by LFIAdmin | Sep 21, 2021 | Home
By Aishwarya Vashishth, Lawyer
16jgls-avashishth@jgu.edu.in | Sep 21, 2021
Introduction
“Reverse Mortgage” means “an agreement under which an owner of a primary residential property borrows funds from a Bank/Financial Institution (being the Lender) against the security of his ownership rights by mortgaging the same and receives Loan amounts by way of regular tax-free payments (monthly/quarterly/yearly) from the Lender without having to sell his residential property during the validity of the mortgage”. The amounts received under Reverse Mortgage are considered as loans and not income, hence, the same do not attract any tax liability. The benefit of Reverse Mortgage is available only to Senior Citizens.
The concept of Reverse Mortgage which is very popular in countries like the U.S.A. and U. K. is also prevalent in India
The Reverse Mortgage is normally “a life annuity” for a Senior Citizen. It is often found that a Senior Citizen has a decent home to live in but has no means to maintain themselves and live a decent and dignified life. In Reverse Mortgage, the Capital Value of the residential property is converted into an annuity over the lifetime of the Owner and their spouses. In return for the Reverse Mortgage, the Lender makes a lump sum payment to the Borrower or periodic payments during his/her life for a certain fixed period. In Reverse Mortgage one is not required to make any monthly mortgage payments as long as the Borrower (and/or his/her spouse) continues to stay in the residential property as the Owner. There are no income qualifications. The house continues to be in the name of the Borrower during the validity of the mortgage. The Reverse Mortgage is available only on primary residence (in existence of at least 20 years) and not on a second home/house or any commercial property.
Reading the Fine Print
Each bank/financial institution lending under Reverse Mortgage in India has different norms and terms of its own. Depending on the valuation of the residential property, the financial facility is granted up to 3 years. The Borrower can utilize the amounts for various purposes like renovation and maintenance of the house, family’s medical or emergency expenditure, day-to-day living expenses, and similar other personal expenses. However, the borrowings thereunder cannot be used for any speculation, trading, business, or commercial purposes.
The mortgage debt under Reverse Mortgage shall interalia include the loan amount, application fees, processing fees, interest (compounded), penal interest (if any) and prepayment interest, etc.
The “Reverse Mortgage debt’ becomes forthwith due and payable in full on the occurrence of any of the following events, namely: –
- Upon the borrower (and/or his/her spouse) or the last of the surviving borrower if there is more than one borrower passing away or sells the house.
- Upon the borrower permanently moving out of the house.
- Upon the borrower failing to pay property taxes, maintenance charges, and insurance of the house.
- Upon the last surviving borrower failing to live in the house for 12 consecutive months without sufficient cause or justification.
- Upon the Borrower allowing the property to be deteriorated beyond what is considered as reasonable wear and tear and fails to restore the deterioration.
- Upon the Borrower or any of them (if there are more than one) is declared Bankrupt/Insolvent.
- On account of perpetration of fraud or misrepresentation by the Borrower relating to the mortgage transaction.
- The Government condemning the said residential property (for health or safety reasons).
- The Government under statutory provisions acquires the said residential property.
- Upon the Borrower committing any breach of the terms and conditions of the loan agreement and other incidental writings.
The Reverse Mortgage debt is satisfied out of the sale proceeds of the said residential property and if found insufficient, also from the estate of the Borrower. Surplus amount, if any, will be remitted back to the Borrower or his legal heirs. The legal heirs have the preferential right to redeem the Reverse Mortgage by making payment of mortgage debt and they will be given preference for doing so.
The Borrower also has to consider the “adverse effects” of the present scheme of reverse mortgage highlighted below: –
(a) The maximum tenure of payments can be of 10 to 20 years. Beyond the said period, the Borrower can stay in the residential property but he will not be eligible for any further payments.
- The Financial Institution/Bank has the option to revise the lump sum amount/periodic payments at such frequency or intervals based on the revaluation of the property or at least once every 5 years.
- Since the reverse mortgage can be either at a fixed rate of interest or floating rates, it will be prone to attract interest rate movements. Hence, in the scenario in the case of floating rate of interest on Reverse Mortgage, it could add to the Borrower’s liability if the rate goes up.
- Under the Reverse Mortgage, the legal heirs of the borrower are not entitled to take control over the mortgaged residential property until the outstanding loan amount/mortgage debt is first cleared and before they would stake their claim to the property.
The Bank/Financial Institution at its discretion may levy a penalty or other charges on prepayment of the loan. If the Borrower or his heirs wish to prepay the loan amount, they may have to bear this additional cost.
