Trademark Law India

Indian Trademark Law has been codified in conformity with the International Trademark Law and is about to undergo an amendment to be at par International Trademark Law.
Recently India has signed Madrid Protocol that will allow Foreign Applicants to file an International Application designating India like many countries around the globe e.g
China. Though unlike China and many other countries Multi class filing is allowed in India.

Statue:
The various statues dealing with Intellectual property laws in India are as follows:

1. Trademarks Act, 1999

2. Copyright Act, 1957

3. Patents Act, 1970 as amended by Patents (Amendments) Act, 2005

4. Designs Act, 2005

5. Code of Civil Procedures, 1908

6. Indian Penal Code, 1860

7. Geographical Indication of Goods (Registration & Protection) Act, 1999

8. Semiconductor, Integrated Circuit Layout Design Act, 2000

9. Plants Varieties Protection and Farmers’ Rights Act, 2001

10. Information Technology Act, 2000

Requirement:
A ‘Trademark’ means a mark capable of being represented graphically and which is capable of distinguishing the goods or services of one person from those of others.

A ‘Mark’ includes a device, brand, heading, label, ticket, name (including abbreviations), signature, word, letter, numerals, shape of goods, packaging or combination of colors and any combination thereof.

The two main requirements of a trademark are that it must be distinctive (adapted to distinguish the goods/services of the applicant from that of others) and not deceptive. Therefore while selecting a trademark, words that are directly descriptive of the goods, common surnames or geographical names should be avoided as these confer weaker protection to the proprietor even if registered.

Now the concept of “well known mark” has been introduced after the last amendment and Section 2 (zg) defines a well known mark as:

“Well-known trademark, in relation to any goods or services, means a mark which has become so to the substantial segment of the public which uses such goods or receives such
services that the use of such mark in relation to other goods or services would likely to be taken as indicating a connection in the course of trade or rendering of services between those goods or services and a person using the mark in relation to the first mentioned goods or services.”

While determining whether the mark is well-known mark, the registrar will take in to consideration while determining that the mark is a well known mark.

(a) the knowledge or recognition of the alleged well known mark in the relevant section of the public including knowledge obtained as a result of promotion of the trademark.

(b) the duration, extent and geographical area of any use for that trademark.

(c) The duration, extent and geographical area for any promotion of the trademark including advertising or publicity and presentation at fairs or exhibition of the goods or services
in which the trademark appears.

(d) The duration and geographical area of any registration of any publication for registration of that trademark under this Act to the extent that they reflect the use or recognition of that
trademark.

(e) The record of successful enforcements of the rights in that trademark, in particular the extent to which the trademark has been recognized as a well known trademark by any Court or Registrar under that record.

Whereas a trademark has been determined to be well known in at least one relevant section of the public in India by any court or Registrar, the Registrar shall consider that trademark
as a well known trademark for registration under this Act.

“Relevant section of Public” may be actual or potential consumers of, persons involved in channels of distribution of or business circles dealing with the type of goods or services to
which the mark is applied.

The Registrar is not required to consider the following facts while determining a well known trademark.

a) The Trademark has been used in India
b) The Trademark has been registered
c) The application for registration of the Trademark has been filed in India.
d) The trademark is well known in or has been registered in, or in respect of which an application for registration has been filed in any jurisdiction other than India or
e) The trademark is well known to the public at large in India.

Priority:
For claiming a priority from an application filed in United States a corresponding application should be filed in India within 6 months of date of filing of original application.

Various Grounds for refusal:

Absolute grounds:

Section 9 of the Trademarks Act, 1999 sets out the absolute grounds for refusal of trademarks, which can be grouped under following heads:

a) Trademark is devoid of distinctive character;
b) Trademarks that are descriptive;
c) Trademarks likely to deceive of cause confusion;
d) Trademarks or signs that are customary in current language and in the bonafide and established and customary practice of the trade;
e) Trademarks comprising scandalous or obscene matter or likely to hurt religious susceptibilities in India;
f) Trademarks consisting of shape which are purely functional or are necessary to obtain a technical result or give substantial value to the goods; or
g) Trademarks whose use is prohibited under Emblems and Names (Prevention of Improper Use) Act, 1950.

Prohibition:

Section 13 of the Trademarks Act, 1999 prohibits registration of any word as trademark which is:

a) Commonly used and accepted name of any chemical element or any chemical compound (as distinguished from mixtures) in respect of a chemical substance or preparation; or
b) Declared by the World Health Organization and notified as such by the Registrar, as an International non-proprietary names.

Relative grounds of refusal:

Section 11 of the Trademarks Act, 1999 sets out the relative grounds for refusal of trademarks, which can be grouped under following heads:

a) identical or similar to a previous mark with and/or without similar or identical goods;
b) Prohibition of use of the trademark under passing off or law of copyright;

Statutory defense available under the Act:

For registration:

a) Honest concurrent use;
b) Acquiescence; or
c) Prior user

Against Injunction suit or criminal matters

a) Use in accordance with honest practices in Industrial or commercial matters;
b) Parallel Imports;
c) Fair use in description of the goods or services; or
d) Generic ness.

Special Considerations in case of well known mark:

As per Section 11 of the Trademarks Act, while considering an application for registration of a trademark and opposition filed in respect thereof the Registrar shall

a) protect a well known trademark against the identical or similar trademark.
b) take into consideration the bad faith involved either of the applicant or the opponent affecting the rights relating to the trade mark.

However this provision shall not effect the trademark if it trademark has been registered in good faith disclosing the material information to the Registrar or where right to a
trademark has been acquired through use in good faith before the commencement of this Act.

Enforcement of Trademarks Rights:

Opposition (before the Registrar) and Cancellation (before the Registrar as well as Appellate Board)

Opposition can only be done after publication of the trademark and within 3 months of date of availability of Journal. One month extension is available if sought before the expiry of 3
months time.

Cancellation on the ground of non-use for a period of 5 years and 3 months and proof of intention on part of the registered proprietor not to use the trademark at the filing date and nonuse till the cancellation petition.

Before the Courts: Ex-parte Injunction, Permanent Injunction, Anton Pillar Order, and /or Arrest and Seizure of goods (irrespective of registration).

Assignment/ license:

Trademarks are now recognized as a “movable property” under the Indian law and can be therefore assigned/ licensed. A trademark can be assigned with or without the goodwill
attached to it.

Renewal:

The trademarks can be renewed perpetually, are renewable for a period of 10 years on payment of prescribed fees.

Express processing:

Under Indian trademark law now it is possible to expedite the various proceeding e.g. search, examination etc. by filing a request with prescribed fees. Indian Trademarks law are at par with the International laws and has stringent procedures for safeguarding and protecting interest of the proprietor of mark.

“DIVORCE LAW of INDIA NEEDS URGENT AMENDMENT” – LAW MINISTER OF INDIA

DIVORCE LAW of INDIA –

AMENDMENT AS PER LAW COMMISSION’S RECOMMENDATION IN 2009 –

NOT YET DONE

 

Another case of: – JUSTICE DENAIED when JUSTICE DELAYED

 

Groom: Aged about 40yrs, Bride: 41 yrs, Son: Aged about 12yrs

 

PAST

 

On or about 1984, I, at the age of 15 years proposed to a 16-year girl – and the story began. I forgot that I lost my father at the age of 11 years, had a sister aged 6 years and my widow mother. I had lots of responsibilities to carry out as the only son of my beloved father. In a romantic mood, I forgot the difference in financial status of the two families. The story could have been entirely different if the girl would have refused me then and there, but she accepted me. But her family was “matured” and they opposed it in every possible way. I had my first big exam (10+) just at door. In spite of broken heart I tried my best and got 70% in the exam.

 

Thereafter I could realise the real state of affairs, as the girl became totally silent. But I wanted to meet the girl at least once and finally found her in July 1988, in her college, 15 km away from her home. In between, the girl never informed me about her whereabouts. Again on that day the girl agreed to “CARRY ON” the romance for the time being.

