequeath.
The declaration must be to the effect that it operates after the death of Testator.
It is revocable during the lifetime of the testator. Any clause in a Will that the testator cannot revoke, it will render the Will void.
It can be modified or altered at any time by the testator
After the Indian Succession Act, 1925, Wills should be made in writing except in case of Mohammedans.

Registration and Stamping of a Will:
A Will does not require any stamp duty. According to Section 18 of Registration Act, 1908. Registration of Will is not mandatory. It is optional. It is important to note that a registered Will has certain advantages.

Manner of registration:
Any testator may, either personally or by duly authorized agent deposit with any Registrar his Will in a sealed cover superscribed with the name of the testator and that of his agent (if any) and with a statement of the nature of the document as per Section 42 of Registration Act, 1908.

The testator, or after his death, any person claiming as executor or otherwise under a Will, may present it to any Registrar or Sub-Registrar for registration under section 40 of the Registration Act, 1908.

Question 47.
In the light of judicial pronouncements, discuss the following; A will and codicil are one and the same.
Answer:
Will:
According to Section 2(h) of Indian Succession Act, 1925, “Will” is the legal declaration of a man’s intention which he wills to be performed after his death or an instrument by which a person makes a disposition of his property to take effect after his death.

Will is, therefore, the legal declaration of a man’s intention which he wills to be performed after his death or an instrument by which a person makes a disposition of his property to take effect after his death.

Codicil:
According to Section 2(b) of Indian Succession Act, 1925: “Codicil” means an instrument made in relation to Will and explaining, altering or adding to its dispositions and is deemed to form part of the Will.

Following are the key elements of codicil:

Codicil is a supplement or addition to a will that explains, modifies, or revokes a previous will provision or that adds an additional provision.
A codicil must be signed and witnessed with the same formalities as those used in the will’s preparation.
An addition or supplement to a will; it must be executed with the same solemnities.
A codicil is a part of the will, the two instruments making but one will.
There may be several codicils to one will and the whole will be taken as one:
The codicil does not consequently revoke the will further than it is in opposition to some of its particular dispositions, unless there are express words of revocation.

A will and codicil are not one and the same, however, Section 3(64) of General Clause Act, 1897 states that a Will shall include a Codicil and every writing making a voluntary posthumous disposition of property.

Question 48.
Write notes on the following; Privilege will and non-privileged will.
OR
Distinguish between the following; Privileged will and unprivileged will.
Answer:
privileged Will

soldier being crnployed in an expedition or engaged in actual warfare or
an airman so employed or engaged, or
any mariner being at sea, may,

if he has completed the age of 18 years, dispose of his property by a will made in a manner provided in Section 66 of the Indian Succession Act, 1925.

Privileged Wills may be in writing or maybe made by word of mouth.
II the Will is written wholly by the testator, with his own hand, it need not be signed or attested.
It may be written wholly or in part by another person, and signed by the testator. In such case it need not be attested.
If the instrument purporting to be a Will is written wholly or in part by another person and is not signed by the testator, it shall be deemed to be his Will, if it is shown that it was written by the testator’s directions or that he recognised it as his Will.
If the soldier, airman or mariner has written instructions for the preparation of his Will, but has died before it could be prepared, such instructions shall be considered to constitute his Will.
If the soldier, airman or mariner has, in the presence of two witnesses, given verbal instructions for the preparation of his Will, and they have been reduced into writing in his lifetime, but he has died before the instrument could be prepared and executed, such instructions shall be considered as his Will, although they may not have been reduced into writing in his presence, nor read over to him.
The soldier, airman or mariner may make a Will by word of mouth by declaring his intentions before two witnesses present at the same time.
A Will made by word of mouth shall be null at the expiration of one month after the testator, being still alive, has ceased to be entitled to make a privileged Will.

Unprivileged Will:

According to Section 63 of the Indian Succession Act, 1925:
Wills made other than privilege wills are non-privileged wills i.e. every testator, not being a soldier employed in an expedition or an airman so employed or engaged, or a mariner at sea.
The testator shall sign or shall affix his mark to the Will, or it shall be signed by some other person in his presence and by his direction.
The Will shall be attested by two or more witnesses, each of whom has seen the testator sign/affix his mark to the Will or has seen some other person sign the Will, in the presence and by the direction of the testator.
Each of the witnesses shall sign the Will in the presence of the testator, but it shall not be necessary that more than one witness be present at the same time.
A Will made by word of mouth shall be null at the expiration of one month after the testator, being still alive, has ceased to be entitled to make a privileged Will.
No particular form of attestation shall be necessary.

