Tag: civil system in india

By: Divya Tandon

What is Private Equity Investment?

Private Equity is one of the methods of financing an entity wherein capital is invested by private set of investors into a business in return for equity in the company wherein the capital is invested.

Private Equity investors are generally leveraged buyout funds, growth equity funds, venture capital funds, real estate investment funds, special debt funds or individuals having high net worth etc.

Private Equity Investors provide funding to the companies they invest in which help in meeting the capital requirements of the companies for funding their projects, pay off existing debts, solidifying the balance sheet, launching new projects etc.

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Due to huge size of investment, private equity investors often get involved in the functioning of the company and have a significant control and decision making rights in the company they invest in. The Private equity investors uses their enormous experience and skills to manage and improve the operations and revenue of the investee company over a period of time. The intent of the private equity investors is to improve the worth of the company so that they can later sell their stake for more than it was when they bought it thereby making profit.

Importance of Private Equity in the Construction/Real estate industry

The construction companies/firms require huge funds for their projects. Most companies/firms are not self-sufficient to fund their projects on their own. Hence, they look for alternative investment options to fund their projects. The construction companies can approach the banks for availing loans, look for joint venture partners, find suitable individual investors willing to invest in the form of equity or debt or private equity firms willing to invest in the company.  Since, huge funds are required by construction companies, most of the times the companies adopts more than one of the investment options to fund their projects.

Earlier, private equity investors used to avoid investment in construction industry due to certain inherent risks.  However, in recent years investment by Private Equity investors has gained momentum. The enactment of Real Estate (Regulation and Development) Act, 2016 (“RERA Act”) which has come into force with effect from May, 2017 has also made developers more accountable as their acts are now regulated by the RERA Authority. The RERA Act is more stringent as compared to previous legislation which has been brought to eradicate the problems that were inherent in the real estate sector. The RERA Act ensures transparency with respect to real estate transactions. Heavy penalties are imposed on the developers for violation of the provisions of the RERA Act or the terms and conditions of the agreement executed with the customers. Hence, RERA has brought in positive transformation in the real estate sector and boosted the confidence of private equity investors to invest in this sector.

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Besides the enactment of RERA Act, various other government policies and schemes have led to surge in investor interest in the real estate sector including foreign investors. Some of the policies of the government which has boosted private equity investment in construction industry are easing of FDI regulations, Housing for All, Affordable Rental Housing Complex Scheme, Credit Linked Subsidy Scheme (CLSS) to name a few.

Private Equity firms often fund real estate companies and provide financial support in development of real estate projects. Private equity investment provides the required liquidity to the company for its projects and provide support in launching new projects or to complete the pending projects. After enactment of RERA, the developers prefer completing their projects as per the agreed timelines to avoid payment of interest on the amounts paid by the customers. But due to liquidity crunch, sometimes the developers struggle with the available capital to complete the ongoing projects and provide possession to the customers. In such a scenario, the private equity investors come to the aid of the construction companies to provide last stage funding. Thus, the demand for funds in the last stages of completion of projects have risen. The last stage funding is also favorable for the private equity investors as it is comparatively less risky as during the last stages of construction generally necessary approvals are in place and construction is on the verge of completion. However, the private equity investors should ensure proper due diligence to understand the reason for the project being stalled. If the project is stalled only due to financial crunch, the investment by the private equity investors can help in reviving and completing the project and provide benefit to the investors by maximizing their value. On the other hand if the project where the private equity investor is considering to invest is stalled due to some third party dispute or pending litigations then the funding by private equity investors may not solve the problem and the project may not be completed as per the estimated timelines. This may result in the investment of private equity investors getting stuck.

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“Post the liquidity crisis in NBFCs in Q4 2018, private equity players including the domestic ones have become increasingly active once again and are expected to bridge the funding gap”[1]

In recent years, private equity investors are funding some major projects. The investment by private equity investors is not only in residential projects, but also in commercial and retail projects.  Due to the private equity investment, some of the stalled projects have been able to see the light of the day and have been completed, providing much needed relief to the customers who had invested in such projects.

Depending on the size of investment, the private equity investors get involved in the decision making process. The level of influence depends on the stake invested. They provide their inputs through out the development process and act as strategic partners.

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Impact of Covid-19 on the private equity investment in the construction industry

Due to the outbreak of the global pandemic Novel Corona Virus – COVID-19 in March, 2020, the current financial markets, trade, commerce and thereby business continuity is facing an unprecedented situation due to lockdown imposed by the central and state governments from time to time to curtail the spread of the deadly virus. This pandemic has paralyzed and destroyed the very economic fabric of the entire world including India.  Both the Central Government as well as State Governments had placed severe restrictions and implemented various remedial measures in an all-out effort to halt the spread of the virus.

The impact of the Covid-19 is thus a calamity and the adverse consequences on the Real Estate Industry is serious and has impacted the business severely. As a fall out of the above, there is total disruption in the supply–chain of materials, shutdown of construction activities due to huge shortage of construction materials in the market on supply–chain issues due to import restrictions, global manufacturing, shutdown of materials, heavy escalation in prices of materials etc. The site labourers had returned back to their native homes/villages due to the fear of contracting the virus due to which construction sites had either substantially slowed down or had come to a grinding halt. Since the real estate as an Industry being the most labour intensive, being extremely reliant on hundreds of materials coming from everywhere in projects and reliance on stable financial inflows into the projects; all these either being slowed / unavailable / stalled in most projects, severely affected current ongoing projects of the most real estate developers. The sale of residential/commercial premises had also been affected due to liquidity crunch in the market.