 

In  1994, myself got married after lots of inside drama from her family. Her father could never accept me “from heart” as an eligible husband of his daughter and he did a “FAVOUR” to us; by managing to get a job for her, in a school 65 km away from her in-law’s house, just a month before the said marriage. Meantime I managed to make a house with the proceeds received from LIC, obtained after my father’s death. At that time, I was looking after the “small” business left by my father. But her father could never rely on my financial condition and his daughter continued with the service by ferrying daily up and down 130 km. She used to stay very often at her father’s house (close to workplace). She conceived in 1995, but had a miscarriage, and she had two more miscarriages after that in two consecutive years. I lost the joy of being a FATHER and the doctors told specifically that all these miscarriages happened due to her daily strenuous journey. In between, I have decided to take up a job. And my wife finally decided to leave her job, her father also agreed (after some drama again) to the decision. And just after that she became the “proud mother” of our only son.  But she could never forgive me for that decision, although she made her own decision always.

 

I started feeling humiliated for the indirect responsibility for the cause of leaving her job. The misunderstanding began and it increased day after day. I concentrated on my job, and obtained recognition from my employer. I was earning enough to carry on my responsibilities. I built up another floor in the house, since my mother had a long desire for that. I performed my last pending duty by getting my sister married in 2006. I started realising slowly, that I am nothing but a moneymaking machine for my wife. Needless to say, in between, the marriage lost all its charm in all way. My wife became a “lady” by then and was reasonably satisfied with her monetary status, and I became a late 30’s gentleman and kept myself satisfied with my job with an understanding that for the sake of my son, we should stay together.

 

But from 2007, she started taunting me even in front of my son. I became mentally broke. My health was broken, started suffering from IBS, BP etc. (diseases from tension and mental unrest) and started thinking about separation and divorce. I had to take sedative regularly. At the same time I was worried about my son’s future. We were sleeping in different rooms from 2008. My wife stopped using Sindoor from 2006. I really wanted to forget all her past behaviours as bad dreams, but I couldn’t.  I love my job; it has given me my own identity and before the situation affects my job performance, I wanted to end it. I was in a dilemma till April 2009 (on the death anniversary of my father); when she humiliated me about my parents and myself with some nasty words (“you have some problem in your blood, that’s why I am worried about my son’s future staying with you”). I have finally decided for DIVORCE. Previously, she said many times that she would also prefer the mutual application for Divorce. But this time she disagreed and after discussing with her father, they demanded huge ransom money as “compensation”. She also told me that as divorce is inevitable, one of us should leave the house. I wanted to provide my son at least the same house after separation, which I felt necessary for my son’s upbringing. I shifted to a rented apartment near my place of work in July 2009. She was taking money (whatever needed) from me as usual and delaying the filing process for any separation, keeping the same humiliation process on. I agreed (also paid till date) to pay all necessary expenses for maintenance of my son and wife, including the maintenance for the house where they are still staying with my mother. After all this in 25 years, her father again failed to rely on me. Earlier, I had no money, so they hesitated to get myself married to her. But now, they do not know how much money to claim from me, to spoil me even after Divorce, and that is why they are hesitating to go for a mutual divorce. So I had no other alternative to file the divorce petition in September 2009. I know lots of odds will come from my mother and relatives, as divorce is still considered as a social taboo. Each marriage is between two individual – not between “Ideal Wife” and “Ideal Husband”. I am responsible for my job (doing it last 13 years) as well as my family. I belong to a social class and agree to pay any reasonable maintenance (the only sub clause was recommended as check measure for divorce for Irretrievable Break Down) as decided by the Honourable Court.

 

Contest divorce itself is a very tough decision. Even in my professional life, people are not taking it easily. Still I want to take my own black spots, my failure in the marriage – to the public, at least to the people who matters; cant play hide and seek game anymore. I stopped myself several times; thinking about my son, but he should also better see one parent than parents without love or respect for each other. Perhaps by staying apart both of us can maintain a healthy relation with him.

 

PRESENT

 

[ Lots of incidents happened in between: -

 

In October, I felt sad for my son (but nothing for my wife) and came to my old address. But the “drama” continued. I got seriously depressed after noticing my wife’s behavior. Actually she got much more “CRUEL”, and silently (sometime with abusive language in a very low voice) she started humiliating me.  Finally, I went to a psychiatrist. I was suffering from a tremendous depression and trauma for my wife’s behavior. After being checked up by 2 more doctors, I am taking anti-depressant drugs since then. Recently (January, 2009) I got a “fit certificate” from Doctor, but still having medicines. In between, she forced to bring all household goods from my rented apartment and stopped to me sell the same, although some items (like fridge) were duplicated. I really got spellbound noticing her attitude. She forced me to shift to 1st floor leaving my mother on ground floor. On 1st floor we were sleeping in different rooms .Now I am again residing at my rented apartment. ]

 

Now it’s already 5 months gone after my filing. The first date was in Dec 2009. On that day I just got another date. And on the next date also, I shall surely get just “another date.”

 

Is not this the right (if not delayed already) time to address the problem associated with Indian Divorce Act itself?  Please note, I am not the 1st to say this, the law commissions already felt this in 1971 and 2009 (reports enclosed). Both “seriously” recommended introducing THE IRRETRIEVABLE BREAK DOWN OF MARRIAGE as another ground for divorce. We have now a “Fault divorce” and mutual divorce. When my partner and me can’t agree on a less affecting thing like “mutual divorce” (which means to break the tie of marriage), how can we STAY TOGETHER in marriage thereafter? All of us know that, staying together (in any form) requires much more agreement between any two people than to stay apart. That means I have to request (or beg or buy) my wife to be free from marriage, just like a sentenced captive from the Jail. Judiciaries indirectly being used as a tool to bargain terms for divorce, in cases like this. Yes, when there is legal battle between couple, who are staying separate over a year, the only motto can be to get a “good bargain” or to harass one spouse by mere non-cooperation. My wife now more “ cruel” in behaviour. She is fighting legally with me – that means she don’t have any ‘emotional” dependence on me. When we talk about our “old tradition of marriage” we often forget that, no “traditional” wife will come to court to keep or leave her marriage.

 

I would like to mention another thing. My petition primarily based on “CRUELTY”, as the most suitable “available ground” for divorce. But one has to understand that fairer sex normally don’t act “cruel” by physical nature. Even in some cases “SILENCE” or “ABSENCE OF CORDIAL NATURE” between husband and wife can be cruelty of severe nature, which happened in my case. And when a person like me, who act as a Manager in a reputed company, files the divorce for wife’s cruelty, it can effect my professional reputation to a great extent. Actually it’s very much humiliating for me to file the petition and fight for that. It’s not explainable to anyone, but one who is in similar condition, can very well understand this. Broken marriage is not a crime and by the recommended amendment, divorce law can address that break with far less complexity. As we all know, nobody or nothing can compel a couple or any two people to live together. Present Divorce Law can delay (and make more bitter) the process of divorce, but can’t really change the direction in this scenario.

 

Can the Judiciary ask me to point out very private part of my life like marriage? Is not this hampering my basic fundamental right as a citizen? When there is no such law for a “father & son” or “mother & son” relation to be in that tie for ever (although maintenance clause is there), why would be such gross disparity in case of marriage? Are later the more “NOBLE” or “MUST ON” relations than the earlier? Is institution of marriage a serious “offense”, which if I have done once, can’t be freed till my death? Is wedlock means deadlock?

 

 

Now as an effect I have two options –

 

EITHER to stay in my marriage forgetting about my own negative feelings compromising with my health and peace of mind

 

OR

 

To badmouth my son’s mother in the court to prove her fault to get rid of her.

 

In both cases either my wife or I would be sufferer, not the Honurable Judiciary or the legislative body! Won’t the chances of any healthy relation would decrease or diminish just because of amount of tension created between us during the process, as more dates means more blames or more defense (which is also a part of attack mechanism)? Even the child would be indirectly sufferer for the bitterness between the parents as helpless witness of the whole event.  Breaking up is a hard decision for anyone, but while doing, why we (in the process itself for its duration & nature) need to be nasty instead of peaceful? If a marriage can be done in a one-month notice period, why the divorce would be delayed for YEARS?

 

I am referring to some very pertinent cases where Honourable Supreme Court of India understood the gravity of the circumstances and granted the decree of divorce by dissolving the marriage, sometimes even after the lower court’s verdict in an opposite direction. In most of the cases, petition filed against wife’s cruelty. Judiciary understood that delaying the process would only increase bitterness between the couple. Whenever we delay something, it affects. In this scenario its affecting unfortunate people like me.

 

 

(1) N. G . Dastane Vs S. N. Dastane

DATE OF JUDGMENT : 19/03/1975

BENCH: CHANDRACHUD, Y.V. GOSWAMI, P.K. UNTWALIA, N.L.

