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THE LEGAL VALIDITY OF MOU IN INDIA

In my previous blogs, I have explained about MOU [better known as MEMORANDUM OF UNDERSTANDING] and how does it work. Also, that a Memorandum of Understanding or “MOU” is used at a variety of places starting from business, divorce, partnership firms, companies, familial relationships, government organisations, between Foreign and Indian Nationals etc. It is the general notion that a “MOU” is non biding and has got no legal validity in India. In my present blog, I shall discuss about another unanswered question which have had contrasting views and try to discuss each aspect and then conclude and comment upon the validity of “MOU” in India. The basic stressing areas shall include the following1.     Introduction to the validity of “MOU”2.     Legal position of “MOU” in Indian Law3.     Enforceability of “MOU”a.      In General b.     International “MOU”c.      “MOU” between two countries 4.     Landmark Judgments 5.     Personal Opinion6.     Conclusion INTRODUCTION TO THE VALIDITY OF “MOU”A “MOU” is generally said to be a ‘non-binding agreement’ which does not have any legal enforceability and thus acts merely as a ‘letter of intent’ between two parties who mutually agree or disagree to do or not to something and on the basis of which another legally binding instrument is executed keeping all the previous understandings outlined in such “MOU” and giving it effect. As such we can decipher two things 1.     A “MOU” is merely a statement of understanding between two or more parties which when made has no enforceability in the eyes of law as such an agreement has no intention to create a legal bond between such persons. As a result of which, if in case there is a breach of such “MOU” there is no relief. 2.     It is a well-established rule of law that – “All contracts are agreements but, all agreements are not contracts”. This is so because for a contract to be valid it needs to fulfil all the essential ingredients mentioned u/s 10 of The Indian Contract Act, 1872. One of which is – “an intention to create legal relationship between the parties to such contract”. However, now the question arises that what if A “MOU” is drafted in such a manner that is fulfills all the ingredients of section 10??? Can such a “MOU” be a valid contract and be legally enforceable in a court of law???Can such a “MOU” compel the other person to oblige to the same and the breach of such “MOU” will be treated similar to that of a breach of contract??? It is also true that ‘Nomenclature’ of a contract or an agreement is not an index to determine the validity or invalidity of the same. Stating an agreement to be a “MOU” does not explicitly denote that such contract is non-binding.LEGAL POSITION OF “MOU” IN INDIAN LAWAs mentioned above, now that we can understand the fact that it is not necessary for a “MOU” to be non-binding. The question of whether such a “MOU” is legally binding or not depends upon the intent of the parties to create a legal relationship to that extent. Therefore, we can say that the legal position of “MOU” in Indian Law depends upon the intent by which such a document is made and thus such an intention of creating a legal relationship by way of such a “MOU” plays a pivotal role in determining the legal position of the same. Also, it must be noted that the construction of such “MOU” holds primary importance in setting the legality and the construction of words play a pivotal role in the same. If the parties intend to create a legal binding effect to a “MOU” then,a.      The construction of the words shall be of such nature ü Use of the word ‘shall’ instead of ‘may’ü ‘would be’ instead of ‘can be’ü ‘should be’ instead of ‘might be’ So, on and so forth. The use of such words tries to create a legal relationship by making the other person liable to do a certain act. The words shall, would, should, instead of may, can, might are of a superior nature and bind the acts which follow after such words. b.     “legal binding clause”ü A “MOU” would be legally binding if the parties thereto agree to insert any such clause, the literal meaning upon reading of which would mean that such a “MOU” intends to create a legal relationship between the parties to the contract and that the breach of such provisions would mean the same as a breach of a contract under the Indian Contract Act, 1872. c.      