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It is also learnt that across the real estate industry, almost 60% – 65% of flat purchasers are defaulting in paying their due instalments to the companies towards the flats booked by them thereby further adversely affecting the business of the construction firms. The developers however on the other hand are without any respite/remedy in terms of payment of instalments towards huge loans taken from banks as well as payment of taxes and premiums to the various departments of the Government. Under these facts and circumstances, where on the one hand the payments are not being made by customers/purchasers, the construction work being affected and standstill due to the supply chain being disrupted and the workers unable to come to work, whereas the developers having to make payments towards service of finance loans, taxes, premiums etc. entire real industry is under the grave stress.

The outbreak of the Covid-19 and the forced lockdown (by the competent Government/Authorities) pursuant thereto, was a sudden setback to real estate sector which was already going through a rough patch due to low demand. Thus the construction industry is facing challenging times due to the drastic impact of the pandemic. The real estate industry is facing financial crunch to launch new projects and also to finish ongoing projects. Though, the restrictions have been relaxed by the governments, the impact of the Covid-19 and lockdown will be felt for months to come. Many construction companies are on the verge of bankruptcy. In such a scenario, private equity investors can come to the rescue of the severely hit real estate entities/firms.

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In recent times many private equity investors are in negotiation talks with construction companies to provide much-needed funding for their projects.

Recent trends

“Indian real estate attracted U$ 5 billion institutional investments in 2020, equivalent to 93% of transactions recorded in the previous year. Investments from private equity (PE) players and VC funds reached US$ 4.06 billion in 2020. The real estate segment attracted private equity investments worth Rs. 23,946 crore (US$ 3,241 million) across 19 deals in Q4 FY21. Investments in the sector grew 16x compared with Rs. 1,470 crore (US$ 199 million) in Q4 FY20. In value terms, these investments were 80% of that in 2020 and 48% of 2019, according to a report by Knight Frank”[2]

As per the reports from the property consultant, Savills India “Private equity investment inflows into the Indian real estate sector stood at $2.7 billion during the first half of 2021 as investors’ confidence remained intact despite the pandemic-induced slowdown. This inflow is equivalent to 41 per cent of the investment that the sector saw in the entire year of 2020. However, in the second quarter of 2021, Indian real estate market saw an investment of $865 million, a 54 per cent decline from the previous quarter.”[3]

As per Colliers’ report Investments Turbocharged with Focus on Alternate Assets Classes “Despite COVID-19, the total expected private equity inflows in the Indian real estate sector is expected to touch $5 billion in 2021, a 4.1 percent increase from 2020” [4]

As per ICRA estimates, Indian firms are expected to raise more than Rs. 3.5 trillion (US$ 48 billion) through infrastructure and real estate investment trusts in 2022, as compared with raised funds worth US$ 29 billion to date.[5]

According to the data released by Department for Promotion of Industry and Internal Trade Policy (DPIIT), construction is the third-largest sector in terms of FDI inflow. FDI in the sector (including construction development & activities) stood at US$ 50.8 billion between April 2000 and March 2021.[6]

Thus it can be seen from the above that the private equity investors both domestic and foreign have gained confidence in the Indian construction industry and have joined hands with some of the major construction companies to boost the growth of the sector.

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[1] As per the report of Savills on Private Equity in Indian Real estate

[2] https://www.ibef.org/industry/real-estate-india.aspx

[3] https://economictimes.indiatimes.com/news/india/indian-realty-attracts-2-7-billion-private-equity-investments-in-january-june-report/articleshow/84339543.cms?from=mdr#:~:text=Private%20equity%20investment%20inflows%20into,from%20property%20consultant%20Savills%20India.

[4] https://www.moneycontrol.com/news/business/real-estate/no-covid-19-impact-private-equity-inflows-into-indian-real-estate-sector-to-touch-5-billion-in-2021-7195641.html

[5] https://www.ibef.org/industry/real-estate-india.aspx

[6] https://www.ibef.org/industry/real-estate-india.aspx

 

By: Shirleen Kaur

ABSTRACT

Laws are generally divided into two major heads i.e., substantive law and the procedural law. Both the heads are considered together as one is purposeless without the other. The former contains the rules and regulations, characteristics of laws with bare acts of those laws. While the latter one gives an approach on how to implement substantive laws. Essentially, the judicial structure is divided into two kinds of case matters: civil and criminal. Hence, a study of Civil Procedure is basically a study of the procedures the substantive statues that are not criminal.

INTRODUCTION

United Arab Emirates (UAE) has arisen to be one of the main powerhouses in economically aspect in Middle East. With time has also recognized the need of modernizing its laws as the growth of commercial contracts continues to increase as well. Despite that the ambiguous global changing nature of the world cannot be brushed aside when it comes to emerging markets, Dubai’s economic and dynamic cultural growth. These factors cannot be strengthened if legal and regulatory framework has not been developed and continue to develop sufficiently to encourage substantial internalized local and international enterprise in Dubai. It is well established that there is immense analysis done while deciding willingness to set up international businesses. Legal and regulatory framework has a major role to play in it as most pf the decision is based on their suitability of country’s legal framework. American philosophers have a major part in making civil procedure to be especially substantial. The civil procedure rules are so important as it is correlated to larger American norms. This loyalty for procedural to be ideal in due process explains how USA law makers have faith in individualism promoting a requirement for legal framework to proclaim that every claimant will get individualized justice. Consequently, this even reflects what is the USA’s cultural view regarding civil disputes. They follow the approach that there is supposed to be a winner and losers whenever a dispute arises rather than having a negotiation resolution approach.

