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ASSIGNMENTS
PROGRAM:
SEMESTER-I
Subject Name
: Business Environmental Law
Study COUNTRY
: Sudan LC
Permanent Enrollment Number (PEN) : MFC001652014-2016014
Roll Number
: AMF105 (T)
Student Name
: SOMAIA TAMBAL YOUSIF ELMALIK
INSTRUCTIONS
a) Students are required to submit all three assignment sets.
ASSIGNMENT
Assignment A
Assignment B
Assignment C
DETAILS
Five Subjective Questions
Three Subjective Questions + Case Study
45 Objective Questions
MARKS
10
10
10
b)
c)
d)
e)
Assignment A
Assignment B
Assignment C
(Tata Oil Mills Company) and Lakme from Tata and Modern Foods from the
government, besides many other small takeovers and mergers.
The new moguls of the Indian business are those who predicted the changes
in the environment and reacted accordingly. Azim Premji of Wipro,
Narayana Murthy of Infosys, Subhash Goyal of ZEE, the Ambanis of
reliance, L.N.Mittal of Mittal Steel, of Bharti Telecom are some of them.
Even a small businessman who plans to open a small shop as a general
merchant in his town needs to study the environment before deciding where
he wants to open his shop, the products he intend to sell and what brands he
wants to stock.
Relationship between a business and an environment:
The relation between a business and an environment is not a one way affair.
The business also equally influences the external environment and can bring
about changes in It. Powerful business lobbies for instance, actively work
towards changing government policies.
The business environment is not all about the economic environment but
also about the social and political environment. Politically, after the
Congress government came to power at the center with the support of the
CPI in May 2004, the whole process of disinvestments took a U-turn
Similarly, a new sociological order in India today has created a market for
fast foods, packaged foods, multiplexes, designer names, valentine day gifts
and presents, and gymnasiums and clubs etc.
So it is quite obvious that success in a business depends upon better
understanding of the environment. A successful organization doesnt look at
the environments on and ad hoc basis but develops a system to study the
environment on a continuous basis to try and protect the organization from
every possible threat and to take the advantage of every opportunity. Some
times better and timely understanding of the environment can even turn
threat into an opportunity.
Characteristics of Environment:
1. Environment is Complex: The environment consists of a number of
factors, events, conditions and influences arising from different
sources. All these interact with each other to create new sets of
influences.
2. It is Dynamic: The environment by its very nature, is a constantly
changing one. The varied influences operating upon it impart a
dynamism to it and cause it ot continually change its shape and
character.
3. Environment is multi-faceted: The same environmental trend can
have different effects on different industries. For instance GATS that
is an opportunity for some companies but a threat for others.
Place.
3. Issues: the current concerns that arise in response to events and
trends.
4. Expectations: The demands made by interested groups in the light of
their concern for issues.(Azhar Kazmi, TATA McGraw Hill,p118)
Type of Environment:
The environment can be divided into three broad categories:
Internal Environment
Macro Environment (General Environment)
Micro Environment(Relevant Environment of Competitive
Environment)
Internal Environment: Internal environment refers to that of the
organization and is controllable. Some internal factors are:
1. Culture and Value Systems: Organizational culture can be viewed as
the system of shared values and beliefs that shape a companys
behavioral norms. A value is an enduring preference as a mode of
conduct or an end state. The value system of the founders of the
organization has a lasting impact on it. The value systems not only
influence the working of the company and the attitude of its people
but also the choice of its business. Values and cultures are inherited
from seniors by juniors in a organization. If a young man gets a job in
a bureaucratic culture he gets accustomed to a work routine of 10 to 6.
On the other hand, if he gets a job in a private concern he works till
the work finishes. Similarly, for organizations accustomed to and
aggressive consumer goods sales culture, a foray into the industrial
goods segment proves difficult.
2. Mission and Objectives: The mission and objectives of the company
guide the priorities, direction of development, business philosophy,
and business policy.
3. Management Structure and Nature: Structure is the manner in
which the tasks and sub-tasks of the organization are related. Structure
is concerned with the hierarchical relationship and the relationship
between the management od different functional areas like the
structure of the top management and the pattern of shareholding.
4. Human Resource: It concerns with factors like manpower planning,
recruitment and selection, compensation, communication and
appraisal.
Besides this, internal environment also includes corporate resources,
production/operation of goods and services, finance and accounting
systems and methods, marketing and distribution.
Demographic
Political/Leg
al
Economic
Business
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interrelated.
This shows that a single political in 1991 has changed all the components of
the macro environment. So while studying macro environment, one should
not only concentrate on how this factor will influence business but also on
how this will influence other components of the environment and what will
be the impact of these changes in the business. Only then can one design
long term strategies.
1. Political Environment: It is the political environment of the country
that decides the fortune of businesses in a country. After the 1917
revolution in sudden political change transformed the equation of
doing business. After the change of regime in the USSR in late 1980s
and early 1990s business equations changed once again in Resin.
In India in 1977, the janata government came to power because of
which Coca Cola and IBM had to leave the country. All liquor
companies had to close their operations. When P.V Narsimha Rao can
to power and a new economic policy was putin that presented of new
opportunities for Businesses, but at the same time brought a threat for
inefficient organizations.
Not only political philosophy but political stability too has
significance for businesses. The more stable, the political environment
of a country the more conducive will be the environment for business.
The consensus among various political parties on key issues is also
relevant in this case.
2. Regulatory and Legal Environment: The political environment
governs the legal and regulatory environment of country. The
regulatory environment plays a vital role by dictating the dos and
donts of a business. Every county has a different legal environment.
In India we have the Companies Act that governs Companies, the
MRTP Act which restricts monopoly, various laws regarding shares,
the Consumer protection Act, environmental laws, and the
implementation of GATS.GATS has resulted in the implementation of
international laws regarding patents, There are laws for import and
export, licensing etc. that have a drastic impact on business and the
future of organizations.
When an NRI Lord Swaraj Paul, a British Citizen, tried take over
Escorts, its owners, the Nandas approached the government to save
their company. A law restricting any NRI from purchasing shares of
an Indian company came into force, and Escorts was saved.
3. Demographic: It is the demographic environment which decides the
marketing mix for an organization. It decides the type of product the
organization comes out with. In India a lot of research and efforts are
undertaken to reduce the cost of products and to launch products at the
Factor Endowment
Local Demand
Condition
Bargain Power
of supplier
Bargain Power
of Buyer
Threat of Competitor
Threat of New
Entrants
The parties to a contract may either specifically lay down that the
agreement entered is not a formal or legal agreement or in certain cases the
non-existence of an intention to enter into a legal relationship can be
implied from the agreement itself.