In consistency with section 10 of the Indian Contract Act, 1872ü If a “MOU” fulfills all the conditions laid down u/s 10 of the Indian Contract Act, 1872 then, such a “MOU” should be treated as a contract as defined in section 2(h) of The Indian Contract Act, 1872. Hence, giving it a legal force. d.     Insertion of a “dispute resolution clause”ü If a “MOU” inserts a dispute resolution clause, then, it binds the parties to perform their obligations as mentioned or specified in such “MOU”. Non performance of which will lead to breach/dispute for which the “MOU” in itself shall contain a clause which shall provide the method in which such dispute shall be resolved in good faith and in an amicable manner. Thus, from the above we can say that – The principle legislation governing “MOU” in India is dealt with the Indian Contract Act, 1872. Also, in order to make a “MOU” legally enforceable it must have a clear intention to bind the parties to a contract whereby both come under specific obligation to perform their part of the duties. ENFORCEABILITY OF “MOU”As has been discussed earlier in this blog, the enforceability of a “MOU” depends upon the principle governing legislation. I.e. The Indian Contract Act, 1872. In light of this, the enforceability of “MOU” can be divided into 3 categories. a.     In General b.     International “MOU”c.      “MOU” between two countries IN GENERALIn the general sense, the enforceability of a “MOU” can be divided into two categories. They are: 1.     When it fulfills the conditions of a Contract as per The Indian Contract Act, 1872.ü If the “MOU” satisfies the conditions laid down u/s 10 of The Indian Contract Act, 1872 then, the performance of such obligations laid down in the “MOU” can be enforced vide The Specific Relief Act, 1963. ü However, such a relief shall only be granted under The Specific Relief Act, 1963 when, the damage caused to the aggrieved party by way of non-performance of obligation cannot be ascertained and compensation for in lieu of such damages fails to become an appropriate remedy. Sen Mukherjee and Co vs. Chhaya Banarjee [AIR 1998 / CAL 252]2.     When it does not fulfill the conditions of a Contract as per The Indian Contract Act, 1872.ü In certain cases, the courts may find that the “MOU” lacks certain requirements to form a valid Contracts and hence the same cannot be enforced. ü However, even in the above circumstance a person has the right to approach to the court on the basis of: Ø Principles of promissory estoppel     &Ø EquityMotilal Padampat Sugar Mills Co. Ltd. vs. State of Uttar Pradesh   [AIR 1979, SC 621]ü Even beyond that, a “MOU” can be held as enforceable merely on the grounds of equity and on the basis of the general principles of equity irrespective of whatever deficiency it holds is still held to be a contract. Subimalchandra Chatterji vs. Radhanath Ray [AIR 1934, CAL 235]INTERNATIONAL “MOU”ü Any International “MOU” is executed in the form of a treaty or a covenant which is then registered under the ‘United Nations Treaty Collection’.ü These International “MOU” should be registered and by doing so one avoids political diplomacy and secrecy.ü The enforceability of a National or International “MOU” does not differ. In both the cases, the enforceability is dependent upon the intention so conveyed through the construction of such “MOU” ü The title of such International “MOU” nowhere mentions whether it is a legally binding document or whether it is non-binding document. It is prudent to mention here that, The International Court of Justice in the year 1994, July 1st [Quatar vs. Bahrain] has expressed their views upon the legality of “MOU” and had also provided various standards to be maintained for the legality of such “MOU”INTERNATIONAL “MOU” BETWEEN COUNTRIESü As it has already been mentioned and is clear now that no “MOU” is legally binding without the clear intention of it making it as binding. ü Nevertheless, there are “MOU” between countries for a variety of reasons and some of them can be as follows. The “MOU” entered between two countries can have the object and purpose of: - 1.     Exchanging resources between themselves 2.     Exchanging technology between themselves 3.     Student exchange programs4.     Exchange of technical support 5.     Military Support 6.     Understanding of peace 7.     