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UAE CIVIL LAW PROCEDURE

United Arab Emirates was affirmed as independent, united and a sovereign state comprising seven emirates. Relevantly, just like Indian legal system is based on Indian Constitution likewise, UAE legal system based on its the constitution. UAE legal system is a dual nature as it has local and federal courts together with a Supreme Court. “Civil Procedure Law” has been issued under Federal Law No. 11 of 1992 which is followed accordingly by the UAE courts to adjudicate all the civil matters.

• Sources of civil laws in UAE

The main ideas and beliefs of the United Arab are taken from the Sharia law. Although, most laws entail a combination of European and Islamic notions of the civil law whose source is that the Egyptian legal code created within the 19th and 20th century. The adoption of civil law by variety of states within the area exhibits the French influence.

In Addition, having a specific legal legislation for all the agencies particularly of labour law, company law, and intellectual property, United Emirates has over the time recognized commercial and civil codes. This formation has facilitated some expansion in civil legal systems to be more structured and complete. Every new structure may affect someone in some way or the other as a consequence, it can be interpreted as inflexible sometimes. This rigidity has brought the same to some extent when it comes to establishing the job work linked to numerous countries within the geographic region. The UAE functions under a civil law system and acts are the first source of law.

The other thing that may differentiate the legal system of UAE from other countries would be that the Judgments of the higher courts don’t seem to be obligatory on the lower courts (although they could be a beneficial guide and often cited for backing of a position). Each case is set on its own advantaged and facts.

NATURE

All court proceedings in UAE courts follow Arabic language. If there are any non- Arabic documents that are to be filed in the Court, needs to be converted into Arabic by a professional translator certified by the Ministry of Justice.

Correspondingly, the system within the UAE is fundamentally investigative in nature. In each case, the judge would prefer investigating the facts (generally through an expert allocated by Court) and apply the law to detailing of the facts of the case in reaching their judgment. There has never been a discussion of introducing a jury trial. All proceedings in UAE civil cases are supported with the written pleadings of the parties and reinforced by all the documentary evidence admitted. In general, there is no oral hearing in civil cases. There is a common practice which is prevalent for both the federal and also the Dubai courts to refer the matters to court-appointed experts for appropriate conclusions of fact in order to help in variety of expertise areas.

Even though, the judgement is followed, but importantly the concept of cease-and-desist order isn’t practiced in UAE. However, if after a while evidence is further submitted, the court may grant extension of the time supported by the request of the parties concerned treated as the additional submissions made by parties.

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The temporary remedies that are provided in UAE, are orders such as prohibiting the defendant from leaving the UAE or an order with relevance of surrendering of the passport by the defendant. These interim reliefs may be sorted if the claimant believes that the defendant might leave the concerned jurisdiction.

After a judgement is given, the judgment holder will start execution proceedings, and once this process is initiated, the debtor of the judgment shall receive a notice and they shall be expected to pay the debt, and if it isn’t fulfilled within the prescribed time then further execution proceedings commences. Then there are chances that the court may order attachment and sale of the concerned debtor’s property and even attachment of shares, bonds, stocks etc. In exceptional rare cases, imprisonment may also be passed for stricter approach to condemn violations.

Unlike India, there is no provision mentioned in UAE law regarding mandatory and prohibitive injunctions.  The applying for an attachment order of debtors’ assets is the only method that resembles to an injunction given in Indian Courts.

• In the matter of Commercial disputes in UAE, they are resolved through either Litigation or Arbitration. The UAE is signatory to the UN convention on for the interest related to foreign arbitral award. Apart from arbitration, concepts which comes under the umbrella of arbitration such as conciliation and mediation are not that developed which means that these methods are not practiced like that in India. Although ADR may be considered a useful method for
  resolving the commercial disputes, but the need has not been recognized under UAE laws as no statutory framework exists which enforces ADR at large scale as a most vital method for resolving commercial disputes[1].Bottom of Form

USA CIVIL PROCEDURE LAWS

Civil proceedings in the United States district courts are governed by the Federal Rules of Civil Procedure.  The substantial purpose is “to secure the just, speedy, and inexpensive determination of every action and proceeding.” [2]These rules were first adopted by order of the Supreme Court in 1937 and came into effect in 1938. The latest amendment of Civil Regulations was in 2020.

• Sources of laws in USA: US Rules has composed the complex laws to specifically talk about how “it exists in different forms at every level of the government. To start with laws in US exist not only in the statutory form, but also the common laws that are formed through the judiciary.” [3]

Therefore, what distinguishes the sources of laws in USA in simple terms can be covered within the following.

1. Constitution of USA and its Statutes
2. Common laws
3. Executive action
4. Administrative directive
5. Law of equity

Thus, the abovementioned sources of US laws identify the fabric of its governance in the society,

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Constitution and statues: “A constitutional law in USA constitute unique forms of various states. Constitution as it can be understood are the laws of the people, which is different from ‘statues’, constitution cannot be changed or amended, however, changes to statues can be amended in accordance to change in the society. Moreover, statutory is held responsible by the US congress at the federal level,” [4]

Administrative and Executive laws come from different sources referred in Code of Federal Regulation (CFR) and the federal US government respectively.

Common Law and equity laws: these laws are looked upon as providing common platforms of opinions that should be able to make sure that all parties leave during trial proceedings.