Question 49.
In light of judicial pronouncements, discuss the following; Testamentary disposition is personal; it cannot be delegated to. any other person.
Answer:
A Will is the legal declaration of a man’s intention which he wills to be performed after his death or an instrument by which a person makes a disposition of his property to take effect after his death.
The testator may make a Will only in a sound disposing state of mind. Soundness of mind denotes the mental capacity of the testator as to what he is doing, his capability of understanding his extent of his property.

Testamentary disposition is personal:

Testamentary disposition is personal, it cannot be delegated to any other person. A testator cannot confide to another the right to make a Will for him.
Section 59 of the Indian Succession Act: Every person of sound mind not being a minor may dispose of his property by Will.
A person, who is ordinarily insane, may make his Will during the interval in which he is of sound mind.

Question 50.
Distinguish between the following; Probate and letter of administration.
Answer:
Following are the differences between probate & letter of administration:
Probate:
Probate is a certificate granted under the seal of Competent Court, certifying the Will as the Will of the testator and granting the administration of the estate of the deceased in accordance with that Will to the executor named under the Will.

Letters of Administration:
A letter of administration can be obtained from the Court of competent jurisdiction in cases where the testator has failed to appoint an executor under a will or where the executor appointed under a will refuses to act or where he has died before or after proving the Will but before administration of the estate.

Letters of Administration are not always necessary in cases of intestacy of Hindus, Mohammedans, Buddhists, Sikhs, Jains, Indian Christians or Parsis. Letter of Administration is always necessary where a person (governed by the Indian Succession Act) dies intestate.

Question 51.
Comment on the following statement; Certain basic principles are required to be followed in the constructions of a will.
OR
In light of judicial pronouncements, discuss the following; Relevant con-siderations in constructing a will.
OR
In the light of judicial pronouncements, discuss the following; In case of repugnancy in a will, last words shall prevail.
Answer:
Following are relevant considerations in constructing a will:-
Clear and unambiguous words are not to be controlled or qualified by any general expression or intention.
Technical word or words of known legal import must have their legal effect.

Lalit Mohan Singh Roy v. Chikkun Lai Roy ILR 24 Cal 834:
If words are of such a nature as to make it perfectly clear that the testator did not mean to use the technical terms in their proper sense, different meaning can be given.

Cardinal maxim: The cardinal maxim is to ascertain the intentions of the testator from the document which is to be read as a whole without speculating as to what the testator would have done, if he had been better informed or better advised (Gnambal Ammal v. T. Raju Iyer AIR 1951 SC 103, 105).

Relevant considerations: In construing the language of a Will, the courts must consider the surrounding circumstances, the position of the testator, his family relationship, the probability that he would use words in a particular sense etc. The court is entitled to put itself into the testator’s arm chair. (Venkatanarasimha v. Parthasarthy, 41IA 51,70 (PC); GnambalAmmalv. T.RajuIyerAIR 1951 SC 103,106).

Avoidance of intestacy: If two constructions are reasonably possible and one of them avoids intestacy while the other involves it, the court would certainly be justified in preferring that construction which avoids intestacy. (Kasturi v. Ponnantntal AIR 1961 SC 1302).

Effect should be given to every disposition: To the extent legally possible, effect should be given to every disposition contained in the Will unless the law prevents effect being given to it. The intention of the testator should be gathered by giving a harmonious interpretation to the various terms of the Will as a whole. (Rampali v. Chando AIR 1966 All 584,586).

Later part or last words to prevail in case parts irreconcilable: If the several parts of the Will are absolutely irreconcilable, the part that later has to prevail. [Somasundara Mudaliar v. Ganga Bissen Soni, ILR 28 Mad 386].

In case of repugnancy, the last word in the Will shall prevail. (CIT v. Indian Sugar Mills Association [1974] 97ITR 486 SC).

Question 52.
Comment on the following; Registration of a Will is not mandatory.
Answer:
Registration and Stamping of a Will:
A Will does not require any stamp duty. According to Section 18 of I Registration Act, 1908 Registration of Will is not mandatory. It is optional. It is important to note that a registered Will has certain advantages.

Question 53.
In the light of judicial pronouncements, discuss the following; It is to ascertain the intentions of the testator who constructed a Will.
Or
In the light of judicial pronouncements, discuss the following; The Court is entitled to put itself into the testator’s arm’s chair.
Answer:
In construing the language of a Will, the Courts must consider:

The surrounding circumstances,
The position of the testator,
His family relationship,
The probability that he would use words in a particular sense
Other things which are often summed up in somewhat picturesque figure.