CITATION: 1975 AIR 1534    1975 SCR (3) 967, 1975 SCC(2)   326CITATOR INFO : RF 1988 SC 121 (7,10)

 

(2) SIRAJMOHMEDKHAN JANMOHAMADKHAN  HAFIZUNNISA YASINKHAN & ANR

DATE OF JUDGMENT14/09/1981

BENCH:FAZALALI, SYED MURTAZA

BENCH:FAZALALI, SYED MURTAZA

SEN, A.P. (J)

CITATION:

1981 AIR 1972 1982 SCR (1) 695

1981 SCC    (4) 250 1981 SCALE    (3)1400

 

(3) Shobha Rani Vs Madhukar Reddi

DATE OF JUDGMENT12/11/1987

BENCH:SHETTY, K.J. (J), RAY, B.C. (J)

CITATION: 1988 AIR 121    1988 SCR    (1)1010

1988 SCC    (1) 105 JT 1987 (4)    433

1987 SCALE    (2)1008

 

(4) V. Bhagat Vs D. Bhagat

DATE OF JUDGMENT 19/11/1993

BENCH: JEEVAN REDDY, B.P. (J), KULDIP SINGH (J)

CITATION: 1994 AIR 710, 1994 SCC    (1) 337

JT 1993 (6) 428    1993 SCALE    (4)488

 

(5) Romesh Chander Vs Savitri –

DATE OF JUDGMENT 13/01/1995

BENCH: SAHAI, R.M. (J), MAJMUDAR S.B. (J)

CITATION: 1995 AIR 851    1995 SCC (2)    7

JT 1995 (1) 362    1995 SCALE    (1)177

 

(6) SMT. KANCHAN DEVI Vs. PROMOD KUMAR MITTAL & ANR.

DATE OF JUDGMENT:    03/04/1996

BENCH:ANAND, A.S. (J)

BENCH:ANAND, A.S. (J)FAIZAN UDDIN (J)

CITATION:JT 1996 (5) 655    1996 SCALE    (3)293

 

(7) Ashok Hurra Vs Rupa Bipin Zaveri

DATE OF JUDGMENT: 10/03/1997

CIVIL APPEAL NO 1835 OF  1997

 

(8) G.V.N. KAMESWAR RAO Vs G. JABILLI

DATE OF JUDGMENT:    10/01/2002

CASE NO.:Appeal (civil) 140 of    2002

BENCH: D.P. Mohapatra & K.G. Balakrishnan

 

(9) Praveen Mehta Vs Inderjit Mehta

DATE OF JUDGMENT 11/07/2002

CASE NO.: Appeal (civil) 3930 of    2002

 

(10) A. Jayachandra Vs Aneel Kaur

DATE OF JUDGMENT: 02/12/2004

CASE NO.:Appeal (civil)    7763-7764 of 2004

BENCH: RUMA PAL, ARIJIT PASAYAT & C.K.THAKKER

 

(11) Durga Prasanna Tripathy Vs Arundhati Tripathy     DATE OF JUDGMENT : 23/08/2005

CASE NO.: Appeal (civil)    5184 of 2005

 

(12) Vineeta Saxena Vs Pankaj Pandit

DATE OF JUDGMENT: 21/03/2006

CASE NO.: Appeal (civil)    1687 of 2006

BENCH: Ruma Pal & Dr. AR. Lakshmanan

 

(13) K R MAHESH Vs MANJULA

DATE OF JUDGMENT: 11/07/2006

CASE NO.:Transfer Petition (civil)    947 of 2005

BENCH:ARIJIT PASAYAT & S.H. KAPADIA

 

(14) Kajol Ghosh Vs Sanghamitra Ghosh

DATE OF JUDGMENT: 20/11/2006

CASE NO.: Transfer Petition (civil)    228 of 2004

BENCH: G.P. MATHUR & DALVEER BHANDARI

 

(15) Rishikesh Sharma Vs Saroj Sharma

DATE OF JUDGMENT 21/11/2006

CASE NO.:Appeal (civil) 5129 of 2006

 

(16) Sujata Uday Patil Vs Uday Madhukar Patil

DATE OF JUDGMENT: 13/12/2006

CASE NO.: Appeal (civil)    5779 of 2006

BENCH: G.P. Mathur & A.K. Mathur

 

(17) Mayadevi Vs Jagdhish Prasad

DATE OF JUDGMENT: 21/02/2007

CASE NO.:Appeal (civil) 877 of 2007

BENCH: Dr. ARIJIT PASAYAT & DALVEER BHANDARI

 

(18) Samar Ghosh Vs Jaya Ghosh

DATE OF JUDGMENT: 26/03/2007

CASE NO.: Appeal (civil)    151 of 2004BENCH: B.N. Agrawal, P.P. Naolekar & Dalveer Bhandari

 

(19) Satish Sitole Vs Smt Ganga

DATE OF JUDGMENT : 10/07/2008

CIVIL  APPEAL  No. 7567  of  2004

 

(20) Suman Kapur Vs Sudhir Kapur

DATE OF JUDGMENT 07/11/2008

CIVIL APPEAL NO.6582 OF 2008

 

And Last but not the least, THE LANDMARK JUDGEMENT

 

(21) Naveen Kohli Vs Neelu Kohli

DATE OF JUDGMENT 21/03/2006

CASE NO.:Appeal (civil)    812 of 2004

 

Some Newspaper articles about our present Divorce Law: -

 

“Examining the irretrievable breakdown of marriage as a ground for divorce
Ankit Kejriwal, Prayank Nayak

Irretrievable breakdown of marriage can be defined as such failure in the matrimonial relationship or such circumstances adverse to that relationship that no reasonable probability remains of the spouses remaining together as husband and wife for mutual comfort and support. It is the situation that occurs in a marriage when one spouse refuses to live with the other and will not work towards reconciliation. When there is not an iota of hope that parties can be reconciled to continue their matrimonial life, the marriage can be considered as Irretrievable Breakdown of marriage.

 

This concept was first introduced in New Zealand. The Divorce and Matrimonial Causes Amendment Act, 1920 included for the first time the provision for separation agreement for three or more years was a ground for making petition to the court for divorce and the court was discretion whether to grant divorce or not. In England, the gate for this theory was opened up in the case of Masarati v. Masarati, where both the parties to the marriage had committed adultery.  The court of appeal, on wife’s petition for divorce, observed breakdown of marriage. The law commission of England in its report said, The objectives of good divorce law are two: one to buttress rather than to undermine the stability of marriage and two, when regrettably a marriage has broken down, to enable the empty shell to be destroyed with maximum fairness, and minimum bitterness, humiliation and distress. On the recommendation of the Law commission, Irretrievable Breakdown of Marriage was made the sole ground for divorce under section 1 of the Divorce Law reforms Act, 1973. The Matrimonial Causes Act, 1959 of the Commonwealth of Australia provided for divorce on the grounds of breakdown of marriage. In India, breakdown of marriage is still not ground divorce in spite of the recommendation of the Law Commission and various Supreme Court judgments to include breakdown of marriage as a ground for divorce. This paper examines the need to introduce irretrievable breakdown of marriage as a ground of divorce.

 

Theories of divorce

 

The provisions relating to divorce are contained in Sec 13 of Hindu Marriage Act, 1955. The Act recognizes two theories of Divorce: the fault theory and divorce by mutual consent. Under the fault theory, marriage can be dissolved only when either party to the marriage had committed a matrimonial offence. Under this theory it is necessary to have a guilty and an innocent party and only innocent party can seek the remedy of divorce. However the most striking feature and drawback is that if both parties have been at fault, there is no remedy available.

 

Another theory of divorce is that of mutual consent. The underlying rationale is that since two persons can marry by their free will, they should also be allowed to move out of their relationship of their own free will. However critics of this theory say that this approach will promote immorality as it will lead to hasty divorces and parties would dissolve their marriage even if there were slight incompatibility of temperament. Some of the grounds available under Hindu Marriage Act can be said to be under the theory of frustration by reason of specified circumstances. These include civil death, renouncement of the world etc. In this article we shall see that how these theories, owing to change in social circumstances and change in attitude towards the institution of marriage had failed to provide full justice in matrimonial cases.