3. Capacity to Contract: Section 10 specifies that an agreement to be a
contract is too entered between the two parties who are competent to
contract. The persons declared to be incompetent to contract are:
a. Minors: A minor is a person under the age of eighteen years, except
when a guardian of a minors person or property has been appointed by the
court, in which case it is twenty-one. The purpose of declaring minors as
incompetent to enter into a contract is to protect minors against their own
inexperience. However, law tries not to cause unnecessary hardships to
persons who deal with minors..
b. Persons of Unsound Mind: Section 12 lays down a test of soundness of
mind. It states that a person is said to be of sound mind for the purpose of
making a contract if, at the time of making the contract, he is capable of
understanding it and of forming a rational judgment as to its effect upon his
interests. A person who is a lunatic (who is at times of sound mind) may
enter into contract in these times. Persons who have completely lost their
mental powers or those who are drunken or intoxicated are incapable of
entering into a contract. The question of unsoundness has to be determined
based on unmistakable facts and not merely on speculation. The burden of
proving insanity will be on the person who alleges it. The question whether
a contract is invalidated because of unsoundness of mind will not depend
upon the belief or disbelief of the witness but largely based upon the
inference to be drawn from evidence.
c. Persons Disqualified by any Law to which they are Subject: The
following persons are disqualified by law to enter into a contract:
1. Alien Enemies: They are those persons who are not subjects of
Republic of India and the country, in which they reside, is not at
peace with Republic of India. An Indian who resides voluntarily in a
country hostile to India is also considered as an alien enemy.
Contracts made before war may be either suspended or dissolved
depending whether their performance would benefit the enemy or
not.
2. A special privilege is granted to the foreign sovereigns, their
diplomatic staff and accredited representatives of foreign states. Such
persons can enter into contracts and enforce their performance in
Indian courts. However, they cannot be sued unless these persons
iii.
joint promisors defaults in making his contribution, then the other joint
promisors will have to bear even the defaulted amount equally.
Appropriation of Payments: Where several debts are owed and where
payment made is insufficient to discharge the debt, the debtor may intimate the
creditor as to the nature of appropriation. In such a case, the creditor should
follow the directions issued by the debtor.
Assignment of Contracts: Assignment of a contract means the transfer of
rights and liabilities arising out of the contract in favor of a third person
either with or without the concurrence of other party to a contract. An
assignment may take place either by the act of the parties or by operation of
law.
DISCHARGE OF CONTRACT: We now come to the last stage of
contracts. A contract is said to be discharged when the rights and liabilities
created by such contract come to an end. Contracts may be discharged or
terminated by:
1. Performance of the contract, or
2. By mutual consent, or
3. By lapse of time (by limitation), or
4. By operation of law, or
5. Impossibility of performance, or
6. By breach of contract.
Each of the various modes of discharge of contract is explained below:
1. Performance of Contract: The most obvious and meaningful way
to discharge a contract is to fulfill the terms and conditions agreed by
each of the parties in the contract. Section 38 provides for tender of
performance. As per this section if the promisor offers to perform his
side of the contract, but the promisee does not accept his performance
the promisor is discharged from his liability. This is known as
attempted performance. The promisor may sue the promisee for the
breach of contract, if he so desires.
2. Discharge by Mutual Agreement or Consent: The contract may be
terminated by mutual consent of both the contracting parties. Various
cases of discharge by mutual agreement are specified in Section 62
and Section 63. Section 62 provides about the effect of novation as to
where a new contract is substituted for an existing contract by mutual
i.
ii.
iii.
If the owner refuses, upon demand, to pay the lawful charges of the
finder;
III. The bailee should not mix the goods of the bailor with his own goods,
but keep them separate from his own goods. Where the bailee mixes
the bailors goods with those of his own with the bailors consent, then
the bailor and the bailee shall have an interest in the mixed goods in
proportion to their respective shares. Where he mixes the goods
without the consent of the bailor, two possibilities may arise:
The goods can be separated.
The goods cannot be separated
Where the goods can be separated: Where the goods of the bailor
and the bailee can be separated, then they will remain the owners in
accordance with their respective shares. However, the costs of
separation as well as any damage arising from the mixture will have to
be borne by the bailee.
When the goods cannot be separated: The bailor can recover
damages from the bailee for the loss of the goods.
If, by mistake on the part of the bailee or by accident or by an act of
God or by the act of an unauthorized third party, goods of the bailor
get mixed up with like goods of the bailee, then the mixture belongs to
the bailor and bailee in proportion to their shares but the cost of
separation will have to be borne by the bailee.
IV. The bailee should not set up an adverse title of the goods bailed
claiming them to be his.
V. The bailee not only has to return the goods bailed but also any
accretion to the goods.
Rights of Bailee: The duties of the bailor are the rights of the bailee:
i. Delivery of goods to one of several joint bailors of goods.
According to Section 165, in case of several joint owners of goods,
the bailee may deliver them back to or according to the directions of,
one joint owner without the consent of all, in the absence of any
agreement to the contrary.
ii. Delivery of goods to bailor without title.
According to Section 166, if the bailor has no title to the goods, and the
bailee, in good faith, delivers them back to, or according to the
directions of, the bailor, the bailee is not responsible to the owner in
respect of such delivery.
iii.
Right to apply to court to stop delivery, where it is claimed by
a person other than the bailor.
According to Section 167, if a person other than the bailor claims the
goods bailed, the bailee may apply to the court to stop the delivery of
the goods to the bailor, and to decide the title to the goods.
iv. Right of action against trespassers.
According to Section 180, if a third person wrongfully deprives the
bailee of the use or possession of the goods bailed to him, he has the
right to bring an action against that party. The bailor can also bring a
suit in respect of the goods bailed. In Purushottam Das Banarsi Das vs
Union of India delivery of certain goods were obtained by a person on
a forged railway receipt. The said person later pledged the goods with
a third party. It was held that the railway authorities could recover the
same from the third party.
v.
The bailee is also entitled to recover necessary expenses
incurred on bailment. He can also recover compensation from the
bailor in case he incurs a loss owing to the defective title of the
bailor.
vi. Retain the goods (lien) till his dues are paid, in other words the
bailee can exercise a general lien. The bailee may also exercise a
particular lien when the contract requires him to use his skills.
ii.
significant to note that the law of restitution covers only benefits received
and not losses incurred. The principle of restitution is that the defendant
who has been unjustly enriched at the expense of the plaintiff is required to
make restitution to the plaintiff. There cannot be restitution where the
parties are wholly incompetent to contract (where one of the parties is
minor). Section 65 which deals with restitution applies to contracts
discovered to be void and contracts which become void. A person who
has received a benefit under any such contract will have to restore the
benefit to the person from whom it was received. In Dharamsey vs.
Ahmedbhai, a person hired a godown for a period of 12 months by paying
an advance for the entire period. When a fire broke out in the godown he
was entitled to claim a proportionate amount of rent paid in advance.
CONTINGENT CONTRACTS: Section 31 of the Act provides for such
contracts and defines it as a contract to do or not to do something, if some
event, collateral to such contract, does or does not happen. In Muthu vs.