Venkatanarasimha v. Parthasarthy 41IA 51, 70 (PC); GnambalAmmal v. T. Raju Iyer AIR 1951 SC 103,106
“The court is entitled to put itself into the testator’s arm chair. This intention has to be primarily gathered from the document which is to be read as a whole without indulging in any conjecture or speculation as to what the testator would have done if he had been better informed or better advised ”

The Supreme Court in Gnambal Ammal v. T. Raju Iyer AIR 1951 SC 103, 105, held that:
“The cardinal maxim to be observed in construing a Will is to en¬deavour to ascertain the intentions of the testator. This intention has to be primarily gathered from the document which is to be read as a whole without indulging in any conjecture or speculation as to what the testator would have done if he had been better informed or better advised. ”

Question 54.
Santosh and Swamy are the partners in a partnership firm ‘Santswam’.In view of mounting losses in the business, they decided to wind-up the ( business and dissolve the said firm. They require you to provide a release j deed for dissolution of the firm. Prepare the release deed.
OR
What is Relinquishment Deed? Draft a Specimen Deed of release between j two partners on dissolution of partnership.
Answer:
A release or relinquishment deed is an instrument whereby a person renounces a claim upon another or against any specified property which | he is or may be entitled to enforce.
A release is sometimes called relinquishment. When considered from the I point of view of the person in whose favour the transaction operates, it is I “release”. When considered from the point of view of the releaser, it may I be said to be a “relinquishment” as the releaser relinquishes a certain right which he has, or maybe entitled to enforce.

Drafting of a release/relinquishment deed:

Release deed may be drafted as a deed poll or as a deed pool.
A release must be in writing signed by all the parties.

Registration:
If the subject matter of the release is an immovable property the amount of value of which exceeds ? 100, it should be compulsorily ‘ registered.

Attestation:
If the release is required to be registered it should be attested by at least two witnesses. In other cases it may be attested by one witness.

Recitals:
Recitals should contain the origin of the claim, acknowledgement of the releaser about the claim and words and expressions sufficiently clear to covey the intention of the releaser to discharge the claim.

Stamp Duty:
This deed attracts stamp duty under Article 55, Schedule I of the Indian Stamp Act, 1899 wherein a simple release deed is chargeable to stamp duty. The duty is the same as bond (Article 15) for such amount I or value as set forth in the release.

Deed Of Release Between Two Partners On Dissolution Of Partnership:
This Release is made on the 3rd day of July 2019 between Mr. Santosh,S/o……….. R/o……………. (hereinafter called as’“First party”) of the FIRST PART.

AND

Mr. Swamy, S/o………… R/o…………. (hereinafter called as “Second-party”) of the Second Part.

Whereas the said first and second parties were carrying on in partnership the business of textiles and the said business were wound up and the partnership dissolved by deed, dated 1st July 2019 executed by the said parties.

And Whereas the winding up of the said business was entrusted to the arbitration of Mr. Soma and he after realising the debts and calling in the property and assets of the said business and after paying all creditors and liquidating all the liabilities apportioned the shares of the parties, giving to the said Mr. Santosh a sum of ₹ ……… and to the said Mr. Swamy the sum of ₹ ……. .

And Whereas the parties for mutual safety are desirous of executing this deed of release so that all future disputes in regard to the said partnership or the business may be set at rest.

Now Therefore This Deed Witnesses As Under
1. That in pursuance of the said mutual desire the said Mr. Santosh hereby releases the said Mr. Swamy and also that the said Mr. Swamy hereby releases the said Mr. Santosh from all sums of money, accounts, proceedings, claims and demands whatsoever which either of them at any time had or has up to the date of the said dissolution against the other, in respect of or in relation to the said partnership or the business of the said partnership.

In Witness Whereof the said Mr. Santosh and the said Mr. Swamy have hereto signed on the day and the year first above-mentioned.
Witnesses:
1.

Mr. Santosh

Mr. Swamy

Question 55.
Define gift. Discuss procedure for making a gift, draft a specimen deed of gift for love and affections
Answer:
According to Section 122 of the Transfer of Property Act, 1882: ‘Gift’ is the transfer of certain existing movable or immovable property made voluntarily and without consideration, by one person, called the ‘donor’, to another, called the ‘donee’ and accepted by or on behalf of the donee.

Acceptance of Gift:
Acceptance of a gift must be made during the life time of the donor and while he is still capable of giving. If the donee dies before acceptance, the gift is void.

Procedure for making a gift:
Gift of immovable property: For the purpose of making gift of im-movable property, the transfer must be effected by a registered instrument signed by or on behalf of the donor and attested by at least two witnesses.