 

Judicial opinions

 

 The Supreme Court has adopted a literal view and granted divorce under irretrievable breakdown of marriage. In Ashok Hurra v. Rupa Bipin Zaveri, the husband and wife filed a suit for divorce by mutual consent. But, subsequently wife withdrew her consent. So the petition was dismissed by trial court. The Supreme Court held that We are of the view that cumulative effect of various aspects involved in the case indisputably point out that marriage is dead both emotionally and practically, and there is no chance at all of the same being revived and continuation of such relationship is only for name-sake. The Honble Court used Article 142 and granted divorce. The Delhi High Court in its full judge bench decision in Ram Kali v. Gopal Das, took note of modern trend not to insist on maintenance of an union which was broken and said, ‘it would be practical and realist approach, indeed it would be unreasonable and inhumane, to compel the marriage to keep up the facade of marriage even though the rift between them is complete and there are no prospects of their living together as husband and wife’. In the case of Savitri Pandey v. Prem Chandra Pandey, the Supreme Court reiterated the need for the inclusion of irretrievable breakdown of marriage as a ground for divorce. The Supreme Court in Manjula v. K.R. Mahesh held, the marriage has irretrievably broken down and there would be no point in making an effort to bring about conciliation between the parties. In Neetu Kohli v. Naveen Kohli, husband alleged that the wife was quarrelsome and was found in compromising situation with one Biswas Rout. The wife counter alleged that husband had a concubine. This established that the marriage had broken down irreparably and hence granted divorce on grounds of an irretrievable breakdown. It also observed that it was high time that this be included as ground for divorce in the Hindu Marriage Act, 1955.

 

Seventy-first Law Commission Report

 

The 71st Law Commission of India submitted to the Government on 7th April 1978 dealt with the concept of irretrievable breakdown of marriage. This matter was taken by the Law Commission as a result of the reference made by the Government of India in the Ministry of Law, Justice and Company affairs. The Report points out the fact that the fault and the guilt theories of divorce are not sufficient and cause injustice in those cases where the situation is such that although none of the parties is at fault, or the fault is of such a nature that the parties to the marriage do not want to divulge it, yet there has arisen a situation in which the marriage cannot be worked. The marriage has all the outward manifestations of marriage but the real substance is gone, it’s just like an empty shell. The Report unequivocally asserts that in such circumstances it will be in the interest of justice to dissolve the marriage. It is also mentioned in the Report that in case the marriage has ceased to exist in substance and in reality, there is no reason for denying divorce; the parties alone can decide whether their mutual relationship provides the fulfillment, which they seek. Divorce should be seen as a solution and an escape route out of a difficult situation. Such divorce is unconcerned with the wrongs of the past, but is concerned with bringing the parties and the children to terms with the new situation and developments by working out the most satisfactory basis upon which they may regulate their relationship in the changed circumstances. The majority view, which is shared by most jurists, according to the Law Commission Report, is that human life has a short span and situations causing misery cannot be allowed to continue indefinitely. A halt has to be called at some stage. The law cannot turn a blind eye to such situations, nor can it decline to give adequate response to the necessities arising there from. By refusing to sever that tie the law in such cases do not serve the sanctity of marriage; on the contrary, it shows scant regard for the feelings and emotions of the parties.

 

Other jurisdictions 

 

In most developed nations, the irretrievable breakdown of marriage is recognised as a ground for divorce.

 

 

New Zealand

 

New Zealand was the first country to recognize it, through the  (New Zealand) Divorce and Matrimonial Causes Amendment Act, 1920 where a separation agreement for three years is a ground for making a divorce petition

  AUSTRALIA

 

The Matrimonial Causes Act, 1959 of the commonwealth of Australia provided for divorce on the grounds of breakdown of marriage.  The Family Law Act (Australia), 1975 considers irretrievable breakdown as sole ground for divorce If a marriage breaks down, it can legally be ended by the court granting a Divorce.There is only one ground for divorce in Australia – the fact that the marriage has irretrievably broken down. The legal test of irretrievable breakdown is that you have lived apart for at least twelve months and there is no prospect of reconciliation. As far as the court is concerned, this is all you have to establish. The judge won’t be interested in who left whom, or whether one of you is having an affair, or whose ‘fault’ it was that the relationship broke down.

 

Brazil

 

Presumably due to the influence of the Roman Catholic Church, divorce only became legal in Brazil in 1977. Since January 2007, Brazilian couples can request a divorce at a notary’s office when there is a consensus, the couple has been separated for more than a year and have no underage or special-needs children. The divorcees need only to present their national IDs, marriage certificate and pay a small fee to initiate the process, which is completed in two or three weeks.

 

Canada

 

Canada did not have a federal divorce law until 1968. Before that time, the process for getting a divorce varied from province to province. In Newfoundland and Quebec, it was necessary to get a private Act of Parliament in order to end a marriage. Most other provinces incorporated the English Matrimonial Causes Act of 1857 which allowed a husband to get a divorce on the grounds of his wife’s adultery and a wife to get one only if she established that her husband committed any of a list of particular sexual behaviours but not simply adultery. Some provinces had legislation allowing either spouse to get a divorce on the basis of adultery. .

 

 

Under the Divorce Act, 1967-68 it (IBM) is clearly recognised as a ground for divorce, apart from the normal fault grounds.

The federal Divorce Act of 1968 standardized the law of divorce across Canada and introduced the no-fault concept of permanent marriage breakdown as a ground for divorce as well as fault based grounds including adultery, cruelty and desertion.

In Canada, while civil and political rights are in the jurisdiction of the provinces, the Constitution of Canada specifically made marriage and divorce the realm of the federal government. Essentially this means that Canada’s divorce law is uniform throughout Canada, even in Quebec, which differs from the other provinces in its use of the civil law as codified in the Civil Code of Quebec as opposed to the common law that is in force in the other provinces and generally interpreted in similar ways throughout the Anglo-Canadian provinces.

The Canada Divorce Act recognizes divorce only on the ground of breakdown of the marriage. Breakdown can only be established if one of three grounds hold: adultery, cruelty, and being separated for one year.

 Most divorces proceed on the basis of the spouses being separated for one year, even if there has been cruelty or adultery. This is because proving cruelty or adultery is expensive and time consuming. The one-year period of separation starts from the time at least one spouse intends to live separate and apart from the other and acts on it. A couple does not need a court order to be separated, since there is no such thing as a “legal separation” in Canada. A couple can even be considered to be “separated” even if they are living in the same dwelling. Either spouse can apply for a divorce in the province in which either the husband or wife has lived for at least one year.

On September 13, 2004, the Ontario Court of Appeal declared a portion of the Divorce Act also unconstitutional for excluding same-sex marriages, which at the time of the decision were recognized in three provinces and one territory. It ordered same-sex marriages read into that act, permitting the plaintiffs, a lesbian couple, to divorce.

 

France

 

The French Civil code (modified on January 1, 2005), permits divorce for 4 different reasons; mutual consent (which comprises over 60% of all divorces); acceptance; separation of 2 years; and due to the ‘fault’ of one partner (accounting for most of the other 40%).

 

Sweden

 

To divorce in Sweden the couple can file for divorce together or one party can file alone. If they have children under 16 living at home or one party does not wish to get divorced there is a required contemplation period of 6 to 12 months. During this period they stay married and the request must be confirmed after the waiting period for the divorce to go through.

 

United Kingdom

England and Wales

In England, on the recommendation of the Law Commission, it was made the sole ground for divorce under section 1 of the Divorce Law reforms Act, 1969.

 

 

A divorce in England and Wales is only possible for marriages of more than one year and when the marriage has irretrievably broken down. Whilst it is possible to defend a divorce, the vast majority proceed on an undefended basis. A decree of divorce is initially granted ‘nisi’, i.e. (unless cause is later shown), before it is made ‘absolute’

From beginning to end, if everything goes smoothly and Court permitting, it takes around 6 months.

There is only one ‘ground’ for divorce under English law. That is that the marriage has irretrievably broken down.

There are however five ‘facts’ that may constitute this ground. They are:

Adultery

often now considered the ‘nice’ divorce.

respondents admitting to adultery will not be penalised financially or otherwise.