Secretary of State, a person was the highest bidder for a house which was
put up for sale. However, one of the conditions was that the sale could be
confirmed only if the Collector authorizes it. The Collector declined to
confirm the sale. It was held that there was no contract. The event on which
the happening of the contract is dependent should be uncertain. Further, the
event should be collateral to the contract. The event should not form part of
the consideration of the contract though the contract is made to depend upon
it. Contracts of indemnity and insurance are examples of contingent
contracts.
PERSONS WHO ARE REQUIRED TO PERFORM CONTRACTS:
Where personal considerations form the basis of a contract, the promisor
alone should perform the contract. Where personal considerations do not
form the basis of a contract, then the contract may be performed by the
promisor or his agent or legal representatives of the promisor in the event of
his death.
Time and Place of Performance: A contract, which does not specify the
time for performance should be performed within a reasonable time. When
a promise is to be performed on a certain day, and the promisor has
undertaken to perform it, without application by the promisee, the promisor
may perform it at any time during the usual hours of business on such day
and at the place at which the promise ought to be performed. When a
promise is to be performed on a certain day, and the promisor has not
undertaken to perform it, without application by the promisee, it is the duty
of the promisee to apply for performance at a proper place and within the
By operation of law, or
Impossibility of performance, or
By breach of contract.
attempted performance. The promisor may sue the promisee for the
breach of contract, if he so desires.
i. Discharge by Mutual Agreement or Consent: The contract may be
terminated by mutual consent of both the contracting parties. Various
cases of discharge by mutual agreement are specified in Section 62
and Section 63. Section 62 provides about the effect of novation as to
where a new contract is substituted for an existing contract by mutual
agreement of both the parties, the new contract is basically agreed
upon to adjust the remedial rights arising out of the breach of the old
contract.
ii. Discharge by Lapse of Time: Any contract cannot be extended
indefinitely. The Limitation Act, 1963 provides for a certain time
frame within which the contract has to be performed (called period of
limitation). If no action is taken by the contracting parties within the
period of limitation, no remedy at law will be available. It provides for
a definite time frame within which, the deprived party may seek
remedy at law.
iii. Discharge by Operation of Law: A contract may be discharged
by the operation of law in any of the following ways:
i.
By Merger: When the parties agree to include the previous
inferior contract in a superior contract.
ii.
Law does not permit any unauthorized alteration of the terms of a
written agreement. Any such act by any one of the parties will
automatically make the contract as discharged by operation of
law.
iii. By Insolvency: When a person is adjudged insolvent, he is
discharged from all liabilities incurred prior to his adjudication.
iv.
Death: Where a contract is entered into, based on personal
consideration and where it is required that performance of the
contract should be made by the promisor in person, the contract
will be discharged on the death of the promisor.
3.
Goods are said to be in a deliverable state when they are in
such state that the buyer would under the contract be bound to take
delivery of them;
4.
Document of title to goods includes bill of lading, dockwarrant, warehouse keepers certificate, harbingers certificate,
railway receipt, [multimodal transport document,] warrant or order
for the delivery of goods and any other document used in the
ordinary course of business as proof of the possession or control of
goods or authorizing or purporting to authorize, either by
endorsement or by delivery, the possessor of the document to
transfer or receive goods thereby represented;
5.
Fault means wrongful act or default;
6.
Future goods means goods to be manufactured or produced
or acquired by the seller after making of the contract of sale;
7.
Goods means every kind of moveable property other than
actionable claims and money; and includes stock and shares,
growing crops, grass, and things attached to or forming part of the
land which are agreed to be severed before sale or under the contract
of sale;
8.
A person is said to be insolvent who has ceased to pay his
debts in the ordinary course of business, or cannot pay his debts as
they become due, whether he has committed an act of insolvency or
not;
9.
Mercantile agent means a mercantile agent having in the
customary course of business as such agent authority either to sell
goods, or to consign goods for the purposes of sale, or to buy goods,
or to raise money on the security of goods;
10. Price means the money consideration for a sale of goods;
11. Property means the general property in goods, and not
merely a special property;
12. quality of goods includes their state or condition;
13. Seller means a person who sells or agrees to sell goods;
14. Specific goods means goods identified and agreed upon at
the time a contract of sale is made; and
15. Expressions used but not defined in this Act and defined in the
Indian Contract Act, 1872, have the meaning assigned to them in that
act.
1.
on the parts taken. It was held that when the contract was fully performed
and when the goods were handed back (although the cost of repairs had not
been fully paid) the lien had come to an end, and could not be revived
because the buyer asked for further repairs.
Part Delivery (Section 48)
Where an unpaid seller has made part delivery of the goods, he may
exercise his right of lien on the remainder, unless such part delivery has
been made under such circumstances as to show an agreement to waive the
lien. A part delivery of goods does not amount to a full delivery of goods.
Hence, an unpaid seller who has made part delivery can exercise his right
of lien over the remaining goods. In such a case, the seller has a lien not
only for the proportion of price to be paid on account of goods retained, but
also for whatever portion of price that remains unpaid. However, if
delivery of part of the goods is intended to be a symbolic delivery of the
whole, the right of lien on the goods retained will come to an end.
TERMINATION OF LIEN (SECTION 49)
1. The unpaid seller of goods loses his lien thereon
a. When he delivers the goods to a carrier or other bailee for the purpose of
transmission to the buyer without reserving the right of disposal of the
goods.
b. When the buyer or his agent lawfully obtains possession of the goods.
c. By waiver thereof.
2. The unpaid seller of goods, having a lien thereon does not lose his lien
by reason only that he has obtained a decree for the price of the goods.
Stoppage in Transit: Subject to the provisions of this Act, when the buyer
of goods becomes insolvent, the unpaid seller who has parted with the
possession of the goods has the right of stopping them in transit, that is to
say, he may resume possession of the goods as long as they are in the
course of transit, and may retain them until payment or tender of the price.
(Section 50)
The following are the conditions required to be fulfilled for the
applicability of Section 50.
a) The seller should be unpaid
b) The buyer must be insolvent
c) The property in the goods should have passed from the seller to the
buyer
As per Section 4(1) of the Sale of Goods Act, a contract of sale of goods is
a contract whereby the seller transfers or agrees to transfer the property in
goods to the buyer for a price. As per subsection (2), such contract of sale
may either be absolute or conditional.
Subsection (3) deals with the concept of an agreement to sell and stipulates
that where the transfer of property in the goods is to take place at a future
time or subject to some condition thereafter to be fulfilled, such a contract is
an agreement to sell.
SALE AND AGREEMENT TO SELL:
The distinction between a sale and an agreement to sell may thus be
summarized as follows:
1.
A contract which contemplates transfer of title to goods to the
buyer immediately is a sale while a contract which does not
contemplate a transfer of title to goods immediately is an agreement
to sell.
2.
A contract of sale is an executed contract. It involves a
contract plus a conveyance of the property. When the property is
transferred, the rights and liabilities attached to the goods are also
transferred. An agreement to sell, on the other hand, is an executor
contract. The property in the goods does not pass until a certain time
has lapsed or until a certain condition is fulfilled.
3.