NATURE

Legal action plays a broader role in the United States than any other countries. US system of rules provide constructive remedies to parties and is well recognized for its confrontational nature.

American procedural law has advanced class action measures that have no counterparts in the procedural law of Civil-Law authorities and go well beyond the practices of most other Common-Law authorities. As a consequence of an administration of intricate legal procedures that is so distinctive of the American legal system, regular citizens are less capable of handling their disagreements on their own, and more reliant on upon engaging the services of lawyers. Many think, for instance, disputes over auto accidents and the acquisition and sale of homes and apartments should be figured without lawyers. Yet, in most states in the Unites States the unsolved practices that now functions are the simple matters that could force people to turn these problems over to lawyers.

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Generally, in all civil cases, suits filed are initiated by the plaintiff where cases are decided by a judge or if any significant suit is presented then juries may be involved. As similar to other countries, punishments of civil nature cases are almost always of a monetary nature and not of imprisonment. Defendants’ liability has to be established by the plaintiff after and according to “preponderance of evidence”.

Sometimes, the charges against the defendant may constitute both a civil charge and a criminal charge if the particular wrongful act consisted of both a private injury or a public offense.

Generally, below mentioned stages are followed in a civil suit including the process followed within those stages:

• A lawsuit is initiated by the plaintiff filing a complaint.
• A reply is filed by the defendant against the complaint.
• A scheduling order is then issued by the judge arranging out a timeline for case proceedings which may include the initiation of trial.
• Motions by the parties and other pleadings may be filed.
• A jury is then selected to begin the trial proceedings.
• After hearing both the parties, a decision is then given by either by the jury or the judge.
• The aggrieved party after the decision may file for an appeal in the appellate court which may prefer for further appellate review.

ANALYSIS

After comprehending UAE and USA laws, it can be realized that both countries’ civil laws are fundamentally different from one another. Laws which are applicable in UAE might not be similar in US. For an instance, if we take administrative laws prevailing in both nations, in US, administrative laws are regulated under code of federal regulation, on the other hand in UAE, the civil code is defined in each state in a separated form. Nevertheless, the UAE follows Sharia law, an Islamic law having it relevance in administrative laws or civil code. Thus, there can be seen a significant difference in both nations and their prevailing administrative laws.

The constitution and the statue in US are considered to be supreme due to which it can be said that it can be held responsible by the US congress at the federal level. Whereas, in UAE in that regard, the Federal Supreme Court is supreme. Although interestingly UAE and USA common laws are somewhat in forms and few parts similar to one another. As an example, UAE common law legislation has an influence of English common laws and in USA common laws, the definition of liberty is also paramount.

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Another similarity is related to media laws in specific, wherein UAE, the judiciary plays a substantial part in order to provide a solution relating to disputes of any in a civil nature and relevantly in USA such media laws are considered to be form of civil laws under the common heading of ‘common’ and ‘equity’ laws in the society specific to media regulation.

The hesitancy of civil laws of USA to imply good faith into agreements while negotiating amongst two commercial parties is widely known and mostly based on the traditional doctrine. The doctrine Is called doctrine of freedom contract in similarity with English Common Law. In contrast to USA, civil law in countries such as the UAE, they follow fulfilling obligations in such a manner that is consistent with good faith recognized as a fundamental part of the contract.

CONCLUSION

The civil law of UAE follows an interrogative approach which is usually applied by the bench. The courts follow litigation to be entirely court-driven where they have the control over hearing schedules, appointment of experts and so on. The judge hearing the case have absolute discretion in any case for the final decision. As far as the UAE courts are in question, they do not particularly adhere to traditional common law standards of evidence, for instance the “likelihood test” in civil claims or the “beyond reasonable doubt” in criminal matters.

USA can be said to be more liberal country so most of its laws also classify themselves in the same bracket. Subsequently, if we consider societal sphere and their cultural domain between these countries there would be quite a disparity. That being said, nearly all of the laws that are applicable in USA might not be applicable in UAE. However, with a few similarities to common laws, it just indicates that common laws are universal in nature. The major difference even so would be few laws which would UAE laws in general to not strengthen be it due to societal, cultural, or traditionally not applicable.

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[1] International Journal for Legal Research & Analysis, Pavan Kumar,R, June 2021

[2] Fed. R. Civ. P. 1.

[3] Jennings, 2005, p. 20

[4] Jennings, 2005, p. 20

 

By:- Manas Mishra

Many times, we overlook various rules which are made for ourselves or if we say, for the public welfare. It is our duty to act or omit acts which we are not supposed to obey and not obey, respectively. We should always take reasonable steps, keeping our eyes open and adhering to various legislations.

We all are supposed to be law-abiding person and everything depends upon our acts or omission of acts. Acting or obeying restricted acts always result in the creation of unavoidable happenings while the consequences of not following welfare concerned laws cost us more than expected.

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When the plaintiff corresponds by himself to the injury suffered by the negligence of the defendant or unlawful conduct, he is held guilty of contributory negligence. Contributory negligence comes into existence when the plaintiff does not take reasonable care on his part to avoid the harmful consequences. He contributes himself to the mishappening of the event.

Illustration:-

• A person, riding on the wrong side of the road and meet with the accident arising out of the collision of the car.

Municipal Corpn. Of Greater Bombay v. Laxman Iyer[1]

In this case, it was said that both the parties would be liable for the negligence arising out of an accident. In cases related to contributory negligence, the question of liability would depend upon whether either of them would have tried to take due care and avoid the consequences of other’s negligence. Whoever between them would have taken necessary care to get the consequences rid of, arising out of other’s negligence, would be liable for the negligence. Contributory negligence is completely dependent on the conduct of a plaintiff.