Unreasonable behaviour (most common ground for divorce today )

the petition must contain a series of allegations proving that the respondent has behaved in such a way that the petitioner cannot reasonably be expected to live with him/her.

the allegations may be of a serious nature (eg. abuse or excessive drinking) but may also be mild such as having no common interests or pursuing a separate social life ; the courts won’t insist on severe allegations as they adopt a realistic attitude: if one party feels so strongly that a behaviour is “unreasonable” as to issue a divorce petition, it is clear that the marriage has irretrievably broken down and it would be futile to try to prevent the divorce. [4]

Two years separation (if both parties consent)

both parties must consent

the parties must have lived separate lives for at least two years prior to the presentation of the petition

this can occur if the parties live in the same household, but the petitioner would need to make clear in the petition such matters as they ate separately, etc.

Two years desertion

Five years separation (if only one party consents)

 

Scotland

 

About one third of marriages in Scotland end in divorce, on average after about thirteen years. Actions for divorce in Scotland may be brought in either the Sheriff Court or the Court of Session. In practice, it is only actions in which unusually large sums of money are in dispute, or with an international element, that are raised in the Court of Session. If, as is usual, there are no contentious issues, it is not necessary to employ a lawyer. Divorce (Scotland) Act 1976.

It is likely that the two year separation period required for a no-fault divorce with consent will be reduced to one year.

 

United States

 

Marital Status in the U.S.

Divorce in the United States is a matter of state rather than federal law. In recent years, however, more federal legislation has been enacted affecting the rights and responsibilities of divorcing spouses. The laws of the state(s) of residence at the time of divorce govern; all states recognize divorces granted by any other state. All states impose a minimum time of residence. Typically, a county court’s family division judges petitions for dissolution of marriages.

Prior to the latter decades of the 20th century, a spouse seeking divorce had to show cause and even then might not be able to obtain a divorce. The no-fault divorce “revolution” began in 1969 in California, and was completed in 1985 (New York is the last holdout ). However, most states require some waiting period, typically a 1 to 2 year separation. Fault grounds, when available, are sometimes still sought. This may be done where it reduces the waiting period otherwise required, or possibly in hopes of affecting decisions related to a divorce, such as child custody, child support, or alimony.”

  Problems, suggestions

 

However the an attempt to introduce irretrievable breakdown of marriage as a ground for divorce has met with resistance by women organization on the grounds that husbands would desert their wives and then ask for divorce under breakdown of marriage. Also it has been stated by few that the concept of irretrievable breakdown of marriage is somewhat vague. In answer to first criticism it has to be stated in situation where wife has been deserted it indicates that husband wants to get rid of wife and any continuation of such relationship would not make sense to both the parties to the marriage. However a safety clause can be inserted which would empower the court to refuse divorce if it adversely affects the interests of the children. A provision for maintenance for child and wife should be made. As far as the second objection is concerned, it should be necessary for grant of decree of divorce under this theory that parties had lived separately for reasonably long time say for three years. Living separately can be considered as objective criteria for breakdown of marriage. 

 

The concept of marriage is moving from a sacrament to a contract. The spouse should be granted a right to move out of the wedlock if they cannot live together due to extreme situations. Justice Krishna Iyer in the case of Aboobacker v. Mam stated while the stream of life, lived in marital mutuality, may wash away smaller pebbles, what is to happen if intransigent incompatibility of minds break up the flow of stream. Since the social conditions prevailing in the country are peculiar, sufficient changes are needed to be made in the law made so that law is able to ameliorate the conditions of the people who, in absence of required law are craving for relief and hence would be able to make process of dissolution less excruciating. A question may be asked that when irretrievable breakdown of marriage has been recognized as a ground for divorce by judiciary why we need an amendment in legislation. This is so because amendment would lay down conditions and safe guards, which should be taken into consideration before the grant of any decree. 

It is high time that the Government recognizes the need of the time and save many couples from the disgrace and humiliation by introducing the irretrievable breakdown of marriage as ground for divorce under Section 13 of the Hindu Marriage Act, 1955.”

 

“Divorce law in our country belongs to an era that has long elapsed. But the laws have neither kept pace nor do they take into account the altered socio-economic realities of contemporary India. This is highlighted, once more, by the recent controversy surrounding grounds for divorce following Smriti Shinde’s petition to the apex court urging it to consider granting unilateral divorce when a marriage has irretrievably broken down. The Supreme Court itself is ambivalent about where it stands on the matter.

Under the Hindu Marriage Act or the Special Marriage Act, there are no provisions that recognise “irretrievable breakdown” or “irreconcilable differences” as grounds for granting divorce when it is not a mutually consensual decision. However, in 2006, the apex court granted divorce in the Naveen Kohli vs. Neelu Kohli case, precisely because of irretrievable breakdown of marriage. But, early this year, another SC bench refused to entertain this argument in the Vishnu Dutt Sharma vs. Manju Sharma case. It decided to stick to the letter of the law.

This is as good a time as any for the laws governing divorce to be updated. In doing so, the issue must not be looked at through a moral prism alone. As Indians interface with the world and are exposed to new ideas and opportunities, there is bound to be a social churn, which impacts on personal affairs like marriage and family relations. Add to this the fact that more women today are economically more independent and assertive of their rights and choices. Divorce must be seen as a social reality, unfortunate though it might be, and not as a social evil.

There are of course legitimate concerns that waiving the mutual consent clause to grant divorce in cases of irreparable marital breakdown would put women in a vulnerable position. But that cannot be used as an excuse to deny those who would genuinely benefit from easing the process of obtaining a divorce. As things stand, one has to go through a lengthy, convoluted and extremely stressful procedure to get a divorce. It’s time that changed.”

 

“Feelings of two human beings are involved in a couple’s

married life. This could not be patched up by enforcement of law by courts. It is up to the individuals to mend themselves. A horse can be taken to water but it is the horse that should drink it. However, the law should not deny divorce if the marriage has really broken down. By forcing unity with a hammer in the hand, the law does not serve the sanctity attached to the institution of marriage by religions. If the relationship of husband and wife wrecks beyond repair, what is wrong in recognizing that fact and allow them to live separately. How can one compel a wife or a husband to continue to live with spouse if they have fallen apart? If so compelled they would have to lead miserable life.”

 

Forget everything else, just imagine a scenario in a bedroom of a couple where a Judge is sitting and deciding about the “cruelty” performed or not among the couple. It must be sounding ridiculous and to avoid such embarrassment, Law Commission suggested the amendment in the divorce law itself through recent Report (Report no 217, November 2008): -

 

III.RECOMMENDATION

 

3.1          It is, therefore, suggested that immediate action be taken to introduce an amendment in the Hindu Marriage Act, 1955 and the Special Marriage Act, 1954 for inclusion of  ‘irretrievable breakdown of marriage’ as another ground for grant of divorce. 3.2            The     amendment     may     also     provide     that     the     court     before granting a decree for divorce on the ground that the marriage has irretrievably broken down should also examine whether adequate financial arrangements have been made for the parties and children

 

I like to highlight some facts in countries, where NO- FAULT (effectively faster & peaceful) divorce exists: -

 

 

A decline in the rates of domestic violence (which is obviously of a very high concern in India)

 

These laws empower a man or woman in an “abusive marriage” and make it easier to leave and live separate

 

Means less conflict during divorce, which means less emotional harm to children whose parents, are divorcing (very much valid in my case)

 

Shortens the length of time it takes to obtain a divorce, which, in turn, shortens the amount of time spent in a stressful situation causing physical and mental damage to involved party (as in my case, I am having anti depression drugs as prescribed)

 

Financial settlements are based on need, ability to pay and contribution to the family finances, rather than on fault (I am ready to accept any reasonable amount decided by judiciary)

 

Helps reduce the heavy caseloads of family courts (obviously valid for India)

Our legislation is hesitating to amend the law. Nobody wants to disturb the “STATUS CO”. Its human nature to resist any kind of change. A Surgery is done only when that is needed, to avoid some greater pain or loss. If we remember, we in India had customs like “SOTI DAHO PROTHA” (burning the widow with dead husband), which now we can’t even imagine. As we are getting exposed to

the world, we have to ratinolise our thought process and laws, by improvising any outdated system or rule. Staying apart for a

considerable period itself points towards the death of the marriage,

“Divorce” is just the legal nomenclature of that unfortunate incident. No divorce or even cause of any divorce will initiate because of the said amendment, but surely it will decrease the suffering of couple whose divorce already initiated. This amendment is only an addition to the grounds of divorce; no way it can hamper the relationship between a married couple. Mr Moily, honourable law minister of India stated recently :-

 ‘Moily said that the government may consider an amendment in

the law to make disposal of divorce and custody cases time-bound, as has been done for gram nyayalayas. He said that family courts will be given a target of winding up such cases — where mutual consent is absent — within a year of them being filed. He believes litigating couples should be freed quickly from a broken marriage in order to start life afresh.