In an agreement to sell, the seller remains the owner of the
property until it is actually transferred to the buyer at a future point
of time. However, in a contract of sale, the buyer becomes the
owner immediately and all the risks attached to the goods are passed
on to him irrespective of the fact whether the goods are delivered to
him or not and whether the price is paid or not.
4.
In an agreement to sell, the seller agrees to sell the goods for a
price and the buyer agrees to buy the goods for a price. In a contract
of sale, the seller sells the goods to the buyer for a price.
5.
The consequences of a breach of an agreement to sell is as
follows:
a.
In case the buyer defaults, the seller may sue for damages; in
case the seller defaults, the buyer has a personal remedy against the
seller.
b.
Where there is a breach by any of the parties to a contract of
sale, the following will be the consequence. If the buyer fails to pay
the price, the seller may sue him; if the seller fails to deliver the
goods, the buyer may sue for delivery of the same or for conversion
or for damages.
6.
Violation of any of the conditions of an agreement to sell
entitles the buyer to rescind the contract.
However, in a sale, the breach of any condition will not be a ground
for rejecting the goods or treating the contract as rescinded. The
breach can only be treated as a breach of warranty.
7.
The property in the goods remains with the seller in the case
of an agreement to sell. He may sell the goods to a third party,
although he will be committing a breach. In a sale, the goods cannot
be resold by the seller. If he does so, the buyer can recover the
goods, sometimes from third parties.
8. The goods in an agreement of sale may not be specified or
ascertained. In a sale, the goods are specified and ascertained.
9.
A sale results in creation of a jus in rem (i.e., right to the buyer
to enjoy the goods as against the world at large including the seller)
while an agreement to sell results in jus in persona (i.e., right to the
buyer against the seller to sue for damages).
10. In a contract of sale, in case the buyer becomes insolvent
before making payment, the seller is required to handover the goods
to the official receiver or the assignee. In such a situation, he can
claim a ratable dividend for the price of the goods. The situation
differs when it comes to an agreement to sell. Here, if the buyer
becomes insolvent and has not made payment, the seller is under no
obligation to part with the goods.
11.
In a contract of sale, if the seller becomes insolvent, the buyer
can claim the goods from the official receiver or assignee. In an
agreement to sell, if the seller is declared insolvent, the buyer can
only claim a ratable dividend in case he has already made payment
ESSENTIALS OF A CONTRACT OF SALE:
The following are the essential ingredients of a valid contract of sale. There
should be:
a.
a contract
b.
two parties (i.e., the buyer and the seller)
c.
transfer or agreement to transfer the property
d.
goods
e.
In Finance Center vs. Sri Ram Prakash, it was held that a hire purchase
agreement is virtually a contract of bailment.
SALE AND BARTER OR EXCHANGE: In a barter or exchange, the
element of price in money is lacking. Similarly, the exchange of one form
of money for another cannot be considered as a sale. Even where foreign
currency is bought and sold in Indian currency or vice versa, it does not
constitute a sale.
SALE AND BAILMENT: When goods are delivered by one person to
another for some purpose, and where it is agreed that on the
accomplishment of the purpose, the goods will be returned or disposed of
according to the directions of the person delivering it, the goods are said to
have been bailed. However, in case of a sale, the ownership of the goods is
transferred from the seller to the buyer.
SALE AND CONTRACT FOR WORK AND MATERIALS: The
question as to whether a particular contract is one of sale or a work
contract will depend upon the facts of each case. Even though it is
difficult to lay down any specific rule to distinguish between the two, it
should be remembered that if the contract is for supply of materials at an
agreed price and the work and the service is incidental to the execution of
the contract, the contract is for sale of materials.
In Dr Baretto vs. T R Pruce, it was held that the supply of artificial teeth by
a dentist was a contract of sale. A works contract for supply of window
frames and fixing them to the building was held to be an indivisible works
contract. It was held that the material supplied for execution of the works
contract was not sale but formed a part of the works contract Nanuram vs.
State of Rajasthan
CONTRACT OF SALE HOW MADE: Section 5 lays down that:
a. A contract of sale is made by an offer to buy or sell goods for a price
and the acceptance of such offer. The contract may provide for the
immediate delivery of the goods or immediate payment of the price
or both, or for the delivery or payment by installments or that the
delivery or payment or both shall be postponed.
b. Subject to the provisions of any law for the time being in force, a
contract of sale may be made in writing or by word of mouth, or
partly in writing and partly by word of mouth or may be implied from
the conduct of the parties. The presence of a buyer and seller is
essential for a contract of sale.
Section 5 lays down that:
b.
Absolute, or
b.
Conditional.
b.
Present sale of a chance of obtaining goods, or a sale of a
mere expectation dependent upon a chance.
PRESENT SALE OF FUTURE GOODS:
a. In reality this is not a sale but an agreement to sell as one cannot transfer
the property in goods which is not in existence. In effect, this is provided
by Subsection (3) of Section 6, which states that such a contract is a mere
agreement to sell. In such contracts the property in the goods passes to the
buyer at a later stage as in the following cases:
i. If the seller after acquiring the goods, expresses an intention to execute
the original agreement. In Lunn vs. Thornton, it was held that a deed of
bargain and sale cannot pass the property in goods which do not belong to
the grantor at the time of execution of the deed, unless there is some new
act done by the grantor after he acquires the property, indicating his
intention that such subsequently acquired property should so pass.
ii. If the buyer gets control and possession of the goods under authority to
seize them. In Congreve vs. Evetts, growing crops were seized and taken
possession under a bill of sale. Before a sale could be executed, a judgment
was delivered in favor of a creditor. Consequently, the Sheriff seized the
goods and sold them. The proceeds of the sale were paid to the creditor.
However, it was held that the purchaser of the bill of sale was entitled to
the proceeds.
iii.
held that the putting of the oil was an act of appropriation and hence
the property vests in the plaintiff.
iv.
ASSIGNMENT B
Negotiable by Statute:
ii.
iv.
Failure to Refund Application Money [Section 69 (5)]: If
the directors of the company fail to comply with the deadline for
refunding the application money with interest to unsuccessful
applicants then they are severally and jointly liable. This is provided
by the SEBI guidelines also. The deadline is of 130 days from the
day of opening of the issue.
v.
Mis-description of Company Name (Section 147): The
person(s) signing a contract on behalf of the company would be held
liable if the companys name is not properly published by law as
required. The contract may be any contract, bill of exchange, hundi,
promissory note, cheque or order for money.
vi.
vii.
(1)
Public
(2)
(3)
Private
Government
(a)
(b)
(a)
(b)
Unlisted
Listed
Inde- Subsidiary
pendent of Public
Co.
On the basis of liabilities of the members and directors:
Companies
(b)
(1)
(2)
Indian
(Incorporated in India)
CompanyForeign
Company
(Company incorporated outside
India but having place of
business in India)
(1)
(2)
(Holding Company)
(Subsidiary Company)
These types of companies have been explained as under:
PRIVATE COMPANIES:
b.
i.
ii.