Understanding of trade 8.     Understanding of allies          ETCü The above list though not exhaustive, mentions some of the reasons why two countries enter into a “MOU” and act accordingly. ü Also, every “MOU” must not be formally designed and executed, but those which have been formally designed and executed must be registered and include the exchange of some monetary value with the same. LANDMARK JUDGMENTSGiven below are a list of landmark judgments which have been held to be useful in deciding the legality or non-legality of “MOU” CASE LAWS WHERE “MOU” HAS BEEN DECLARED AS A LEGALLY BINDING DOCUMENT 1.     BrikramKishore Parida v. Penudhar Jena2.     Structural Waterproofing & Ors. v. Mr. Amit Gupta3.     Jai Beverages Pvt. Ltd. v. State of Jammu and Kashmir and Ors4.     Millenia Realtors Private Limited v. SJR Infrastructure Private Limited 5.     Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh6.     M/s. Nanak Builders and Investors Pvt. Ltd. v Vinod Kumar Alag7.     Kollipara Sriramulu vs. T. Aswathanarayana &OrsCASE LAWS WHERE “MOU” HAS NOT BEEN DECLARED AS A LEGALLY BINDING DOCUMENT 1.     Monnet Ispat and Energy Ltd. v. Union of India and Ors2.     Jyoti Brothers v. Shree Durga Mining Co PERSONAL OPINIONAfter going through all the above details, facts, and decisions one can conclusively conclude that a “MOU” is generally a non-binding agreement made for the purpose of making another agreement which shall rely upon the principles of such “MOU” and then carter them into a legally binding agreement. Going by the same logic it is stated by the courts that any agreement which is made for the purpose of making another agreement cannot be given the legal status of an agreement. So, to say, an agreement for an agreement is not enforceable. However, now the question arises that – if a “MOU” which is said to be an agreement on the basis of which another agreement is made which then becomes a contract and the breach of such contract shall be legally bending but not a “MOU”. Then, would it be right to say that 1.     A pre-mortgage agreement 2.     A pre-sale agreement 3.     A pre-lease agreement           ETCOr, any such agreement which has the same purpose that which of a “MOU” merely having different names as mentioned above shall also come under the same purview and shall not be legally binding? To which I can deduce the following: - 1.     Mere heading of any agreement shall not be used as an index to come to the decision of its legality or illegality. The contents of the same shall hold value and the agreement in full shall be taken into consideration with respect to equity and principles of promissory estoppel. 2.     The construction and use of words in such agreement shall also be taken into consideration which will further help the reader to analyse the same and conclude whether such agreement was made with an intention to comply with or was it made just for namesake and was merely a promise. 3.     Insertion of various clauses like “legal binding” “indemnification” “damage” “breach” which shall show the clear intention to make such agreement legally binding would play a pivotal role. 4.     A “MOU” is said to be an agreement which needs to fulfil the valid requisites of a contract u/s 10 of The Indian Contract Act, 1872 as it is the guiding principle legislation. Hence it can be said that if any agreement [irrespective of its nomenclature] fulfils the conditions as laid down u/s 10 of such act shall be deemed to be legal and enforceable. CONCLUSION From the above we can finally come to the conclusion that: - 1.     Any agreement to be a contract shall fulfil the provisions of section 10 of The Indian Contract Act, 1872. 2.     An agreement may or may not be legally binding depending upon the intention between the parties who enter into a contract. 3.     In its generic definition a “MOU” is defined to be a non-binding document, however, if there lies a clear intention of compliance then such “MOU” shall be binding. 4.     It is a well-established rule of law that if a “MOU” fulfils all the conditions laid down u/s 10 of The Indian Contract Act, 1872 then, such a “MOU” shall be legally binding. 5.     Apart from everything a “MOU” can be enforceable in spite of deficiencies on the grounds of equity and promissory estoppel as held in the case of Subimalchandra Chatterji vs. Radhanath Ray [AIR 1934, CAL 235]. 