Conclusion
In India, the concept of reverse mortgage has been progressing slowly as houses are seen as family assets for inheritance. Major public-sector banks offer reverse mortgages at competitive rates. Borrowers who wish to opt for the scheme of “Reverse Mortgage” must acquaint themselves with the prevailing guidelines and terms and conditions of loan/periodical payments and carefully consider its pros and cons.
by LFIAdmin | Jul 6, 2021 | Home
By Jaisal Baath, BBA LL.B. (Hons)
jaisalbaath@hotmail.com | Jul 06, 2021
Introduction
In the 21st Century, cross border business is the highest it’s ever been and as such, disputes relating to which jurisdiction will have the taxing right on the cross border transactions being performed are also on the rise. The BEPS Action 14 Minimum Standard aims to improve the resolution of tax related disputes between jurisdictions. Article 25 of the OECD Model Tax Convention brings about a Mutual Agreement Procedure (MAP) mechanism using which, the taxing authorities of the contracting states can resolve treaty disputes concerning the interpretation or application of the treaty by agreement[1].
The main aim of the BEPS Action 14 is to ensure a timely, efficient and effective operation of MAP by addressing the obstacles that hinder the operation of MAP. The OECD is of the view that peer reviews and continuous monitoring will help in ensuring that the final resolution delivered will be more transparent and effective.
BEPS Action 14: Aims and Objectives
The BEPS Action 14 is two-fold. The first sets out the minimum standards, monitoring processes and best practice which are to be followed in order to ensure optimal resolution of treaty disputes. To satisfy the first aspect of Action 14, the member countries must strive to ensure that:
- treaty obligations relating to MAP are implemented in good faith and to ensure that the disputes relating to MAP are resolved in a timely manner;
- putting in place administrative processes so as to ensure the timely resolution and prevention of disputes;
- taxpayers should have the ability to access the MAP to resolve disputes when eligible.
The second fold is the introduction of mandatory binding arbitration of disputes which remain unresolved[2]. This provision for the introduction of a binding arbitration in certain cases is also provided for under the “Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI)”[3]. In relation to this provision, the OECD and G20 countries are yet to reach a consensus for its implementation. However, the US is among the 20 countries who are in favour of mandatory binding arbitration and these 20 countries together account for approximately 90% of the outstanding MAP cases, as at the end of 2013[4].
The 20th October 2016 OECD Publication has several parts. The Terms of Reference has translated the Action 14 minimum standards into 21 elements which helps in analysing a countries administrative and legal MAP frameworks and helps in analysing the effectiveness of the MAP provisions being implemented by the country. These 21 elements assess the countries on the basis of 4 (four) key areas:
- preventing disputes which consists of 2 elements;
- availability and access to MAP which consists of 10 elements;
- resolution of MAP cases which consists of 6 elements;
- implementation of MAP agreements which consists of 3 elements[5].
Furthermore, an assessment methodology was also enacted that provides for the procedures and guidelines to be followed for the peer review process which comprises of a 2 (two) stage process.
Under stage 1, jurisdictions’ implementation of the Action 14 Minimum Standard is reviewed on the basis of the legal and administrative framework of their MAP programmes and the application of this framework in practice, as well input from peers and taxpayers and reported MAP statistics[6]. For countries that have not implemented all of the 21 elements, recommendations are made so as to ensure, the Countries are able to meet all 21 elements. Follow-up on the stage 1 recommendations is reviewed in stage 2 of the process, which is initiated within one year after the approval of a jurisdiction’s stage 1 peer review report by the BEPS Inclusive Framework[7].
The OECD Consultation on the BEPS Action 14 (MAP)
The Public Consultation undertaken has provided the member countries with various suggestions so as to ensure the strengthening of the Minimum Standard. The following are the proposals introduced:
Proposal 1: Increase the use of Bilateral APAs:
An Advance Pricing Agreement (APA) is an agreement between the taxing authority and the tax payer with a view to determining the transfer pricing methodology so as to identify the pricing for the tax payers international transactions for the future. It is recommended that member countries establish bilateral APA programme so as to ensure the prevention of disputes and to provide the tax-payers with certainty.
The peer review process has indicated that a majority of the member countries which were assessed had some form of a bilateral APA programme in place. The countries with a low MAP case burden can forego this recommendation of enacting bilateral APA programmes till the time the countries MAP burden reaches a certain level[8].