However, where two or more persons hold one or more shares in a company
jointly, they shall, for the purposes of this definition, be treated as a single
member. Every private company, existing on the commencement of the
Companies (Amendment) Act, 2000, with a paid-up capital of less than one
lakh rupees, shall within a period of two years from such commencement,
enhance its paid-up capital to one lakh rupees.
According to Section 3(6), a company registered under Section 25 before
or after commencement of Companies (Amendment) Act 2000 shall not be
required to take minimum paid-up capital as specified in this section.
Section 3(5) indicates that where a private company or a public company
fails to enhance its paid-up capital after 14th December, 2002 in the
manner as stated above, such company shall be deemed to be defunct
company within the meaning of Section 560 and its name shall be struck
off from the register by the Registrar.
a.
b.
Has a minimum paid-up capital of five lakh rupees or such
higher paid-up capital, as may be prescribed.
c.
Is a private company which is a subsidiary of a company
which is not a private company.
d.
e.
In case a company contravenes or does not comply with the conditions laid
down by Section 3(1)(iii), a petition for relief may be filed in case such
contravention was accidental or due to inadvertence.
Such a petition should be made to the Central Government and
accompanied by the documents:
i.
ii.
iii.
iv.
v.
Memorandum of appearance, shall be filed in Form 5 of
Annexure-I.
CONVERSION BY CHOICE (SECTION 44):
There is always a choice for the company to convert itself into a public
company. Conversion of a private limited company into a public limited
company by choice will necessarily involve a change in the name of the
company. Any change in the name will require the passing of a special
resolution as provided by Section 21. In addition to the passing of a special
resolution, the following requirements will have to be fulfilled:
a.
The company will have to alter its articles so as to delete the
provisions of clause (iii) of Subsection (1) of Section 3.
On the date of such alteration, the company will cease to be a private
company.
b.
The company shall within thirty days from the passing of the
resolution, file a prospectus or a statement in lieu of prospectus with
the Registrar.
c.
If the number of members is less than seven, such number
should be raised to at least seven.
d.
The number of directors should be raised to not less than three
in case it is less than three.
CONVERSION OF PUBLIC LIMITED COMPANY INTO A
PRIVATE LIMITED COMPANY:
Proviso to Section 31(1) read with Section 31 and (2A) provides that no
alteration made in the articles which has the effect of converting a public
company into a private company shall have effect unless such alteration
has been approved by the Central Government. Every such company after
obtaining the approval of the Central Government has to file a printed copy
of the altered articles with the Registrar within 30 days of receipt of the
approval. Approval of the Central Government must be obtained through
an application within three months from the date when the special
resolution altering the articles was passed. The application should be in
Form IA or in any other form as near thereto as circumstances warrant.
LIMITED COMPANY:
A company can limit its liability either by shares or by guarantee.
i.
If the company is limited by guarantee while having its own share capital,
the liability of members would be towards guarantee as specified in the
memorandum of association and in addition any sums remaining unpaid
on the shares held by him. The form of memorandum and articles of a
guarantee company having share capital can be found in Table D of
Schedule I. The memorandum of such a company should also specify
the amount of share capital with which the company is to be registered
and the amount of each share.
UNLIMITED COMPANY:
Unlimited Companies do not have any limit on the extent of liability of its
members. The liability of each member extends to the whole amount of the
companys debts and liabilities. However, the members cannot be sued
upon directly by the companys creditors. This is in contrast to the liability
of the partners in a partnership firm where partners can be sued directly. In
case of winding up, the official liquidator may call upon the members to
discharge the debts and liabilities without limit. This type of a company
may be formed where heavy liabilities are not likely to be incurred. An
unlimited company may increase and decrease its share capital (if it exists)
without any restriction by passing a special resolution. Also, the company
may buy its own shares which are not allowed for a limited company by
virtue of Section 77. A company which is registered as an unlimited
company may get itself re-registered as a limited company under Section
32 of the Act. There would not be any change in any debts, liabilities,
obligations or contracts of the company existing at the time of conversion
and such debts will be enforceable. The articles of association of a
company must state the number of members with which the company is
registered and the amount of share capital (if any) [Section 27].
GOVERNMENT COMPANY:
Section 617 defines a Government Company as any company which has at
least 51% of the paid-up share capital held either by the Central
Government, or by any State Government or Governments or partly by the
Central Government and partly by one or more State Governments. As the
concept of Government Company has been introduced in the Companies
Act, 1956, it follows that a government company will mean a company
registered and incorporated under the Companies Act, 1956. A statutory
corporation formed under a statute of the legislature, like Life Insurance
Corporation, Air India, etc., are neither companies coming within the
purview of the Companies Act nor are they Government Companies.
FOREIGN COMPANY:
As per Section 591, a foreign company means a company incorporated
outside India but having a place of business in India. Thus, if a company is
incorporated outside India, but employs agents in India without establishing
a place of business here, it cannot be considered as a foreign company. In
Deverall vs. Grand Advertisement Inc. (1954), it was held that a company
shall be said to have a place of business in India if it has a specified or
identifiable place at which it carries on business such as an office,
storehouse, godown or other premises having some concrete connection
between locality and its business. It may also be noted that if a company is
incorporated outside India, has Indian shareholders but does not have a
place of business in India, then such company will not be included within
the purview of a foreign company.
Likewise, a company that is incorporated in India but which has foreign
shareholders is an Indian company and not a foreign company. If 50 percent
or more of the paid-up share capital (whether equity or preference or partly
equity and partly preference) of a company incorporated outside India is
held by one or more citizens of India or/and by one or more Indian
companies, singly or jointly, such company shall comply with such
provisions as may be prescribed as if it were an Indian company.
INDIAN COMPANY:
Indian company means a company formed and registered under the
companies act, 1956. Any company formed and registered under any law
relating to companies formerly in force in any part of India, other than
Jammu and Kashmir and the union territories as specified or a corporation
established by or under a central, state or provincial act or any institution,
association or a body which is declared by the board to be company under
section 2 (17) are referred as Indian company.
In the case of state of Jammu and Kashmir, a company formed and
registered under any law for the time being in force in the state. Similarly in
case of union territories.
HOLDING AND SUBSIDIARY COMPANY ON THE BASIS OF
EXTENT OF CONTROL:
As per Section 4 of the Companies Act, a company shall be deemed to be a
subsidiary of another, if and only if:
(i) that other company controls the composition of its board of directors, or
(ii) the other company holds more than half in nominal value of its equity
share capital, or
(iii) if it is a subsidiary of a third company which itself is subsidiary of the
controlling company. The composition of the board of directors of a
company shall be deemed to be controlled by another if the latter has the
power, without the consent or concurrence of any other persons, to appoint
or remove the holders of all or a majority of the directorships. A company
shall be deemed to have the power to appoint the holder to a directorship in
the following cases:
If a person cannot be appointed to a directorship without the exercise
in his favor of the power of appointment held by the company.
If a persons appointment to directorship follows necessarily from his
appointment as director, managing agent, secretaries and treasurers or
manager to any other office or employment in the company.