Posted By

Shreyash Mohta

1 month ago

HOW TO GET DIVORCE IN INDIA

HOW TO GET DIVORCE IN INDIAWHAT IS DIVORCE?Divorce is the process of terminating a marriage or marital union and is also known as dissolution of marriage. Divorce entails the reorganizing or cancelling of legal responsibilities and duties of marriage, thereby dissolving the bonds of matrimony between a married couple under the particular rule of law of the country or state.WHAT IS THE DIVORCE PROCEDURE AND TYPES OF DIVORCES IN INDIA?In India, divorce procedure starts from the filing of the divorce petition and comes to an end with the pronouncement of final order of the divorce.The divorce procedure is divided into six stages which are:-·      Filing of the petition·      Service of summons·      Response·      Trial·      Interim orders·      Final ordersIn this blog, I shall discuss in details the procedures of divorce in India.A divorce procedure basically starts with the filing of a divorce petition. The whole procedure of divorce works when the said petition is written by any of the one parties involved in the divorce process and the served to the other party.Once you become aware of the process to file a divorce in India in the respective state court, where either of the one parties resides, the Indian divorce procedure ascends depending on the country.In earlier days, divorce used to be considered as a sin and was looked down upon in an individual’s life and thus despite of lot of marital trouble and issues, spouses were bound to cope up with a painful and failed marital tie.But, with the time and the evolution of society the views and perception has changed towards life. Perhaps a lot has changed and there is a dramatic increase in divorce proceedings.As divorce is still considered to be one of the most painful and traumatic experiences for a married couple, there are many researches done on the matter of divorce as of how to get divorce from a husband or how to file a divorce from wife in India. It would create a mess if the procedure is not known properly and can get extremely outrageous and can also be time-consuming.Thus, it is strongly recommended to get instant legal help online or a trusted divorce expert to give proper guidance throughout the entire complicated process in the most easiest and hassle-free way.The Indian Judicial System in respect to other legal proceedings has higher rate of disposal of divorce, considering the fact that all procedures are followed correctly with the help of a competent lawyer and in accordance with law.On the other hand, the Indian Divorce Procedure can be broadly classified in two different categories:1.    Divorce by Mutual Consent2.    Contested DivorceLet us now have a look into the statutory laws governing the whole procedure of divorce in India along with some specific guidelines which need to be followed.STATUTORY LAWS WHICH GOVERN DIVORCE PROCEDURE IN INDIABefore understanding the details of all the statutory laws, an individual needs to be clear on what is the procedure of divorce in India.·      In India, marriage and dissolution of marriage comes under personal matters and the laws related to marriage and divorce and have been framed on the basis of customs and rights of different religion. Thus, there are specific laws for the process of divorce in India respective of people belonging to specific religions.·      The Hindus, Sikhs, Buddhists and Jains are governed by the Hindu Marriage Act, 1955.·      Muslims by the Dissolution of Muslim Marriage Act, 1939.·       Parsi Marriage and Divorce Act, 1936 for the Parsis.·      Christians by the Indian Divorce Act, 1869.·      The Special Marriage Act, 1956 governs all inter- community and civil marriages.TYPES OF DIVORCEDivorce can be obtained in multiple ways. The only thing that one needs to know is how to file a divorce in India i.e. either with the mutual consent or contested divorce.·      DIVORCE WITH MUTUAL CONSENTMutual divorce is much less time consuming compared to the contested divorce. When both the spouses agree to dissolve their disturbed marriage, they opt for Indian divorce procedure with Mutual Consent.In divorce with mutual consent, with the help of good divorce lawyer, a joint divorce petition is drafted, verified and signed by both husband and wife and then needs to be filed before the appropriate court.After the joint petition is filed, the court gives a period of six to eighteen months to the parties. This time period is known as cooling off phase. Provided that within this time period the spouses do not harmonise then the parties can move towards filing for divorce via filing the second motion.After filing of the second motion, if the court is satisfied that both the spouses have given their consent for the divorce which is free from any coercion or undue influence, the court will pass a decree of Divorce. When both the parties on the basis of the terms of settlement have agreed and written in their divorce petition, the Indian divorce procedure is then complete under mutual consent.According to Section 13(B) of Hindu Marriage Act, 1955 and Section 28 of the Special Marriage Act, 1954, the couple should be separated for over a year or two years in order to file a joint petition of Divorce with Mutual Consent.·      CONTESTED DIVORCEThere are several rights for the couples who enter into a marital tie. If any of the rights contravene by any of the party then the other has full liberty to file a petition for divorce.WHAT IS THE DIVORCE LAW IN INDIA?The rights are enlisted below, though some of them are not applicable to all religions.·      THE HINDU MARRIAGE ACT, 19551.    Adultery,2.    Cruelty,3.    Domestic Violence,4.    Conversion to another religion,5.    Mental disorder,6.    Communicable diseases7.    Desertion8.    Renunciation from the world,9.    