Proposal 2: Expand access to training on international tax issues for auditors and examination personnel:
As stated before, the aim of the BEPS Action 14 is to make the dispute resolution mechanisms as effective as possible. Even-though, the OECD lays importance on the existence of an effective MAP policy to realise this aim, not all cases have to enter the MAP process. Mandatory training for audit/examination personnel would increase auditors’ efficacy and would result in[9]:
- better-trained auditors and examiners and
- (ii) fewer adjustments that lead to long discussions in MAP or situations where the case is closed by providing unilateral relief in the jurisdiction that made the adjustment at issue.
This in turn can have the effect of reducing the overall number of MAP cases being initiated every year.
Proposal 3: Define criteria to ensure that access to MAP is granted in eligible cases and introduce standardised documentation requirements for MAP requests:
There are currently no commonly agreed criteria specifying when exactly a case will be eligible to be instated under the MAP process, as well as what information and documentation the tax payer is supposed to file in order to initiate the MAP process. Action 14 Minimum Standard defines the situations in which MAP should be given such as:
- transfer pricing cases;
- cases concerning the application of treaty and domestic anti-abuse provisions;
- cases in which there has been an audit settlement, and
- cases in which taxpayers have provided in the MAP request the required information and documentation as set out in a jurisdiction’s MAP guidance[10].
The peer review process identified that there are certain instances in which the MAP process is denied when it should have been allowed and vice versa. A few of such situations are as follows:
- cases in which there was no double taxation;
- cases in which there was already a final court decision but correlative relief might be obtained, and
- cases where a PE no longer existed at the time the MAP request was submitted[11].
Due to the above stated reasons, it is submitted that there is a need to adopt a standard for deciding which cases warrant a MAP process and which don’t. At the same time, to make the access to MAP easier for the tax payer as well as to ensure that no tax payer wanting to opt for MAP is wrongly denied access.
Proposal 4: Suspend tax collection for the duration of the MAP process under the same conditions as are available under domestic rules:
The MAP process usually lasts for a very long time, during the pendency of which, the jurisdictions laying claim to the taxable income, should put their call for the payment of the disputed income on hold, till the time the process of MAP comes to a final conclusion and the award is made in favour of one of the interested parties. This is done to ensure that their is no financial hardship on the tax payer during the pendency of the suit as by being forced by both the jurisdictions to pay their respective alleged claims pertaining to the taxable income, a case of double taxation is born which financially frustrates the tax payer and defeats the purpose of opting for the MAP process in the first place. This requirement for the suspension of the claims being made by both the jurisdictions is in line with the domestic laws of most jurisdictions, under which a suspension of tax collection is available when domestic remedies are initiated to challenge the tax assessment[12].
Proposal 5: Align interest charges / penalties in proportion to the outcome of the MAP process:
Proposal 5 also follows the same line of reasoning as Proposal 4. The penalties and interest charges that are levied against a tax payer can be substantially high and in some cases can also be more than the taxes actually under dispute. This is highly biased against the tax payer as if after the final decision of the MAP process, the adjustment that made the basis for the interest being levied stands reversed, the tax payer can legitimately ask as to why is he still supposed to pay the interest even when the tax adjustment stands reversed as part of the MAP agreement. Currently, Jurisdictions don’t have to align such interests in line with the final outcome of the MAP process and this can result in significant financial hardships on the tax payer. This can effectively constitute as a roadblock in the effective function of the MAP process as tax payers maybe discouraged from going for MAP.
Proposal 6: Introduce a proper legal framework to ensure the implementation of all MAP agreements:
The peer review process shows that domestic time limits in approximately one-third of the reviewed jurisdictions may jeopardize the implementation of MAP agreements, in cases where the applicable tax treaty does not contain the equivalent of Article 25(2), second sentence, of the OECD Model Tax Convention (which ensures that MAP agreements can be implemented notwithstanding domestic time limits)[13]. In a number of jurisdictions assessed, the MAP process is still not fully implemented due to either the jurisdictions not being able to implement the MAP agreement or due to the tax payer not being able to initiate a MAP process due to the expiration of the domestic timelines.
As such, there are several options to address the risk of non-implementation, amongst which the following three introducing the obligation for jurisdictions that:
- All of their tax treaties contain the equivalent of Article 25(2), second sentence;
- All of their tax treaties contain the equivalent of Article 25(2), second sentence, supplemented, if requested by one State, with a provision limiting the time during which a primary adjustment or an assessment is made; or
- Their domestic legislation includes a mechanism that fiscal years are kept open until the MAP proceedings have been finalised or they have administrative procedures that allow for implementation notwithstanding domestic time limits for at least as long as not all treaties contain the equivalent of Article 25(2), second sentence[14].