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For exercising defense under contributory negligence, defendant mustprove that the plaintiff did not take reasonable care avoid the accident.

Rural Transport Service v. Bezlum Biwi[2]

The conductor having known the fact that the bus is full of passengers and cannot afford more yet invited many others and made them comfortable at the roof of the bus. The driver tried to overtake the bus, forgetting that passengers of roof of the bus. This action of driver led to death of one of the passengers of roof due to injury arose out of hit by the branch of a tree. The court held that driver and conductor would not be liable for this misshaping since there was contributory negligence on the part of deceased passengers and others who had implied consent to travel on the roof of the bus, taking risk.

Rules for determining Contributory Negligence

1. The plaintiff’s carelessness regarding the contributory negligence defense does not have the identical meaning as the tort of negligence. The plaintiff does not have to owe the other party a duty of care in this case. What must be proven is that the plaintiff failed to take reasonable precautions for his own safety, therefore contributing to his own harm. Thus, all it takes to show contributory negligence is to demonstrate to the jury and satisfy them that the injured person did not take reasonable care of himself in his own interests and contributing to his own lack of care for himself.

Bhagwat Sarup V. Himalay Gas Co.[3]

It was held that the deliveryman’s fault was solely his own. It has also been noted that simply giving an axe/hammer to the delivery person on request did not indicate contributory negligence on the petitioner’s part, because the petitioner was a layman, whereas the delivery person was a trained individual who was expected to understand the consequences of the conduct he was performing.

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2. It is insufficient to establish that the plaintiff did not take reasonable precautions to ensure his own safety. It should still be demonstrated that his carelessness caused to the resultant damage. The defense of contributory negligence cannot be invoked if the defendant’s carelessness might well have inflicted the same harm even when the plaintiff had already been cautious, and the petitioner’s fault may not be the main reason for the crash.

Agya Kumar V. Pepsu Road Transport Corporation[4]

It was held there has been simply carelessness on the part of the bus driver, and despite the reality that the rickshaw was overburdened, there was almost no contributory negligence on the part of the rickshaw driver, because the rickshaw’s overburden had no bearing on the accident’s occurrence.

National Insurance Co. V. Kastoori Devi[5]

In this case there was a collision between a motorcycle consisting of three to four people and truck. The collision led to serious accident. It was held that the circumstance that the motorcyclist was transporting three people in the passenger seat did not suggest that he was guilty of contributory negligence. Unless  he veered off the road due to its overweight so this led to the outcomes would he even be convicted of contributory negligence.

 

Scope of Contributory negligence as defence

Contributory Negligence on the claimant’s behalf was proven to be a good defence, and the claimant’s case was dismissed. The claimant was barred from bringing further actions against the reckless defendant due to his own carelessness. Plaintiff’s carelessness does not really imply a violation of duty to one of the other parties, but rather a failure to take reasonable precautions to ensure his own protection. The rule of law states that if both parties share fault for the catastrophe, regardless matter how minor that culpability is on one side, the loss is borne by the party who fails.

Butterfield V. Forrester[6]

It was held that the plaintiff has no basis of claim even though he could have averted the mishap by taking reasonable precautions. When one individual is at fault, it does not negate the need for the other one to take reasonable care of oneself. To establish this claim, there must be an obstacle on the road caused by the defendant’s fault and no lack of due prudence on the claimant’s to prevent it.

The doctrine posed a significant burden for plaintiffs, since even little carelessness on their side might result in their losing their case against a defendant whose carelessness was the primary source of the complainant’s damages. Laws concerned with contributory negligence have been amended by initiating Last opportunity Rule.

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Last Opportunity Rule

When two people are careless, the one who had the later chance to avoid the accident by using ordinary caution should be held responsible for the loss. It indicates that if the defendant is negligent and the plaintiff has a later opportunity to prevent the defendant’s negligence’s effects, the plaintiff will be held responsible. Similarly, if the defendant had the final chance to avoid the disaster, he would be held responsible for the whole damage suffered by the plaintiff.

Davies V. Mann[7]

The complainant chained his donkey’s forefeet and abandoned it on a winding road. The defendant was driving his horse-drawn cart too quickly, and the donkey was killed as a result of his carelessness. Despite his own fault, the plaintiff was found to be entitled to compensation since the defendant failed to follow the last-chance rule.

Subhakar V. Mysore State Road Transport Corporation[8]

The court lowered the amount of compensation due since the claimant was at fault. The claimant-appellant, who was riding a bicycle at the time, abruptly switched to the right side of the road. He was hit by the respondent’s bus, which caused him to fall and injure his leg, needing two and a half months in the hospital. It was held that due to the fact that both parties contributed equally to the accident via their negligence, the claimant’s compensation was lowered by 50%.

Vidya Devi V. M.P. Road Transport[9]

In this case, a motorcyclist collided with a bus and died because of the collision. The bus driver was also found to be at fault for failing to keep a good lookout to avoid a probable accident. It was held that the plaintiff was entitled to one-third of the damages, and he would have been entitled to if the dead motorcyclist had not been negligent.

Municipal Corporation of Greater Bombay V. Shri Laxman Iyer[10]

Supreme court held that in the case of contributory negligence, courts have power to apportion the loss between the parties as seems just and equitable. In this context means that damages are reduced to such an extent as the Court thinks it is just and equitable having regard to the claim.