Presumption of death etc. ·      DISSOLUTION OF MUSLIM MARRIAGE ACTAs per the Muslim personal divorce laws, a Muslim man can give divorce to his wife without dragging the matter to the court. But in case if a Muslim woman wants to dissolve a marriage and wants to give divorce, then she either has to take permission from her husband or can file a divorce petition under the Dissolution of Muslim Marriage Act based on the following grounds:-a)    The husband is found missing for a period of last four years,b)    Where husband doesn’t provides maintenance for a period of about two years,c)    The husband is imprisoned for a period of seven years or more,d)    Where a husband fails to fulfill marital obligations for a period of at least three years.e)    Where the husband has been suffering from insanity or leprosy for a period of two years.f)     Where the husband is impotent. ·      INDIAN DIVORCE ACTIn the Indian divorce act the grounds of divorce for a Christian Couple have been mentioned which are as follows:-a)    Conversion of different religion by the husband and marrying another girl,b)    Adultery,c)    Bigamy along with adultery,d)    Commitment of sodomy, rape or bestiality by the husbande)    Cruelty along with adulteryf)     Adultery along with Desertion for a least time period of 2 years. ·      SPECIAL MARRIAGE ACT, 1956Special Marriage Act is different from the customary Hindu Marriage Act. This act specially governs the Civil marriages which is the inter-caste or inter-religion marriages and so is the divorce proceedings of the parties. The grounds of divorce under this ac are as follows:a)    Indulging in voluntary sexual intercourse with any person other than the spouse,b)    Desertion for a period of 2 years or more,c)    Spouse being imprisoned for a period of seven years or more under the Indian Penal Code,d)    Cruelty,e)    Any form of communicable or Venereal diseases,f)     If the spouse is found missing or not heard of being alive for a total period of 7 years or more,g)    Judicial Separation. THE PROCEDURE FOR DIVORCE:-There are few important and vital procedures that need to be followed by every citizen to take divorce in India. The steps are as follow:-·      DRAFTING AND FILING OF DIVORCE PETITION:-The first step in the procedure of divorce is the filing of divorce petition before the respective family court with proper court fees.Divorce petition can be filed in three territorial jurisdiction of Court1.    The last residing place of husband and wife,2.    Where the husband is presently living,3.    Where the wife is presently livingThe party seeking the divorce has to file petition to initiate the divorce procedure in India before the appropriate court. The petition must have the ground of divorce mentioned and substantiated at later stage with evidence. Guidance and advice of experienced and competent divorce lawyer is needed.·      SERVICE OF SUMMONSThe following step after filing of divorce petition is service of summons of the other party and giving them a notice that the divorce process has been already initiated by their spouse. The summons are served via speed post with a covering letter written on the letter pad of the Advocate.  ·      RESPONSEAfter receiving the summons the spouse against whom the divorce is filed has to appear in the court on the mentioned date of summons. In case the other spouse fails to appear on the mentioned date, the judge may give the opportunity of ex-parte hearing to the petitioner and after that the court passes an ex parte order of divorce and put an end to the process of divorce.·      TRIALConducting the trial is the next step of divorce procedure in India. After the submission of the respective petitions, the court hears both the parties along with their witnesses and evidence. The respective lawyers will then conduct the examinations in chief and cross-examinations of spouses as well as evidences.·      INTERIM ORDERSInterim orders is the another aspect of the divorce procedure in India. Petition can be filed by any party to get a temporary order in respect of child custody and maintenance in front of court during the divorce proceeding and after hearing and if the court is satisfied, the court passes interim orders.·      ARGUMENTThis is the most crucial steps of a divorce procedure where the respective advocates argues before the court in order to establish the contentions of their clients on the basis of evidence filed and witnesses deposited. This step matters a lot to win the divorce proceeding.·      FINAL ORDERThe last step in divorce procedure is the pronouncement of the final order of the divorce. The court passes the final order after the completion of all the preceding stage which entirely dissolves a marriage. In case either of the party is not satisfied with the final order, then they have the liberty to move before the higher Courts.IMPORTANT FACTORS IN DIVORCEThe main factors which need to be sorted out at the time of Divorce are:-1.    Alimony2.    Custody of child3.    Settlement of propertyALIMONYAlimony is the obligation of the married ties to support each other which exists even after the dissolution of marriage which thereby means that if any of the spouses is incapable of supporting himself or herself is the obligation of another party and claim of alimony becomes stronger when husband or wife is ready to take the custody of the child.CUSTODY OF CHILDThe custody of child amicably gets settled between parties in case of divorce with mutual consent. Whereas the parenting ability of both husband and the wife is examined in case of contested divorce and if required the court talks to the child in a friendly manner to understand the desire of the child and then the order of custody is passed on the best interest of the child. Moreover, irrespective of anything the mother is the natural guardian of the child till an age of 5 to 7 years and as such the case of custody would go in the favour of the mother without prejudice.SETTLEMENT OF PROPERTYThe property gets settled according to the ownership of the spouses at the time of divorce. NECESSARY DOCUMENT FOR DIVORCE1.    Address proof of both the parties2.    Marriage certificate or Invitation card of marriage or Picture of marriage3.    Proof of separate living of the spouses for more than a year4.    Details of earnings5.    Details of assets owned by the petitioner. CONCLUSIONMarriage is considered to be a sacred bond by the Hindus. There was no provision for divorce before Hindu Marriage Act 1955. The concept of getting divorce was extremist for the Indian society. The wives had to face all the consequences and were the silent victims of the system. Presently, law provides many ways to get out of an unhappy marriage by seeking divorce procedure in the court. Thus, women have to no longer endure the harassment and injustice by their husbands. But on the other hand it is equally essential for the lawmakers to deal with the process in a very cautious manner as the theory has negative and positive traits.               

Posted By

Neha Roy

1 month ago

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