Proposal 7: Allow multi-year resolution through MAP of recurring issues with respect to filed tax years:
In cases where the MAP process being initiated is exactly similar to a MAP process that has already been decided upon before, provided the facts and circumstances of both the MAP processes is the same, the tax payer should be allowed to rely on the the decision arrived in the similar MAP process already decided. While doing this, the authorities should make sure that the facts and circumstances of the two MAP processes is the same and as such a multi-year resolution through the MAP process should be allowed. This may help to avoid duplicative MAP requests and permit a more efficient use of competent authority resources[15].
Proposal 8: Implement MAP arbitration or other dispute resolution mechanisms as a way to guarantee the timely and effective resolution of cases through the mutual agreement procedure:
MAP Arbitration ensures that the cases filed under the MAP process are adjudicated upon in a timely manner. Implementing MAP arbitration could be an incentive to reduce the number of MAP disputes that are closed with no or only partial resolution but may also have a positive impact on more timely resolution of all pending MAP cases[16]. A number of jurisdictions have adopted the process of MAP Arbitration after seeing the benefits of the same whereas, some jurisdictions have raised concerns such as constitutional and sovereignty concerns and also concerns relating to the cost and resource constraints of such an Arbitration.
Conclusion
The OECD Consultation Documents on the BEPS Action 14 (MAP) shows that there still are significant shortcomings in the MAP process as being implemented by Jurisdictions. A majority of the recommendations arrived at after the Consultation aim towards making the MAP process more tax payer friendly and aims to reduce the burdens, specially financial burdens, on the tax payer. The recommendations also ensure that the the member countries implement the MAP process with certainty so that the case load on the country is reduced and only those cases that genuinely deserve to be instituted under the MAP process get the time and attention. The MAP process is very helpful in adjudicating and eliminating instances of double taxation and although it has so far been able to realise its aim of providing a fair and just platform, the recommendations brought about in the Public Consultation process will ensure that the shortcomings of MAP will stand eliminated and both, tax payers as well as the jurisdictions will have more faith in the working of the entire MAP process.
[1]Brown, J. and Shiers, R., 2016. BEPS Action 14: OECD detail on ‘MAP’ procedures. (1).
[2] Oecd.org. 2016. BEPS ACTION 14: MAKE DISPUTE RESOLUTION MECHANISMS MORE EFFECTIVE. [online] Available at: <https://www.oecd.org/ctp/dispute/discussion-draft-action-14-make-dispute-resolution-mechanisms-more-effective.pdf> [Accessed 25 March 2021].
[3]Un.org. 2020. Committee of Experts on International Cooperation in Tax Matters. [online] Available at: <https://www.un.org/development/desa/financing/sites/www.un.org.development.desa.financing/files/2020-07Revised%20CRP2%20Chapter%205%20%28MAP%20Arbitration%29%20adopted%2026%20June%202020%5B1%5D.pdf> [Accessed 22 March 2021].
[4] Brown, J. and Shiers, R., 2016. BEPS Action 14: OECD detail on ‘MAP’ procedures. (1).
[5] Oecd.org. 2021. BEPS Action 14: Making Dispute Resolution Mechanisms More Effective – 2020 Review. [online] Available at: <https://www.oecd.org/tax/beps/public-consultation-document-beps-action-14-2020-review-november-2020.pdf> [Accessed 25 March 2021].
[6] Id. at 2
[7] Id. at 2
[8] Id. at 7
[9] Id. at 8
[10]Id. at 9
[11] Id. at 9
[12] Id. at 11
[13] Id. at 13
[14] Id. at 13
[15] Id. at 14
[16] Id. at 15
by LFIAdmin | Jun 25, 2021 | Uncategorized
By Raagini Raghu
16jgls-rraghu@jgu.edu.in | June 25, 2021
Can the Maternity Benefit Act and Transgender Persons (Protection of Rights) Act be interpreted harmoniously to provide maternity benefit to transgender pers?