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Doctrine of Alternative Danger

Despite the fact that the plaintiff is expected to be cautious and the defendant’s carelessness, there may be times when the plaintiff is justified in taking a risk since the defendant has created a dangerous scenario. The plaintiff may feel puzzled or worried because of a risky scenario caused by the defendant, and to protect himself, his property, or a third party from harm, he may take an alternative risk.

As a result, the law allows the plaintiff to face an alternative hazard to protect himself from the threat posed by the defendant. His action against the defendant will not fail if the route he chooses cause him some injury.

Shyam Sundar V. State of Rajasthan[11]

Due to defendants’ carelessness, (the State of Rajasthan), a truck actually belonged to them went up in flames after just four kilometres on a specific day. When one of the inmates leapt out to escape the flames, he collided with a stone by the roadside and died instantly. The defendants were found to be responsible for the same.

Sayers V. Harlow Urban District Council[12]

It was held that Defendants were responsible because the plaintiff’s damage was a natural result of their breach of duty.

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Contributory Negligence of Children

What constitutes contributory negligence in the instance of an adult may not apply to a kid since a youngster cannot be assumed to be as cautious as an adult. To determine whether a suspect is convicted of contributory negligence or not, the maturity of the individual must be taken into account.

1. Sriniwas V. K.M. Parasivamurthy[13]

In this case, it was held that a 6-year-old kid lacks the road sense and familiarity of his or her elders, the plaintiff cannot be held liable for contributory fault.

D.T.C. V. Lalita[14]

The position of children for the purpose of contributory negligence was explained by Delhi High court I this case:-

“In the case of a held of tender age, conduct on the part pf such child contributing to an accident may not preclude it from recovering in circumstances in which similar conduct would preclude a grown up person from doing so.”

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Conclusion

Contributory negligence often led the claimant to meet with loss as it acts as defence for the defendants. Myriads of judicial decisions show that claimants do not prove their point to get compensated by the defendant when there is a reckless conduct of other party. On other side, it works with great ease as of its defence nature for them. There is no doubt that certain proviso exists for this defence. For instance, in Last Opportunity Rule in which who is found that he has had chance to avoid the mishappening at last, but nothing is brought into action, so he will be liable for reckless conduct. Contributory Negligence is much seen in motor vehicle accident cases.

Many a times there is no way left where plaintiff has to take corrective measures on the spot to save himself or others or the property knowing the fact that complex circumstances have been created by the defendant, he takes the risk. Further while deciding the case, Court has to consider the age in Contributory negligence arises out of conduct of children.

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[1]AIR 2003 SC 4182

[2]AIR 1980 Cal. 165

[3]AIR 1985 H.P. 41

[4]AIR 1980 P. & H. 183

[5]1988 ACJ 8 (Raj.)

[6](1809) 11 East 60

[7](1882) 10 M. and W. 546

[8] AIR 1975 Kerala 73

[9] AIR 197 M.P. 89.

[10]AIR 2003 SC 4182

[11]AIR 1974 SC 890

[12](1958) 2 All E.R. 342

[13]AIR 1976 Goa 1

[14]AIR 1982 Delhi 558

By:- Prachi Parekh

INTRODUCTION:

Nowadays, people love to spend upon fashion-related products and this has helped the fashion industry to grow tremendously within a short span of time. The growth in the industry has led to employment generation and variety of career opportunities in the same, as well as innovative services and techniques are being welcomed by the industry. This has again led to growth and discovery of various new channels of providing these services and for which different contracts have to be created for each and every channel. Let us find out about various contracts that can be made under this industry.

TYPES OF CONTRACTS IN THE FASHION INDUSTRY AND CLAUSES CONTAINED IN THEM:

1. CONSIGNMENT CONTRACT: This is a contract between a retailer and his agent wherein the retailer grants the right to sell, merchandise, conduct an exhibition for sale of the fashion apparel or inventory. Here, the retailer is called as consignor and his agent as consignee in the whole contract.

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CLAUSES IN CONSIGNMENT CONTRACT[1]:

1. Preamble: It depicts the details and facts of whole contract in short
2. Duration clause
3. Terms of sale of products clause
4. Percentage that each party would receive clause or Consignment fee clause
5. Payment options clause
6. Liability for lost or damaged stock clause or Insurance Clause
7. Effect on non-sale clause
8. Minimum Price clause:the price below which the fashion products should not be sold
9. Location and storage of stock during consignment clause
10. Expenses clause
11. Modification/Amendment clause
12. Applicable law clause

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2. SHOWROOM RENT CONTRACT: It is a contract between the shop owner or showroom owner and the designer of fashion products for renting out the shop space to sell his stock. It is a type of a rent contract between these parties wherein the shop owner grants his shop to the designer against periodical payments of rent for the letting.

CLAUSES IN SHOWROOM RENT CONTRACT:

1. Preamble
2. Duration clause
3. Expenses clause
4. Terms of the rent payment clause
5. Applicable law clause
6. Dispute Resolution clause: In which court to refer the dispute in is included in it.
7. Terms of letting clause: for example, whether the showroom will be furnished or not
8. Payment of taxation clause
9. Breach of contract clause
10. Liability for damage to the showroom clause
11. Security deposit clause: the amount of deposit to be given by the designer to the owner for rent
12. Modification/Variation clause
13. Termination clause: it also includes notice period to be given to each other

 

3. FRANCHISE CONTRACT IN FASHION INDUSTRY: This is acontract wherein one party grants the authority to other to open and operate the business in the name of the selling party. The party granting such a right is called as a franchisor and other party is termed as a franchisee. We find many franchises in fashion industry such as Being Human,Fittin, Choupette, Duke, lenskart.com, Bombay dyeing[2], etc.