Defunct Company:
A defunct company means a company which never commenced business
or which is not carrying on business and has either no assets or has such
assets as shall not be sufficient to meet the costs of liquidation. However,
a company is not considered as defunct if the cessation of business is due
to the conduct of winding up. Also, the mere reduction of members below
statutory minimum does not render a company defunct.
Under Section 3(5) the existing public company which could not raise
minimum required capital after 14th December 2002 also treated as
defunct company within the meaning of Section 560. Section 560
provides for the restoration of a companys name previously struck off the
register. However, the application must be made by the company, member
or creditor to the tribunal before the expiry of 20 years from the publication
in the Official Gazette.
The effect of an order of restoration shall be that the company shall be
deemed to have continued in existence as if its name had not been struck
off.
Closely Held Company:
A public company which has raised capital only from the members,
directors, relatives and kith and kin of the promoters and not raised capital
from the public.
Widely Held Company (A Listed Company):
A Public Company which has raised capital from the public by issue of
prospectus and its shares are dealt in two or more Stock Exchanges.
contact between the producer and consumer, often sellers make exaggerated claims
and advertisements, which they do not intend to fulfill. This leaves the consumer in a
difficult position with very few avenues for redressal. The onset on intense
Competition also made producers aware of the benefits of customer satisfaction and
hence by and large, the principle of consumer is king is now accepted. The need to
recognize and enforce the rights of consumers is being understood and several laws
have been made for this purpose. In India, we have the Indian Contract Act, the Sale
of Goods Act, the Dangerous Drugs Act, the Agricultural Produce (Grading and
Marketing) Act, the Indian Standards Institution (Certification Marks) Act,
the Prevention of Food Adulteration Act, the Standards of Weights and Measures Act,
the Trade and Merchandise Marks Act, etc. which to some extent protect consumer
interests.
However, these laws required the consumer to initiate action by way of a civil suit,
which involved lengthy legal process proving, to be too expensive and time
consuming for lay consumers. Therefore, the need for a simpler and quicker access to
redressal to consumer grievances was felt and accordingly, it lead to the legislation of
the Consumer Protection Act, 1986.
RELIEF AVAILABLE TO THE CONSUMERS:
Depending on the nature of relief sought by the consumer and facts, the Redressal
Forums may give orders for one or more of the following reliefs:(a) Removal of defects from the goods,
(b) Replacement of the goods;
(c) Refund of the price paid;
(d) Award of compensation for the loss or injury suffered;
(e) Removal of defects or deficiencies in the services;
(f) Discontinuance of unfair trade practices or restrictive trade practices or direction
not to repeat them;
(g) Withdrawal of the hazardous goods from being offered to sale; or
(h) Award for adequate costs to parties.
PROCEDURE FOR FILING THE APPEAL:
Appeal against the decision of a District Forum can be filed before the State
Commission within a period of thirty days. Appeal against the decision of a State
Commission can be filed before the National Commission within thirty days. Appeal
against the orders of the National Commission can be filed before the Supreme Court
within a period of thirty days.
There is no fee for filing appeal before the State Commission or the National
Commission.
Procedure for filing the appeal is the same as that of complaint, except the
application should be
Accompanied by the orders of the District/State Commission as the case may be and
grounds for filing the appeal should be specified.
SPEEDY DISPOSAL:
The thrust of the Act is to provide simple, speedy and inexpensive redressal to
consumers grievances. To ensure speedy disposal of consumers grievances, the
following provisions have been incorporated in the Act and the rules farmed there
under: It is obligatory on the complainant or appellant or their authorized agents and the
opposite parties to appear before the Forum/Commission on the date of hearing or any
other date to which hearing could be adjourned.
The National Commission, State Commission and District Forums are required to
decide complaints, as far as possible, within a period of three months from the date of
notice received by the opposite party where complaint does not require analysis or
testing of the commodities and within five months if it requires analysis or testing of
commodities.
The National Commission and State Commissions are required to decide the appeal
as far as possible, within 90 days from the first date of hearing.
OBJECT OF THE CONSUMER PROTECTION ACT, 1986:
The main objective of the act is to provide for the better protection of consumers.
Unlike existing laws, which are punitive or preventive in nature, the provisions of this
Act are compensatory in nature. The act is intended to provide simple, speedy and
inexpensive redressal to the consumers grievances, and reliefs of a specific nature and
award of compensation wherever appropriate to the consumer. The act has been
amended in 1993 both to extend its coverage and scope and to enhance the powers of
the redressal machinery. The basic rights of consumers as per the Consumer
Protection
Act (CPA) are
1. The right to be protected against marketing of goods and services which are
hazardous to life and property
2. The right to be informed about the quality, quantity, potency, purity, standard and
price of goods, or services so as to protect the consumer against unfair trade practices
3. The right to be assured, wherever possible, access to variety of goods and services
at competitive prices
4. The right to be heard and be assured that consumers interests will receive due
consideration at appropriate forums
5. The right to seek redressal against unfair trade practices or restrictive trade practices
or unscrupulous exploitation of consumers
6. The right to consumer education
EXTEND AND COVERAGE OF THE ACT:
The salient features of the Act are summed up as under:- The Act applies to all goods and services unless specifically exempted by the Central
Government.
- It covers all the sectors whether private, public or cooperative.
- The provisions of the Act are compensatory in nature. It enshrines the following
rights of consumers:- Right to be protected against the marketing of goods and services which are
hazardous to life and property?
-Right to be informed about the quality, quantity, potency, purity, standard and price of
goods or services so as to protect the consumer against unfair trade practices;
-Right to be assured, wherever possible, access to a variety of goods and services at
competitive prices;
-Right to be heard and to be assured that consumers interests will receive due
consideration at appropriate forums;
-Right to seek redressal against unfair trade practices unscrupulous exploitation of
consumers; and
-Right to consumer education
-The Act envisages establishment of Consumer Protection Councils at the Central and
State levels, whose main objects will be to promote and protect the rights of the
consumers.
The CPA extends to the whole of India except the State of Jammu and Kashmir and
applies to all goods and services unless otherwise notified by the Central Government.
DEFINITIONS OF IMPORTANT TERMS:
Before studying the provisions of the CPA, it is necessary to understand the terms
used in the Act. Let us understand some of the more important definitions.
Complainant Means
1. A consumer; or
2. Any voluntary consumer association registered under the Companies Act, 1956 or
under any other law for the time being in force; or
3. The Central Government or any State Government, who or which makes a
complaint; or
4. One or more consumers where there are numerous consumers having the same
interest
Complaint means any allegation in writing made by a complainant that:1. An unfair trade practice or a restricted trade practice has been adopted by any trader
2. The goods bought by him or agreed to be bought by him suffer from one more
defects
3. The services hired or availed of or agreed to be hired or availed of by him suffer
from deficiency in any respect
4. The trader has charged for the goods mentioned in the complaint a price excess of
the price fixed by or under any law for the time being in force or displayed on the
goods or any package containing such goods.