The Maternity Benefit Act, 1961 ensures that women in the workforce are given a paid maternity leave for a certain period before and after child birth. This is an important piece of legislation which safeguards and accounts for the primary care giving role women have in society in the dual life they lead. Women are involved in reproductive labour in the private sphere and productive labour in the public sphere. However, it is often argued that the role a mother plays in the life of a child is not limited a female woman. It can be fulfilled by any person irrespective of their sexual orientation. This would require the definition of woman in the Maternity Benefit Act to be interpreted broadly to include individuals of different sexual orientations. Transgender people have the right to have a child as well and the Maternity Benefit Act is silent on whether the legislation would apply to all genders across the spectrum. The newly introduced Transgender Persons (Protection of Rights) Act, 2019 prohibits people and establishments from discriminating against a transgender person and imposes an obligation on employers and establishments to not discriminate against transgenders in any matter relating to employment.
The ILO Constitution is enshrined with principles of equality and non discrimination. The most relevant international labour law standard is the ILO Discrimination (Employment and Occupation) Convention, 1958 (No. 111). India ratified this convention on 3 June, 1960. The ILO Convention 111 defines “discrimination” as “any distinction, exclusion or preference made on the basis of sex, religion, political opinion, national extraction or social origin, which has the effect of nullifying or impairing equality of opportunity or treatment in employment or occupation” and “other distinctions, exclusions or preference which has the effect of nullifying or impairing equality of opportunity or treatment in employment or occupation.” The ILO Convention 111 not only prohibits discrimination but also requires national policy to undertake a “proactive and positive approach” towards equality of opportunity and treatment in employment and occupation.
International human rights standards have condemned discrimination based on sexual orientation. The discrimination of a person on the grounds of sexual orientation was recognised as a human right violation in Toonen v Australia where ‘sex’ was interpreted to include “sexual orientation”. In 2011 the UN Human Rights Council expressed their “grave concern at acts of violence and discrimination against individuals because of their sexual orientation and gender identity”. The Yogyakarta Principles are internationally recognised human rights standards related to sexual orientation and gender identity. The principles seek to ensure equality for all irrespective of sexual orientation and gender identity and have been followed by Indian courts. This puts an obligation on individual states to protect individuals from discrimination based on sexual orientation.
The Maternity Benefit Act safeguards the interests of women who enter the public sphere of organised labour. There are two kinds of labour, productive and reproductive labour. The latter is said to be limited to women in their households while the former is said to be more fruitful and ‘transformative’. The Maternity Benefit Act dispels this myth by allowing women to enter the workforce and ensure that they fulfil their primary care giving role while engaging in gainful employment. It allows women to undertake a dual role. This special protection given to women must not be limited to only women. Instead, the Maternity Benefit Act must be gender neutral. The legislation is inefficient if it identifies any one sex who can be involved in care giving labour. In his judgement in Mini TK v Senior Divisional Manager, LIC, Kozhikode Justice A Muhamed Mustaque has elucidated the crucial role of a mother in the upbringing of her child especially in the child’s formative years. He likens a woman to a goddess in a family which is the backbone of society. At the same time the judgment highlights that “motherhood has become a contentious issue in the modern society” because economic and competing market interests override “the notions of culture and social justice like gender equity.” Mini TK had taken extra leave to take care of her autistic child, the court reversed her employers decision to dismiss her from service for taking maternity leave above the maximum period available due to her “compelling circumstance”. Her compelling circumstance was her duty towards her autistic child who needed extra care. The court stated that an employer had an obligation to “protect her personhood as a mother”. It was held that, “motherhood is not an excuse in employment but a right which demands protection in the given circumstances.” The court looked at the unique situation of women from the perspective of fundamental rights and abided by international human rights commitments. International conventions like the UDHR, ICESCR, ICCPR, CEDAW are to be followed when States do not explicitly denounce their obligations to use as a guidance to interpret fundamental rights. The court noted constitutional principles must be interpreted in purview of the dynamic nature of society. Women were no longer confined to the private sphere but had the right to enter the public sphere for gainful employment while fulfilling their duty as a mother towards their child. Therefore, women were not be discriminated against men in matters of employment and their fundamental right to motherhood was to be protected and upheld.
The courts have interpreted the Maternity Benefit Act liberally to provide maternity benefit to a commissioning mother in a surrogacy arrangement. In Rama Pandey v Union of India the court used the “updating principle” to account for new ways to procreate with advances in science. The other principle used was the “dynamic process of enactment”. Justice Rajiv Shakdher has cited Bennion on Statutory Interpretation, 5th Edition and stated that while it is the duty of judges to give effect to the will of the Parliament, they are not to interpret the statute mechanically, instead judges refine and polish the legislation. The updating principle was used to conclude that even a commissioning mother is entitled to maternity benefit as she is the principle care giver of the child. The commissioning mother was not denied maternity benefit because she did not carry the child. At the same time, except for government civil servants, there is no labour law that provides paternity leave. Government civil servants are given paternity leave for fifteen days before the expected date of delivery or upto six months after the birth of the child. During paternity leave the employee is paid leave salary at the rate immediately preceding the leave period. Although the judgment in Pooja Jignesh Doshi v State of Maharashtra stated that the commissioning father is entitled to paternity leave in a surrogacy arrangement it was not elucidated further. Even while using an “updating principle” the Indian courts have limited motherhood to a female and a family is limited to a unit with heterosexual parents.