Gift of movable property: For the purpose of making gift of movable property, the transfer may be effected either by a registered instrument signed as aforesaid or by delivery. Such delivery may be made in the same way as goods sold may be delivered.

Existing property:
According to Section 124 of the Transfer of Property Act, 1882, Gift should be made only for the existing property as gift of future property is void. A gift of future property is mere promise qnd cannot be enforced.

Gift to more than one donee:
According to Section 125 of the Transfer of Property Act, 1882, the
gift of a thing to two or more donees of whom one does not accept it, is void as to the interest which he would have taken had he accepted. The intention conveyed under this Section is that a gift is personal to the donee and therefore if a gift made to two persons jointly and one of them does not accept it, the other cannot accept the whole.

The gift deed should be drafted as a deed of transfer with recitals if necessary. There is no consideration involved in gift as such no men-tion is required to be made of the same in the gift deed.

The words “natural love and affection” is generally expressed in all cases of gift to relations.
Deed Of Gift:
THIS DEED of GIFT is made on the 3rd day of July 2017 between AB, S/o ……….. R/o……….. (hereinafter called as “the donor”) AND CD, S/o…R/o… (hereinafter called as “the donee”).

Whereas the donor is owner of the property described in the Schedule and out of his paternal affection for his daughter, the donee, is desirous of making a gift of the said property to the donee at the time of her marriage.

Now This Deed Witnesses As Follows:
1. In consideration of the natural love and affection of the donor for the donee, the donor transfers to the donee free from encumbrances all the property described in the Schedule TO HOLD the same to the donee absolutely forever.

2. The donee accepts the transfers.

Schedule Of Property

In Witness Whereof the parties hereinabove have signed this deed on the date above mentioned in the presence of:
Witness
1.

Donor

Donee

Question 56.
Write notes on the following; Onerous gift.
Answer:
Onerous gift refers to a gift that is subject to conditions. These conditions are imposed on the recipient of the gift.

Section 127 of Transfer of Property Act, 1882 states that:
Where a gift is in the form of a single transfer to the same person of several things, the donee can take nothing by the gift unless he accepts it fully.

Where a gift is in the form of two or more separate and independent transfers to the same person of several things, the donee is at liberty to accept one of them and refuse the others, although the former may be beneficial and the latter onerous.

Besides, a donee not competent to contract and accepting the property burdened by any obligation is not bound by his acceptance but if after becoming competent to contract and being aware of the obligation, he retains the property given, he becomes so bound.

Where a gift consists of the donor’s whole property, the donee is per-sonally liable for all the debts due by and liabilities of the donor at the time of the gift to the extent of property comprised therein.

Question 57.
In the light of judicial pronouncements, discuss the following; Revocation of gift.
Answer:
Section 126 of Transfer of Property Act, 1882 provides for revocation or suspension of a gift as under:-

The donor and donee may agree that on the happening of any specified event which does not depend on the will of the donor a gift shall be suspended or revoked.
A gift which the parties agree shall be revocable wholly or in part, at the mere will of the donor, is void wholly or in part, as the case may be.
A gift may also be revoked in any of the cases in which, if it were a contract, it might be rescinded. Save as aforesaid, a gift cannot be revoked.

Ganga Baksh v. Jagat Bahadure (1896) 23 Cal – 15:
“Under Hindu Law a gift once completed is binding upon the donor and it cannot be revoked by him unless it was obtained by fraud or undue influence.”

Question 58.
Gift can be made either orally or through gift ‘deed. Is there any requirement to get it stamped and registered?
Answer:
Gift deed of immovable property is compulsorily registrable as per Section 123 of the Transfer of Property Act and Section 17(i)(a) of the Registration Act, 1908, whatever may be the values.

Article 23 of the Indian Stamp Act, 1899: The value of the property gifted must be set forth in the deed of gift. Stamp Duty is payable on gift deed as on the conveyance as per amount of value of the property as mentioned in the deed or as per market value of such property whichever is greater.

Muhamad Muzaffar Ali ILR 44 Allahabad 339 FB:
“If the value of the property is intentionally omitted or under-valued with a view to defraud the revenue, prosecution may be invited under Section 64 of Indian Stamp Act. Further, penalty provisions under Gift-tax Act may also be attracted.”

Drafting and Conveyancing Relating to Various Deeds and Documents- I- Drafting, Pleadings and Appearances Important Questions

Drafting and Conveyancing Relating to Various Deeds and Documents- I- Drafting, Pleadings and Appearances Important Questions

Drafting, Pleadings and Appearances Notes