5. Goods which will be hazardous to life and safety when used, are being offered for
sale to the public in contravention of the provisions of any law for the time being in
force, requiring traders to display information in regard to the contents, manner and
effect of use of such goods; with a view to obtaining any relief provided by law under
the CPA.
Goods mean goods as defined in the Sale of Goods Act, 1930. Under that act, goods
means every kind of movable property other than actionable claims and money and
includes stocks and shares, growing crops, grass and things attached to or forming part
of the land which are agreed to be severed before sale or under the contract of sale.
Service is defined to mean service of any description which is made available to
potential users and includes the provision of facilities in connection with banking,
financing, insurance, transport, processing, supply of electrical or other energy, board
or lodging or both, housing construction, entertainment, amusement or the purveying
of news or other information but does not include the rendering of any service free of
charge or under a contract of personal service.
Consumer dispute means dispute where the person against whom a complaint has
been made, denies or disputes the allegation contained in the complaint.
Restrictive Trade Practice means any trade practice which requires a consumer to buy,
hire, or avail of any good or as the case may be, services as a condition precedent for
buying, hiring or availing of any other goods or services.
Unfair Trade Practice means unfair trade practice as defined under the Monopolies
and Restrictive Trade Practices Act. The MRPT act has defined certain practices to be
unfair trade practices. The detailed definition is given in the Consumer Protection Act,
1986 as amended by the Consumer Protection (Amendment) Act. 1993. It means a
trade practice which, for the purpose of promoting the sale, use or supply of any goods
or for the provision of any service, adopts any unfair method or
Unfair or deceptive practice including any of the following practices, namely: (a) False or misleading representation,
(b) Bargain price
(c) Offering of gifts, prize, contest etc.
(d) Noncompliance of product safety standard.
(e) Hoarding or destruction of goods.
The Act may be consulted before filing a complaint for unfair trade practice.
Defect means any fault, imperfection or shortcoming in the quality, quantity, potency,
purity or standard which is required to be maintained by or under any law for the time
being in force or Under any contract, express or implied, or as is claimed by the trade
in any manner whatsoever in relation to any goods.
Deficiency means any fault, imperfection or shortcoming or inadequacy in the quality,
nature and manner of performance which is required to be maintained by or under any
law for the time being in force or has been undertaken to be performed by a person in
pursuance of a contract or otherwise in relation to any service.
WHO IS A CONSUMER?
All of us are consumers of goods and services. For the purpose of the Consumer
Protection Act, the word Consumer has been defined separately for goods and
services. For the purpose of goods, a consumer means a person belonging to the
following categories:
(i) One who buys or agrees to buy any goods for a consideration which has been paid
or promised or partly paid and partly promised or under any system of deferred
payment;
(ii) It includes any user of such goods other than the person who actually buys goods
and such use is made with the approval of the purchaser.
Note: A person is not a consumer if he purchases goods for commercial or resale
purposes however, the word commercial does not include use by consumer of goods
bought and used by him exclusively for the purpose of earning his livelihood, by
means of self-employment.
- For the purpose of services, a consumer means a person belonging to the
following categories:
(i) One who hires or avails of any service or services for a consideration which has
been paid or promised or partly paid and partly promised or under any system of
deferred payment;
(ii) It includes any beneficiary of such service other than the one who actually hires or
avails of the service for consideration and such services are availed with the approval
of such person.
WHO CAN FILE A COMPLAINT
The following can file a complaint under the Act:- A consumer
- Any voluntary consumer organization registered under the Societies Registration
Act,1860 or under the Companies Act,1956 or under any other law for the time being
in force.
- The Central Government
- The State Government or Union Territory Administrations.
- One or more consumers on behalf of numerous consumers who are having the same
interest
(Class action complaints)
STRUCTURE:
-To provide simple, speedy and inexpensive redressal of consumer grievances, the Act
envisages three- tier quasijudicial machinery at the National, State and District levels.
National Consumer Disputes Redressal Commission - known as National
Commission.
Consumer Disputes Redressal Commissions known as State Commission.
Consumer Disputes Redressal Forums- known as District Forum.
-The provisions of this Act are in addition to and not in derogation of the provisions of
any other law for the time being in force
WHAT CONSTITUTES A COMPLAINT?
Under the Act, a complaint means any allegation in writing made by a complainant in
regard to one or more of the following:- Any unfair trade practice as defined in the Act or restrictive trade practices like tieup sales adopted by any trader.
- One or more defects in goods. The goods hazardous to life and safety, when used,
are being offered for sale to public in contravention of provisions of any law for the
time being in force.
- Deficiencies in services.
- A trader charging excess of price.
(i) Fixed by or under any law for the time being in force; or
(ii) Displayed on goods; or
(iii) Displayed on any packet containing such good;
WHERE TO FILE A COMPLAINT:
Consumer Protection Councils
The interests of consumers are enforced through various authorities set up under the
CPA. The CPA provides for the setting up of the
(a) Central Consumer Protection Council,
(b) the State Consumer Protection Council and
(c) the District Forum
(a) Central Consumer Protection Council:
The Central Government has set up the Central Consumer Protection Council which
consists of the following members:(a) The Minister in charge of Consumer Affairs in the Central Government who is its
Chairman, and
(b) Other official and non-official members representing varied interests
The Central council consists of 150 members and its term is 3 years. The Council
meets as and when necessary but at least one meeting is held in a year.
(b) State Consumer Protection Council:
The State Council consists of:(a) The Minister in charge of Consumer Affairs in the State Government who is its
Chairman, and
(b) Other official and non-official members representing varied interests
The State Council meets as and when necessary but not less than two meetings must
be held every year.
Redressal Machinery under the Act
The CPA provides for a 3 tier approach in resolving consumer disputes. The District
Forum has jurisdiction to entertain complaints where the value of goods / services
complained against and the compensation claimed is less than Rs. 5 lakhs, the State
Commission for claims exceeding Rs. 5 lakhs but not exceeding Rs. 20 lakhs and the
National Commission for claims exceeding Rs. 20 lakhs.
(c) District Forum
Under the CPA, the State Government has to set up a district Forum in each district of
the State. The government may establish more than one District Forum in a district if
it deems fit. Each District Forum consists of :(a) A person who is, or who has been, or is qualified to be, a District Judge who shall
be its President
(b) Two other members who shall be persons of ability, integrity and standing and
have adequate knowledge or experience of or have shown capacity in dealing with
problems relating to economics, law, commerce, accountancy, industry, public affairs
or administration, one of whom shall be a woman.
Appointments to the State Commission shall be made by the State Goverrnment on
the recommendation of a Selection Committee consisting of the President of the State
Committee,
The Secretary - Law Department of the State and the secretary in charge of Consumer
Affairs
Every member of the District Forum holds office for 5 years or up to the age of 65
years, whichever is earlier and is not eligible for re-appointment. A member may
resign by giving notice in
Writing to the State Government whereupon the vacancy will be filled up by the State
Government.The District Forum can entertain complaints where the value of goods or
services and the compensation, if any, claimed is less than rupees five lakhs. However,
in addition to jurisdiction over consumer goods services valued upto Rs. 5 lakhs, the
District Forum also may pass orders against traders indulging in unfair trade practices,
sale of defective goods or render deficient services provided the turnover of goods or
value of services does not exceed rupees five lakhs.