“There is no need for divorce cases to drag on for years when the marriage has actually broken down. Similarly,children’s custody

cases must be decided in a time-bound manner so that there is no uncertainty over their future,” Moily said.’

I request and appeal to all, to raise voices in favour of the amendment of Divorce Law of India.

 

At the end we all must remember- LAW IS MADE BY THE PEOPLE

LAW IS MADE FOR THE PEOPLE.

 

 

 

 

 

CORPORATE GOVERNANCE-A COMPARATIVE STUDY OF SELECT PUBLIC SECTOR AND PRIVATE SECTOR COMPANIES IN INDIA

CORPORATE GOVERNANCE-A COMPARATIVE  STUDY OF  SELECT PUBLIC SECTOR AND PRIVATE SECTOR COMPANIES IN INDIA

                                                      BY

                                Dr.V.V.S.K.PRASAD.,Professor

                                                       &

                          T. VENKATESWARA RAO., Asst.Professor

 

BACKGROUND

Corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way a corporation is directed, administered or controlled. Corporate governance also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed. The principal stakeholders are the shareholders, management, and the board of directors. Other stakeholders include labor(employees), customers, creditors (e.g., banks, bond holders), suppliers, regulators, and the community at large.

Corporate governance is a multi-faceted subject. An important theme of corporate governance is to ensure the accountability of certain individuals in an organization through mechanisms that try to reduce or eliminate the principal-agent problem. A related but separate thread of discussions focuses on the impact of a corporate governance system in economic efficiency, with a strong emphasis shareholders’ welfare. There are yet other aspects to the corporate governance subject, such as the stakeholder view and the corporate governance models around the world (see section 9 below).

It is a system of structuring, operating and controlling a company with a view to achieve long term strategic goals to satisfy shareholders, creditors, employees, customers and suppliers, and complying with the legal and regulatory requirements, apart from meeting environmental and local community needs.

Report of SEBI committee (India) on Corporate Governance defines corporate governance as the acceptance by management of the inalienable rights of shareholders as the true owners of the corporation and of their own role as trustees on behalf of the shareholders. It is about commitment to values, about ethical business conduct and about making a distinction between personal & corporate funds in the management of a company.” The definition is drawn from the Gandhian principle of trusteeship and the Directive Principles of the Indian Constitution. Corporate Governance is viewed as ethics and a moral duty.

 

OBJECTIVES OF THE STUDY

Counterbalancing the very strong recent public interest in the corporate governance of private sector companies has been a vigorous interest in the governance of public sector organisations. While there are similarities between the two sectors in governance terms, there are also significant differences that shape the way government departments, authorities, corporations and even government business enterprises are organised and governed. If the public sector is looked at even more closely, there is a wide variety of forms, structures, processes and practices that can be discerned from agency to agency.

 The present study has multifold objectives :

1.      To compare and contrast corporate governance practices of Public sector and private sector companies in India.

2.      To examine whether there is any correlation between corporate governance practices and  the performance of the company.

3.      To Study the investors perception on the company having good governance practices.

4.      To understand common governance practices if any , in both public sector and private sector companies.

 

I. CORPORATE GOVERNANCE IN INDIAN PRIVATE SECTOR COMPANIES

 

1. GRASIM

Code of Conduct (hereinafter referred to as “the Code”) has been framed and adopted by Grasim Industries Limited (hereinafter referred to as “the Company”) in compliance with the provisions of Clause 49 of the Listing Agreements entered into by the Company with the Stock Exchanges.

Applicability
The Code applies to the Members of Board of Directors (hereinafter referred to as “Board Members) and Members of the Senior Management Team of the Company one level below the Executive Directors, viz. Business Heads, Unit Heads, Presidents, Joint Presidents and all other executives having similar or equivalent rank in the Company and the Company Secretary of the Company (hereinafter referred to as “Senior Managers”).

The Company Secretary shall be the Compliance Officer for the purpose of this Code.

The Code shall come into force with effect from 1 January 2006 and future amendments / modifications shall take effect from the date stated therein.

The Code shall be posted on the website of the Company.

Code of conduct
The Board Members and Senior Managers shall observe the highest standards of ethical conduct and integrity and shall work to the best of their ability and judgement.

The Board Members and the Senior Managers of the Company:

1

Shall maintain and help the Company in maintaining highest degree of Corporate Governance practices.

2

Shall act in utmost good faith and exercise due care, diligence and integrity in performing their office duties.

3

Shall ensure that they use the Company’s assets, properties, information and intellectual rights for official purpose only or as per the terms of their appointment.

4

Shall not seek, accept or receive, directly or indirectly, any gift, payments or favour in whatsoever form from Company’s business associates, which can be perceived as being given to gain favour or dealing with the Company and shall ensure that the Company’s interests are never compromised.

5

Shall maintain confidentiality of information entrusted by the Company or acquired during performance of their duties and shall not use it for personal gain or advantage.

6

Shall not commit any offences involving morale turpitude or any act contrary to law or opposed to the public policy.

7

Shall not communicate with any member of press or publicity media or any other outside agency on matters concerning the Company, except through the designated spokespersons or authorised otherwise.

8

Shall not, without the prior approval of the Board or Senior Management, as the case may be, accept employment or a position of responsibility with any other organization for remuneration or otherwise that are prejudicial to the interests of the Company and shall not allow personal interest to conflict with the interest of the Company.

9

Shall in conformity with applicable legal provisions disclose personal and/ or financial interest in any business dealings concerning the Company and shall declare information about their relatives (spouse, dependent children and dependent parents) including transactions, if any, entered into with them.

10

Shall ensure compliance of the prescribed safety & environment related norms and other applicable codes, laws, rules, regulations and statutes, which if not complied with may, otherwise, disqualify him/ her from his/ her association with the Company.

11

Shall ensure compliance with SEBI (Prohibition of Insider Trading) Regulations, 1992 as also other regulations as may become applicable to them from time to time.

Annual compliance reporting:
Board Member and Senior Managers shall affirm compliance with this Code on an annual basis as at the end of the each financial year of the Company (as per Appendix I within 7 days of the close of every financial year).

Acknowledgement of receipt of the code
Each Board Members and Senior Managers both present and future shall acknowledge receipt of the Code or any modification(s) thereto, in the acknowledgement form annexed to this Code as Appendix – II and forward the same to the Compliance Officer.

Any breach of the aforesaid Code brought to the notice of the Compliance Officer or any member of the Board or Senior Management shall be reported to the Board of Directors of the Company for necessary action.

2. ITC

 ITC’s Corporate Governance initiative is based on two core principles. These are :

         i.            Management must have the executive freedom to drive the enterprise forward without undue restraints; and

This freedom of management should be exercised within a framework of effective accountability.

ITC believes that any meaningful policy on Corporate Governance must provide empowerment to the executive management of the Company, and simultaneously create a mechanism of checks and balances which ensures that the decision making powers vested in the executive management is not only not misused, but is used with care and responsibility to meet stakeholder aspirations and societal expectations.

Cornerstones

From the above definition and core principles of Corporate Governance emerge the cornerstones of ITC’s governance philosophy, namely trusteeship, transparency, empowerment and accountability, control and ethical corporate citizenship. ITC believes that the practice of each of these leads to the creation of the right corporate culture in which the company is managed in a manner that fulfíls the purpose of Corporate Governance.

Trusteeship :

ITC believes that large corporations like itself have both a social and economic purpose. They represent a coalition of interests, namely those of the shareholders, other providers of capital, business associates and employees. This belief therefore casts a responsibility of trusteeship on the Company’s Board of Directors. They are to act as trustees to protect and enhance shareholder value, as well as to ensure that the Company fulfils its obligations and responsibilities to its other stakeholders. Inherent in the concept of trusteeship is the responsibility to ensure equity, namely, that the rights of all shareholders, large or small, are protected.