In KS Puttaswamy v Union of India the Supreme Court held that procreation and sexual orientation are inherent to the dignity of an individual which requires constitutional protection. The Indian Constitution guarantees equality and traditionally courts have held that women should not be discriminated against men in matters of employment. However, the gender equity upheld by courts have so far been limited to the gender binary of ‘men’ and ‘women’. Since national policy must be in tune with international convention such as the ILO Convention 111 and also in line with international human rights standards laid down by the UN OHRC and Yogyakarta Principles, Indian legislation and judgements must reflect inclusivity of transgenders. Transgenders have the right to choose a gender of their choice. They also have the right to motherhood. The Maternity Benefit Act must be interpreted broadly so as to extend maternity benefits to transgenders who also have the right to motherhood and gainful employment.
The Transgender Persons (Protection of Rights) Act, 2019 aims to protect the rights of transgender persons and ensure their welfare. By way of Section 9, it has introduced a provision for non discrimination in any matter relating to employment by an establishment. A transgender man can give birth naturally. Some transition in order to give birth. A transgender individual can also adopt or have a baby via a surrogate. In line with the decision in KS Puttaswamy transgender individuals have the right to a family, marriage, procreation and sexual orientation. It is related to the inherent dignity of an individual which the Indian Constitution protects under Article 21. At the outset, the Maternity Benefit Act provides paid maternity leave and aims to achieve social justice by accounting for reproductive labour. Courts can use dynamic interpretation to “update the construction of an enactment” to account for changes that have occurred since the original enactment of the statute. Social conditions have previously persuaded courts to apply the updating principle and while doing so the original principles which were envisaged by the wording are followed. If Motherhood is possible with a surrogacy arrangement and adoptive parents are akin to a commissioning parents, there is no reason why it should be denied to transgenders. Therefore, the Act must protect the interest of transgender individuals as well. In light of the new Transgender Persons (Protection of Rights) Act which explicitly prohibits discrimination in matters of employment, maternity benefit must apply to transgender individuals as well.
Section 9 of the Transgender Persons (Protection of Rights) Act is not exhaustive, it prohibits discrimination of transgenders in ‘any matter relating to employment’. In Municipal Corporation of Delhi v Female Workers (Muster Role) maternity benefit was extended to all employees including daily wage employees whose names were not on the muster roll as “social justice demands the removal of socio economic inequalities”. Since maternity benefit would improve the working conditions of the workers it is a matter relating to employment. The sexual orientation of an individual is not pertinent to whether he or she is given maternity benefits. If a transgender individual and a woman seek maternity benefit from their employer and only the woman is given maternity benefit there could be only one reason for the difference in outcome. The employer has discriminated against the transgender employee on the basis of sex. This is because if an employer discriminates an employee for being transgender then that individual is being discriminated for being a man or a woman which is a discrimination based on sex. In Bostock v Clayton County, Georgia sexual orientation discrimination which led to the firing of a transgender employee for being transgender was considered to be an unlawful discrimination. The Indian Constitution and ILO Constitution guarantees equality before the law and also explicitly states that individuals cannot be discriminated on the basis of sex. Therefore, denial of maternity benefit to a transgender individual based on their sexual orientation is an unlawful discrimination.
It is important to support transgender individuals so that they can discharge their duties to their fullest potential in their workplace. They would benefit from an inclusion of a provision in the Maternity Benefit Act for giving maternity benefit to transgenders since they belong to a vulnerable class of society and require special protection. In National Legal Services Authority v Union of India the Supreme Court emphasised the need for legal protection of transgender persons in education, employment, healthcare, state activity such that they enjoy the same benefits as any other citizen of this country. Often the payment of maternity benefit causes a strain on the employee which is why the ILO has also suggested a ‘model of social insurance’ to guarantee maternity benefit to employees in a workplace. The amount paid as social insurance is the amount which would have been paid if the leave was not taken. Social insurance is usually funded by the employer or workers or both and with government subsidy. This model has been implemented in the Employees State Insurance Act, 1948, however, it is limited to certain establishments. If this scheme is made more prevalent maternity benefits would become more accessible to individuals despite their sexual orientation as opposed to the current scenario where the employer pays the entire amount. It will also prevent employers from discriminating against individuals based on their sexual orientation at the time of hiring by not employing those who would seek maternity benefits.