CLAUSES UNDER FRANCHISE CONTRACT IN FASHION INDUSTRTY:

1. Preamble
2. Franchise fee clause
3. Security Deposit clause
4. Royalties clause
5. Mode of Payment clause
6. Confidentiality clause: wherein the franchisee agrees not to disclose franchisor’s trade secrets
7. Standards of Operations clause: wherein fixed set of standards have been set and the franchisee needs to follow them accurately
8. Inspection clause: Right of franchisor to inspect the premises at regular intervals
9. Applicable laws clause
10. Proper registrations by franchisor relating to licenses clause
11. Advertising and Brand Promotion clause
12. Training, supervision and support clause
13. Use of trademark and intellectual property clause: This is one of the most important clauses wherein the franchisor needs to have registered the trademark and should have exclusive rights for use of such a trademark
14. Duration of contract clause
15. Renewal clause
16. Termination of contract clause
17. Dispute Resolution clause: for example, arbitration, mediation, conciliation
18. Force Majeure clause: Wherein any of the parties fails to perform their functions due to unforeseen circumstances, then what should be done?
19. FASHION RELATED ADVERTISING AND PROMOTIONAL CONTRACT: It includes a contract between a designer/retailer/manufacturer of fashion products and an advertising and marketing agency for promoting these products through various channels in exchange of an advertising fee.

CLAUSES UNDER FASHION RELATED ADVERTISING CONTRACT:

1. Preamble
2. Duration of contract
3. Scope of Work clause
4. Budget and Payment schedule clause
5. Advertising fee/price clause
6. Consequences of late payment clause
7. Breach of contract clause
8. Termination clause
9. Dispute Resolution Clause
10. Copyright clause: This ensures that the ad agency is properly disclosing all the due credits and information relating to their use of any product or services which leads to prevention in copyright violations.
11. Confidentiality clause
12. Indemnity clause: If the designer/retailer/manufacturer faces any financial hit, or some similar situation and has not paid the ad agency as per the terms of the contract, then they will need to indemnify the ad agency for their loss
13. Terms and conditions clause

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5. FASHION INDUSTRY EMPLOYMENT CONTRACTS:The employment contracts in fashion industry have a wide range. These can include employment for modelling and acting, designing, stitching, manufacturing, transportation and distribution/shipping of fashion products.

CLAUSES OF FASHION RELATED EMPLOYMENT CONTRACTS[3]:

1. Preamble: Information relating to the facts for entering into the contract, parties and type of employment
2. Duration clause
3. Force Majeure clause
4. Salary/Wages/Remuneration related clause
5. Number of working days clause
6. Confidentiality clause
7. Annual/sick Leave clause
8. Maternity/Paternity leave clause
9. Liability for breach of contract clause
10. Termination clause
11. Dispute resolution clause
12. Places to be worked at clause
13. Other perks or social benefits clause
14. Overtime clause
15. Retrenchment Benefits clause
16. Outsourcing/ sub-contracting clause
17. Restrictions/prohibitions in employment clause: Sometimes there may be restrictions to the person being employed by and an employer in the fashion industry relating to age, marriage etc and is included in this clause.
18. Survivability clause
19. Severability clause

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6. OUTSOURCING CONTRACTS IN FASHION INDUSTRY:These contracts include outsourcing certain services or products which are important to the fashion industry. For example, fashion events management services, human resource services, apparel outsourcing, technology outsourcing.

CLAUSES UNDER FASHION OUTSOURCING CONTRACTS INCLUDE[4]:

1. Preamble: including the reason, facts and details of parties entering into the contract
2. Retained Rights clause: Each party retains certain rights with respect to title, interest etc
3. Terms and conditions clause: It may include that the services or products must be of good quality and free from any defects
4. Remuneration clause
5. Duration clause
6. Liability for Breach clause
7. Confidentiality clause
8. Survivability clause: it ensures that even after the contract has been performed certain terms and conditions in the contract will still remain in force, this is because of the confidentiality and non-disclosure clause, as the trade secrets have to be kept secret even after completion of the performance to the contract.
9. Termination clause
10. Guarantee/Warrantee clause
11. Modification/Amendment clause
12. Technical assistance clause
13. Territories of providing services clause
14. Inspection and acceptance clause
15. Applicable Law clause
16. Severability clause:Due to any uncertainty if provision of this contract becomes unlawful or impossible to perform, then this clause ensures that the whole contract is not termed as unenforceable but except the certain provisions remaining of the contract remains in force with full validity.
17. Independent contractor clause
18. Dispute resolution clause

CONCLUSION:

Thus, as we saw above these were some of the different types of contracts under the fashion Industry and some of which though contains similar clauses but are also specialised as per their work. Some clauses such as severability, survivability, dispute resolution, applicable governing laws, confidentiality clause, force majeure clause are amongst the most important clauses which safeguards the contract against uncertain or unforeseen events that can make the contract disputable or void. Inserting these clauses ensures that the contract remains in force and is termed to be valid. The non-disclosure clause also ensures that the valuable trade secrets are not revealed by the parties to the contract and the survivability clause exists even after the parties have finished dealing or performing as per the contract and if such a term is breached, the consequences need to be faced by the defaulting party as per the provisions in that effect in the respective contract.