Transparency :

ITC believes that transparency means explaining Company’s policies and actions to those to whom it has responsibilities. Therefore transparency must lead to maximum appropriate disclosures without jeopardising the Company’s strategic interests. Internally, transparency means openness in Company’s relationship with its employees, as well as the conduct of its business in a manner that will bear scrutiny. We believe transparency enhances accountability.

Empowerment and Accountability :

Empowerment is an essential concomitant of ITC’s first core principle of governance that management must have the freedom to drive the enterprise forward. ITC believes that empowerment is a process of actualising the potential of its employees. Empowerment unleashes creativity and innovation throughout the organisation by truly vesting decision-making powers at the most appropriate levels in the organisational hierarchy.

ITC believes that the Board of Directors are accountable to the shareholders, and the management is accountable to the Board of Directors. We believe that empowerment, combined with accountability, provides an impetus to performance and improves effectiveness, thereby enhancing shareholder value.

Control :

ITC believes that control is a necessary concomitant of its second core principle of governance that the freedom of management should be exercised within a framework of appropriate checks and balances. Control should prevent misuse of power, facilitate timely management response to change, and ensure that business risks are pre-emptively and effectively managed.

Ethical Corporate Citizenship :

ITC believes that corporations like itself have a responsibility to set exemplary standards of ethical behaviour, both internally within the organisation, as well as in their external relationships. We believe that unethical behaviour corrupts organisational culture and undermines stakeholder value.

 

3. Bajaj

Code of Conduct for Directors and Members of Senior Management

This code of conduct shall apply to the directors and members of the senior management of Bajaj Auto Limited (referred to hereinafter as BAL or the Company).

For this code, members of the senior management (hereinafter referred to as `senior managers’) shall mean those personnel of the company, who are members of the core management team, but shall exclude the whole-time directors.

Directors and senior managers shall observe the highest standards of ethical conduct and integrity and shall work to the best of their ability and judgement. Directors and senior managers shall be governed by the rules and regulations of the company as are made applicable to them from time to time.

Directors and senior managers shall affirm compliance with this code on an annual basis as at the end of each financial year.

Code of conduct:

Directors and senior managers shall ensure that they use the company’s assets, properties and services for official purposes only or as per the terms of appointment. Directors and senior managers shall not receive directly or indirectly any benefit from the company’s business associates, which is intended or can be perceived as being given to gain favour for dealing with the company. Directors and senior managers shall ensure the security of all confidential information available to them in the course of their duties. No director or senior manager, other than the designated spokespersons shall engage with any member of press and media in matters concerning the company. In such cases, they should direct the request to the designated spokespersons. Directors and senior managers shall not engage in any material business relationship or activity, which conflicts with their duties towards the company. Senior managers shall not, without the prior approval of the managing director of the company, accept employment or a position of responsibility with any organisation for remuneration or otherwise. In case of Whole-time Directors, such prior approval must be obtained from the board of directors of the company. Directors and senior managers shall declare information about their relatives (spouse, children and parents) employed in the company.

Senior managers shall follow all prescribed safety and environment-related norms.

 

 

 

4.Cipla

 

As required under revised Clause 49 of the Listing Agreement the following code of conduct has been approved by the Board of Directors and is applicable to the Directors and Senior Management of the Company.

1. Ethical conduct

All directors and senior management employees shall deal on behalf of the Company with professionalism, honesty, integrity as well as high moral and ethical standards. Such conduct shall be fair and transparent and be perceived to be as such by third parties

2. Conflict of interest

business, relationship or activity, which might detrimentally conflict with the interest of the Company

 

3. Transparency

 

All directors and senior management employees of the Company shall ensure that their actions in the conduct of business are totally transparent except where the needs of business security dictate otherwise. Such transparency shall be brought about through appropriate policies, systems and processes.

 

4. Legal compliance

All directors and senior management employees of the Company shall at all times ensure compliance with all the relevant laws and regulations affecting operations of the Company. They shall abreast of the affairs of the Company and be kept informed of the Company’s compliance with relevant laws, rules and regulations. In the event that the implication of law is not clear, the course of action chosen must be supported by eminent legal counsel whose opinion should be documented.

 

5. Rightful use of company’s assets

 

All the assets of the Company both tangible and intangible shall be employed for the purpose of conducting the business for which they are duly authorized. None of the assets of the Company should be misused or diverted for personal purpose.

 

6. Cost consciousness

All the directors and senior management employees of the Company should strive for optimum utilization of available resources. They shall exercise care to ensure that costs are reasonable and there is no wastage. It shall be their duty to avoid ostentation in Company expenditure.

 

7. Confidential information

All directors and senior management employees shall ensure that any confidential information gained in their official capacity is not utilized for personal profit or for the advantage of any other person. They shall not provide any information either formally or informally to the press or to any other publicity media unless specifically authorized to do so. They shall adhere to the provisions of SEBI (Prohibition of Insider Trading) Regulations, 1992.

 

8. Relationships with Suppliers and Customers

 

The Directors and senior management employees of the Company during the course of interaction with suppliers and customers, shall neither receive nor offer or make, directly and indirectly, any illegal payments, remuneration, gifts, donations or comparable benefits which are intended or perceived to obtain business or uncompetitive favours for the conduct of its business. However this is not intended to include gifts of customary nature

9. Interaction with Media

 

The Directors and senior management employees other than the designated spokespersons shall not engage with any member of press and media in matters concerning the Company. In such cases, they should direct the request to the designated spokespersons.

 

10. Safety and Environment

 

The Directors and senior management employee shall follow all prescribed safety and environment-related norms.

 

5. HINDUSTAN UNILEVER:

Hindustan Unilever Limited believes that for a Company to be successful, it must maintain global standards of Corporate Conduct towards all its stakeholders. The Company’s foundation has therefore been rooted to stringent Corporate Governance principles. At Hindustan Unilever, we believe that the principles of fairness, transparency and accountability are the cornerstones for good governance. The HUL Code of Business Principles reflects the Company’s commitment to these principles. It is the Company’s endeavour to continue to achieve highest governance levels.

As regards the compliance with the requirements of Clause 49 of the Listing Agreement with the Stock Exchanges, the Company is in full compliance with the norms and disclosures.

BOARD OF DIRECTORS

The Board of Directors of the Company represents an optimum mix of professionalism, knowledge and experience. The total strength of the Board of Directors of the Company is 10 Directors comprising a Non-Executive Chairman, four Executive Directors and five Non-Executive Independent Directors.

COMMITTEES OF THE BOARD

Audit Committee

The Audit Committee of the Company is entrusted with the responsibility to supervise the Company’s internal control and financial reporting process. The Audit Committee also looks into controls and security of the Company’s critical IT applications,

Remuneration and Compensation Committee

The Remuneration Committee is vested with all the necessary powers and authority to ensure appropriate disclosure on the remuneration of whole-time Directors and to deal with all the elements of remuneration package of all such Directors within the limits approved by the members of the Company. The Compensation Committee administers the stock option plan of the Company.

Shareholder/Investor Grievances Committee

The Committee specifically looks into redressing of investors’ complaints with respect to transfer of shares, non-receipt of shares, non-receipt of declared dividends and ensure expeditious share transfer process. The Committee also monitors and reviews the performance and service standards of the Registrar and Share Transfer Agents of the Company and provides continuous guidance to improve the service levels for investors..

Other Functional Committees

Apart from the above statutory committees, the Board of Directors have constituted other functional committees such as committee for approving disposal of surplus assets of the Company, committee for allotment of shares under ESOP to raise the level of governance as also to meet the specific business needs.

6.HDFC BANK:

Introduction

This Code of Ethics / Conduct intends to ensure adherence to highest business and ethical standards while conducting the business of the Bank and compliance with the legal and regulatory requirements, including compliance of Section 406 of the Sarbanes-Oxley Act of 2002 and the rules and regulations framed thereunder by the Securities and Exchange Commission of USA and other statutory and regulatory authorities in India and USA. The Bank values the ethical business standards very highly and intends adherence thereto in every segment of its business.

Applicability

This Code of Ethics/Conduct is applicable to the following persons.

§                       The Board Members

Officials of the Bank one level below the Board

Ethical Conduct

The Board members / Officials shall engage in and promote honest and ethical conduct of business, including the ethical handling of actual and / or apparent conflicts of interest between personal and professional relationships.

Conflict of Interest

The Board members / Officials shall avoid conflict of interest and disclose to the Board any material transaction or relationship that reasonably could be expected to give rise to such a conflict.