In conclusion, the right to motherhood is not limited to a female woman for which the Maternity Benefit Act must be interpreted from the purview of the Constitution of India, ILO Convention 111 and international human rights standards. Transgenders should not be discriminated against based on their sexual orientation and deprived of maternity benefits. The dynamic interpretation of the Maternity Benefit Act when read along with the Transgender Persons (Protection of Rights) Act would prevent discrimination against transgenders in a workplace and provide them maternity benefits. Transgenders have a right to improved working conditions which will help them reach their fullest potential at work. This includes maternity benefit. Dynamic interpretation will help include within the purview of the Maternity Benefit Act a transgender individuals ability to give birth naturally or commission a surrogate or adopt and even expand the definition of family unit beyond heterosexual parents and children. Law needs to evolve with an evolving society and the introduction of the Transgender Persons (Protection of Rights) Act warrants the inclusion of right of transgenders to motherhood and maternity benefit under the Maternity Benefit Act.
by LFIAdmin | Jun 8, 2021 | Uncategorized
By Nazaqat Lal, Advocate & Solicitor, Bombay High Court
nazaqat_lal@hotmail.com | June 08, 2021
Family arrangements have long been recognised by the law and are increasingly being used in estate planning. Recently, an amendment to the Maharashtra Co-operative Societies Act, 1960 [1] included a family arrangement executed by persons entitled to inherit the property of a deceased member, as one of the documents on the basis of which, a society would transfer the right, title and interest of the deceased member in such flat.
The first question that falls for consideration is what is meant by ‘family’ for the purpose of family arrangements and consequently, who can be party to a family arrangement? In Kale & Ors. vs. Deputy Director of Consolidation & Ors. [2], a landmark judgment on family arrangements, these questions were answered by the Supreme Court of India as under.
“9. …That is why the term “family” has to be understood in a wider sense so as to include within it fold not only close relations or legal heirs but even those persons who may have some sort of antecedent title, a semblance of a claim or even if they have a spes successionis so that future disputes are sealed for ever and the family instead of fighting claims inter se and wasting time, money and energy on such fruitless or futile litigation is able to devote its attention to more constructive work in the larger interest of the country.
….
10. (5) The members who may be parties to the family arrangement must have some antecedent title, claim or interest even a possible claim in the property which is acknowledged by the parties to the settlement. Even if one of the parties to the settlement has no title but under the arrangement the other party relinquishes all its claims or titles in favour of such a person and acknowledges him to be the sole owner, then the antecedent title must be assumed and the family arrangement will be upheld and the courts will find no difficulty in giving assent to the same;”
The next question is the manner in which a family arrangement is to be made. A family arrangement may be made orally or in writing [3]. If made orally, the issue of registration does not arise. However, if made in writing, does it need to be registered? In Kale (supra), the Supreme Court drew a distinction between an instrument effecting, creating, or making a family arrangement and a family arrangement that was executed afterwards as a mere record of a past transaction. It held that in case of the latter, registration would not be required as such memorandum itself does not create or extinguish any rights in immovable property and therefore, would not fall within the scope of Section 17(2) of the Registration Act, 1908.
The dictum in Kale (supra) was followed by the Supreme Court in its recent judgment of Ravinder Kaur Grewal & Ors. Versus Manjit Kaur & Ors. [4] Some brief and relevant facts are as follows. A family arrangement was orally entered into in 1970. This was acted upon by the parties. Thereafter, disputes arose and therefore, it was thought necessary to reduce the terms already settled between the parties, into writing in 1988. This writing was not registered. The core issue before the Supreme Court was whether the document Exhibit P-6 was required to be registered as interest in immovable property worth more than Rs. 100/- was transferred in favour of the plaintiff. The Supreme Court held that such document was merely a memorandum of settlement, and it did not require registration.
While dealing with family arrangements, courts have leaned in favour of upholding a family arrangement and taken a liberal approach towards its execution. This is emphasized in the following paragraphs in Kale (supra).