[1]https://www.pandadoc.com/consignment-agreement-template/

[2]https://topfranchise.com/articles/the-top-10-fashion-franchise-businesses-in-india/

[3]https://legaltemplates.net/form/employment-contract/

[4]https://www.pandadoc.com/business-contract-template/

By: Ayushee Subhadarshini

In the emerging days of technological advancements, the online platforms have leveled up their games to the next level. The platforms like Social media and over-the-top (OTT) services provide so much content to the audience directly through internet. Staying at homes during the pandemic has become easier through these platforms. People create content, share their opinions and views, binge watch series and movies, educate people and also help in promoting online businesses. A large group of people are getting the opportunity to avail these services. The fast increasing advancement of the digital world has helped the world in great ways, but there are also certain ways by which these platforms are being misused by a large part of the society.

Looking forward to the rising influence of OTT in India the platforms have acquired a large share of the entertainment market. Not only the content they provide but the opportunity they serve. OTTs have given a large opportunity to the small growing production houses as well who deal with scripts which show the reality of today’s world and the problems faced by common man. The OTT services were mostly enjoyed by people because it gave them a comfort at their homes, until the government tried to put its hands in the regulations of these services. The government issued notification regarding the Intermediaries and Digital Media ethics rule, 2021 after the harsh reality of the Indian culture was hit on the face of Nationalists. Their views reflected how the Indian Culture has been defamed through these platforms.

In 2018 a committee was formed which included secretaries from various prominent departments to bring about changes in certain rules and regulations for these online platforms after wide field of research on the regulations internationally as well. This committee was formed after the case of Prajwala vs. Union of India where the Supreme Court observed that there is a need to regulate the contents provided in these OTT platforms like to stamp out the contents which include pornography, abuse, rape, nudity, violent and aggressive display which in turn may cause harm to the society and spread hatred. Tehseen S. Poonawalla case, the SC gave the government full freedom to eliminate the “irresponsible and explosive messages on various social media platforms, which have a tendency to incite mob violence and lynching of any kind” In 2021, the ministry of electronics and Information Technology and the ministry of broadcasting released notification regarding the new guidelines. The Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021.This was done by the government under Section87 of the IT Act, 2000.So putting some light on the previous rules and regulations related to digital media and OTT platforms.

So basically this has been divided into three categories -the first part consists of the definitions ,the second part is regarding the due diligence by the intermediaries and, the third part deals with the code of ethics and procedure and safeguards in relation to the digital media The due diligence of the intermediaries include the following;

• The platforms should provide the users all the terms and conditions of the use of such platforms as well as lay down all the rules and privacy policies to the user so as to keep a check and record of the access.
• the intermediaries should within 24 hours of receipt of complain take measures and actions which are reasonable to eliminate or disable such content which exposes the private areas of a person shows partial or complete nudity or shows any sexual act or conduct or any type of content with viruses threatens abusers any individual
• The intermediary should retain registration information of a user for six months after cancellation of registration.

Besides due diligence of intermediaries many additional guidelines have also been issued regarding the social media intermediaries. These are like appointment of Chief Complaint Officer who shall be a resident of India, who would ensure the compliance with it rules and the appointment of a Nodal contact person who is required to co-ordinate with the law enforcing Agencies all the time .It should also appoint a grievance officer who shall be a resident of India it also States to report mentioning the Complaints and actions. The OTT platforms also need to classify their content into mainly five categories which is according to the age group -U (Unrestricted),U/A 7+ (Unrestricted Public exhibition subject to parental guidance for children below the age of 7),U/A 13+ (Unrestricted Public exhibition subject to parental guidance for children below the age of 13),U/A 16+ (Unrestricted Public exhibition subject to parental guidance for children below the age of 16),An (Adult).The guidelines also regulate the need of parental locks so as to restrict the people of certain category to get access to some matured content. Moreover the new guidelines also provide for Grievance Redressal mechanism in which an officer will address the issues which should be raised reasonably within 24 hours and should be solved within 15 days. A three-tier Grievance Redressal mechanism would help to deal with the complaints of the content in which the first tier would be self-regulation by the publishers the second would be self- regulation by the Self-Regulating bodies of the Publishers and the last would be an oversight mechanism by the central government in which the Ministry of Information and Broadcasting will establish an Inter-Departmental Committee to hear grievances not addressed by self-regulating bodies and also oversee adherence to the code of ethics. The digital media publishers are also required to follow the norms of Journalistic conduct of the press council of India and also the Programme codes of cable TV networks so as to ensure their spheres and limits of offline and online platforms.

Though there are certainly bright sides of this Act, but somehow it is felt that it curbs the democracy of the country as it restricts the freedom of expression. If the government thinks that certain contents are there which violates the peace and harmony of the nation then it can struck down the content. Obviously this puts a ban on free flow of information on online platforms. Certain privacy concerns would also arise as right to privacy now comes under the ambit of Article 21 that provides right to life to all. The provision in the act which mentions about the identification of the content creator would raise concerns for privacy. Unfair acts arising out of these can create a lot of problems. Moreover when certain guidelines are created they are for the people and by the people. While drafting these rules no professional from digital platform was asked to recommend or consult in the matter rather it was a decision taken by the government.

Conclusion

As there are always two sides to a coin, certainly the rules made have both pros and cons. It reflects the values and virtues of the society at large. Though India being a democratic country we can see how it contradicts the concept by restricting certain rights. We should see how the citizens and the government comply with these rules.