Confidentiality of Information

The Board members / Officials shall ensure and take all reasonable measures to protect the confidentiality of non-public information about the Bank, its business, customers and other materially significant information obtained or created in connection with any activities with the Bank and to prevent the unauthorised disclosure of such information unless required by applicable laws or regulations or legal or regulatory process.

Disclosure of Information

The Board members / Officials shall endeavor to produce full, fair, accurate, timely and understandable disclosures in reports and documents that the Bank files with or submits to the Securities and Exchange Commission and other regulators and in other public communications made by the Bank

Compliance with Governmental Laws, Rules and Regulations

The Board members / Officials shall comply with all the applicable governmental laws and the applicable rules and regulations.

Variation of the Code and Waivers

The Code shall be reviewed from time to time for updation thereof. Any variation in the Code or any waivers from the provisions of the Code shall be approved by the Board and shall be disclosed on the Bank’s website.

Contract or Term of Employment

Nothing in this Code or other related communications by itself creates or implies an employment contract or terms of employment.

Violation of the Code

The Board shall have the powers to take necessary action in case of any violation of the code.

 

 

II . Corporate Governance in Public sector Companies

 

Keeping in view the importance and role of independent directors in the good

governance of companies, a review was undertaken in respect of all listed government

companies with the objective of assessing the compliance with the provisions of Clause 49 of

the Listing Agreement relating to independent directors on the Board. This review was

primarily based on the information and documents obtained from the Management of the

companies concerned. The review of composition of the Board as on 30 June 2007 of all the

44 Listed government companies (excluding five deemed government companies covered by

Section 619B of the Companies Act, 1956) revealed the following:

(i)

There were no independent directors on the Board of nine listed government

companies given below:.

S. No                                Name of the company

1              Minerals and Metals Trading Corporation Ltd.

2             State Trading Corporation Ltd.

3             Container Corporation of India Ltd.

4             Hindustan Copper Ltd.

5              National Aluminum Co. Ltd.

6             Balmer Lawrie Co. Ltd.

7            Hindustan Cables Ltd.

8             Madras Fertilizers Ltd.

9             The Fertilizers and Chemicals Travancore Ltd.

(ii)

In 21 listed government companies, the Board did not have the required number of independent directors.

Thus, out of 44 listed government companies, the Board of 30 companies had not been

constituted as per clause 49 of the Listing Agreement.

Constitution and composition of Audit Committee in listed government

companies

Audit Committee is by far the most important working committee of the Board in the

case of a government company with an extensive role in ensuring proper financial reporting and adequacy of internal controls over such reporting. The role of Audit Committees in government companies is closely aligned to C&AG’s constitutional and statutory role in promoting fairness and transparency in financial reporting. A limited review was accordingly undertaken in respect of listed government companies with the objective of assessing the  compliance by these companies with various provisions of clause 49 of the Listing Agreement relating to constitution and composition of the Audit Committee. This review was primarily based on the information and documents obtained from the Management of the  companies concerned.

 

As required by Clause 49 of the Listing agreement, the Audit Committee should have

minimum three directors as member and two thirds of which should be independent directors. As on 30 June 2007, in listed government companies revealed that an Audit Committee  existed in all listed government companies. However, the following non-compliances were  noticed with respect to composition of Audit Committee:

(a)

In the following seven government companies , the Audit Committee did not consist

of required number of independent directors:

1.India Tourism Development Corporation Ltd

.2 National Fertilizers Ltd.

 3.Mangalore Refinery and Petrochemicals Ltd.

 4.Hindustan Photo Films Mfg. Co. Ltd.

 5.Dredging Corporation of India Ltd.

 6.Hindustan Fluorocarbons Ltd.

 7.Mahanagar Telephone Nigam Ltd.

 

 (b)There was no independent director in the Audit Committee of nine listed government

companies as mentioned in para 3.5.2(i) and also in case of IRCON International Ltd.

(c) Though the Board of Bharat Immunological Biologicals Corporation Ltd. consisted of

required number of independent directors, the Audit Committee did not consist of two thirds

independent directors as there was only one independent director out of three directors.

 

(d) In case of Neyveli Lignite Corporation Limited, there was only one independent

director, as on 31 March 2007, on the Audit Committee of four members. The compliance

with Clause 49 of the Listing Agreement was made only on 1 June 2007 by induction of three

independent directors on the Audit Committee.

(e) There was no Audit Committee during 2006-07 in case of Hindustan Organics

Chemicals Ltd. However, the Committee was constituted by the Company on 28 May 2007.

 

Thus, the Audit Committee of 18 Central Government listed company had not been

constituted as per Clause 49 of the Listing Agreement.

 

Non-official Directors on the Board of unlisted government companies

The DPE’s guideline on composition of Board of Directors of CPSEs issued in

March, 1992 require that at least one-third of the Directors on the Board of a CPSE should

consist of non official directors. A limited review was undertaken by Audit in respect of all

unlisted government companies in operation with the objective of assessing the compliance

by these companies with the DPE’s guideline relating to non-official directors on the Board.

This review was primarily based on the information and documents obtained from the

Management of the companies concerned. The review of composition of the Board of

unlisted companies as on 30 June 2007 revealed the following:

(i) There was no non-official director on the Board of 48 government companies

 did not have one-third non-official directors as on 30 June 2007.

Thus, the Board of 64 unlisted government companies had not been constituted as per the

Department of Public Enterprises guideline.

 

Constitution and Composition of Audit Committee in unlisted government

companies

As required by Section 292A of the Companies Act, 1956, every public limited

company having paid up capital of not less than Rs. five crore shall constitute an Audit

Committee at the Board level consisting of minimum of three directors and two thirds of

which shall be directors other than Managing or whole time Directors. A limited review was

undertaken with respect to constitution and composition of Audit Committee, as on 30 June

2007, in unlisted government companies in operation covered by Section 292A based on the

information and documents obtained from the Management of the companies concerned, and

the following instances of non-compliance were noticed:

(a) No Audit Committee was formed by the following companies:

S. No                           Name of the company

1                      Richardson & Cruddas (1972) Ltd.

2                      HMT Machines Tools Ltd.

3                      HMT Watches Ltd.

4                      Spices Trading Corporation Ltd.

5                      Bharat Heavy Plates & Vessels Ltd.

(b) Audit Committee formed by Indian Renewable Energy Development Agency Ltd.

consisted of two directors as against the requirement of minimum three. Further, the

Committee did not consist of two thirds of directors as directors other than Managing or

whole-time directors as there was only one such director.

 

Constitution of Audit Committee by unlisted government companies not covered

by Section 292A of the Companies Act, 1956

 

Thirty unlisted government companies had formed Audit

Committees as good governance practice, though these were not required to do so as per

Section 292A of the Companies Act, 1956

 

CONCLUSION

 

The corporate governance practices of both public sector and private sector companies are almost similar. We found that the corporate governance practices exert great influence on the performance of the company. Companies which are having good governance practices will have good image among the investors and public as a whole.

Though a lion’s share of the focus in the Satyam episode was on the role of the independent directors, experts believe the role of auditors is now in spotlight.
Experts believe that it is the institutional investors who have the tools, bandwidth and clout to extract information and play an activist role (as had happened in Satyam’s case) in ensuring that managements don’t go off-track. If institutional investors act collectively, they can demand the required changes at companies they have invested in. While the corporate governance framework in the country is seen at par with other developed markets, the same has to be implemented in ‘letter as well as spirit’.

Additionally, shareholders should ensure that the composition of Board of Directors is a balanced mix of independent directors and management appointees. This would help keep a check on the internal processes of the company. With shareholder activism on the rise, the proactive role of institutional investors will also make the company management more accountable. While things have improved substantially over the last five years, experts believe that more needs to be done, which will further improve disclosure levels and make managements accountable.

At the retail shareholder level, one could look at a company’s past track record (including significant events that reflect management excesses), qualitative and quantitative disclosures (vis-a-vis peers) and consistency in delivering on promises. Experts believe that more rigorous vetting is needed when small and medium companies are considered for investment.

Good public sector governance relies on keeping pace with best practice in private sector corporate governance. That is, of harnessing the potential that corporate governance principles and practices can offer. Importantly, however, it also requires an understanding of the tensions and gaps that arise in the transposition of corporate governance from the private to public sector, so that public sector corporate governance can be modified accordingly.

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