“9. …Where the courts find that the family arrangement suffers from a legal lacuna or a formal defect the rule of estoppel is pressed into service and is applied to shut out plea of the person who being a party to family arrangement seeks to unsettle a settled dispute and claims to revoke the family arrangement under which he has himself enjoyed some material benefits…
…
38. …Assuming, however, that the said document was compulsorily registrable the courts have generally held that a family arrangement being binding on the parties to it would operate as an estoppel by preventing the parties after having taken advantage under the arrangement to resile from the same or try to revoke it…”
From the aforesaid, it becomes clear that when by virtue of a family arrangement, members of a family descending from a common ancestor or a near relation seek to bury their differences or avoid future disputes to maintain harmony in the family, such an arrangement ought to be governed by a special equity peculiar to them and would be enforced if honestly made.
[1] Section 154B-13 inserted by the Maharashtra Co-operative Societies (Amendment) Ordinance, 2019
[2] (1976) 3 SCC 119
[3] Ibid.[(Para 10(3) read with Para 10(4)]
[4] Judgment dated 31st July, 2020 in Civil Appeal No. 7764 of 2014
by LFIAdmin | May 24, 2021 | Uncategorized
By Esha Malik, Advocate
eshamalik322@gmail.com | May 24, 2021
In a recent judgement in Uttar Pradesh Power Transmission Corporation Limited v/s. CG Power and Industrial Solutions Limited, the Apex Court held that availability of an alternate remedy does not bar the jurisdiction of a High Court in entertaining a Writ Petition under Article 226 of the Constitution of India.
The Apex Court, in a Special Leave Petition filed under Article 136 of the Constitution of India by Uttar Pradesh Power Transmission Corporation Limited (“UPPTCL”), was dealing with the final order and judgement (“Impugned Order”) passed by the High Court at Allahabad (Lucknow Bench) allowing the Writ Petition filed by CG Power and Industrial Solutions Limited, inter alia, seeking directions to set aside two letter dated 2nd September, 2016 and 29th December, 2018 respectively issued by Executive Engineer, Unnao UPPTCL arising under the Framework Agreement executed between UPPTCL and M/s. CG Power and Industrial Solutions Limited for construction of 765/400 KV substations at Unnao, Uttar Pradesh. Both these two letter above sought directions to CG Power and Industrial Solutions Limited to remit labour Cess amounting to Rs. 2,60,68,814/-, computed at 1% interest of the Contract value under sections 3 (1) and 3 (2) of the Building and Other Construction Workers Welfare Cess Act, 1996 (“Cess Act”) r/w Rule 3 and Rule 4 (1), (2), (3) and (4) of the Building and Other Construction Workers Welfare Cess Rules, 1998 (“Cess Rules”).
The Hon’ble High Court vide the Impugned Order set aside the above two letters sent by UPPTCL to M/s. CG Power and Industrial Solutions Limited demanding outstanding labour Cess amounting to Rs. 2,60,68,814/- computed at the rate of 1% of the contract value as being unsustainable in law and further held that Cess could only be recovered in the manner stipulated in the Cess Act and the Rules made thereunder.
It is pertinent to note that although under the General Conditions of Contract, there contained an Arbitration Clause, the Apex Court held that it is well settled now by several judgements passed by this Court that existence of an Arbitration Clause does not debar the Court from entertaining a Writ Petition. It further held that availability of an alternate remedy does not prohibit the Court from entertaining a Writ Petition in an appropriate case particularly (i) when Writ Petition seeks enforcement of fundamental rights, (ii) where there is failure of principles of natural justice or (iii) where the impugned orders or proceedings are wholly without jurisdiction and (iv) the vires of the Act is under challenge.
It further made reference to the judgement of Harbansal Sahnia and Ors., v/s. Indian Oil Corporation Limited reported in (2003) 2 SCC 107, wherein this Court allowed the Appeal from an Order of High Court dismissing the Writ Petition and setting aside the impugned Order of High Court and Indian Oil Corporation terminating the dealership of the Harbansal Sahnia, notwithstanding the fact that the dealership Agreement contained an Arbitration Clause.
In the end, the Apex Court confirmed the Impugned Order passed by the Hon’ble Court at Allahabad, Lucknow bench and dismissed the SLP holding that UPPTCL acted in excess of its power by its acts impugned, when there was admittedly no assessment or levy of cess under the Cess Act and also further adding that “it is now well settled by a plethora of decisions of this Court that relief under Article 226 of the Constitution of India may be granted in a case arising out of contract. However, writ jurisdiction under Article 226, being discretionary, the High Courts usually refrain from entertaining a writ petition which involves adjudication of disputed questions of fact which may require analysis of evidence of witnesses. Monetary relief can also be granted in a writ petition”.