A complaint shall be instituted in the District Forum within the local limits of whose
jurisdiction (a) The opposite party or the defendant actually and voluntarily resides or carries on
business or has a branch office or personally works for gain at the time of institution
of the complaint; or
(b) Any one of the opposite parties (where there are more than one) actually and
voluntarily resides or carries on business or has a branch office or personally works
for gain, at the time of institution of the complaint provided that the other opposite
party/parties acquiescence in such institution or the permission of the Forum is
obtained in respect of such opposite parties; or
(c) The cause of action arises, wholly or in part.
STATE COMMISSION
The Act provides for the establishment of the State Consumer Disputes Redressal
Commission by the State Government in the State by notification. Each State
Commission shall consist of:-
(a) A person who is or has been a judge of a High Court appointed by State
Government (in consultation with the Chief Justice of the High Court ) who shall be
its President;
(b) Two other members who shall be persons of ability, integrity, and standing and
have adequate knowledge or experience of, or have shown capacity in dealing with,
problems relating to economics, law, commerce, accountancy, industry, public affairs
or administration, one of whom must be a woman. Every appointment made under this
hall is made by the State Government on the recommendation of a Selection
Committee consisting of the President of the State Commission, Secretary -Law
Department of the State and Secretary in charge of Consumer Affairs in the State.
Every member of the District Forum holds office for 5 years or up to the age of 65
years, whichever is earlier and is not eligible for re-appointment. A member may
resign by giving notice in writing to the State Government whereupon the vacancy
will be filled up by the State Government.
The State Commission can entertain complaints where the value of goods or services
and the compensation, if any claimed exceed Rs. 5 lakhs but does not exceed Rs. 20
lakhs; The State Commission also has the jurisdiction to entertain appeal against the
orders of any District Forum within the State The State Commission also has the
power to call for the records and appropriate orders in any consumer dispute which is
pending before or has been decided by any District Forum within the State if it
appears that such District Forum has exercised any power not vested in it by law or
has failed to exercise a power rightfully vested in it by law or has acted illegally or
with material irregularity.
NATIONAL COMMISSION
The Central Government provides for the establishment of the National Consumer
Disputes Redressal Commission the National Commission shall consist of:(a) A person who is or has been a judge of the Supreme Court, to be appoint by the
Central Government (in consultation with the Chief Justice of India ) who be its
President;
(b) Four other members who shall be persons of ability, integrity and standing and
have adequate knowledge or experience of, or have shown capacity in dealing with,
problems relating to economics, law, commerce, accountancy, industry, public affairs
or administration, one of whom shall be a woman Appointments shall be by the
Central Government on the recommendation of a Selection Committee consisting of a
Judge of the Supreme Court to be nominated by the Chief Justice of India, the
Secretary in the Department of Legal Affairs and the Secretary in charge of Consumer
Affairs in the Government of India. Every member of the National Commission shall
hold office for a term of five years or up to seventy years of age, whichever is earlier
and shall not be eligible for reappointment.
The National Commission shall have jurisdiction:-
(a) To entertain complaints where the value of the goods or services and the
compensation, if any, claimed exceeds rupees twenty lakhs:
(b) To entertain appeals against the orders of any State Commission; and
(c) To call for the records and pass appropriate orders in any consumer dispute which
is pending before, or has been decided by any State Commission where it appears to
the National Commission that such Commission has exercised a jurisdiction not
vested in it by law, or has failed to exercise a jurisdiction so vested, or has acted in the
exercise of its jurisdiction illegally or with material irregularity.
Complaints may be filed with the District Forum by:1. The consumer to whom such goods are sold or delivered or agreed to be sold or
delivered or such service provided or agreed to be provided
2. Any recognized consumer association, whether the consumer to whom goods sold
or delivered or agreed to be sold or delivered or service provided or agreed to be
provided, is a member of such association or not
3. One or more consumers, where there are numerous consumers having the same
interest with the permission of the District Forum, on behalf of or for the benefit of,
all consumers so interested
4. The Central or the State Government.
On receipt of a complaint, a copy of the complaint is to be referred to the opposite
party, directing him to give his version of the case within 30 days. This period may be
extended by another 15 days. If the opposite party admits the allegations contained in
the complaint, the complaint will be decided on the basis of materials on the record.
Where the opposite party denies or disputes the allegations or omits or fails to take
any action to represent his case within the time provided, the dispute will be settled in
the following manner:I. In case of dispute relating to any goods: Where the complaint alleges a defect in the
goods which cannot be determined without proper analysis or test of the goods, a
sample of the goods shall be obtained from the complainant, sealed and authenticated
in the manner prescribed for referring to the appropriate laboratory for the purpose of
any analysis or test whichever may be necessary, so as to find out whether such goods
suffer from any other defect. The appropriate laboratory would be required to report
its finding to the referring authority, i.e. the District Forum or the State Commission
within a period of forty-five days from the receipt of the reference or within such
Extended period as may be granted by these agencies.
HOW TO FILE A COMPLAINT
Procedures for filing complaints and seeking redressal are simple. There is no fee for
filing a complaint before the District Forum, the State Commission or the National
Commission. (A stamp paper is also not required) There should be 3 to 5 copies of the
complaint on plain paper.
The complainant or his authorized agent can present the complaint in person.
CASE STUDY:
Case1
A dealer in radios gives a Murphy radio to a customer on
the terms that Rs. 100 should be paid by him immediately
Subject to the provisions of this Act, the unpaid seller of goods who is in
possession of them is entitled to retain possession of them until payment or tender
of the price in the following cases, namely
d. Where the goods have been sold without any stipulation as to credit.
e. Where the goods have been sold on credit, but the term of credit has
expired.
f. Where the buyer becomes insolvent
2. The seller may exercise his right of lien notwithstanding that he is in possession of
the goods as an agent or bailee for the buyer.
In Imperial Bank vs. London & St Katherine Dock Co., it was held that even though the
delivery of a bill of lading transfers legal property, it does not affect the sellers right of
lien on the goods as long as they are in his possession.
Goods sold without any stipulation as to credit: When goods are sold without any
stipulation as to credit, the seller can retain the goods, until the payment is made.
Goods sold on credit, but the term of credit has expired: When goods are sold on
credit, the possession of the goods is transferred to the buyer immediately. However, if
the seller has retained possession of the goods until the expiry of the period of credit,
the lien which was not available to him during that period will accrue to him on the
expiry of the credit period, even though the buyer is not insolvent at that time.
Where the buyer becomes insolvent: The third case where the seller
has a lien on the goods is where the buyer becomes insolvent.
The sellers lien is revived in case the time for payment has not arrived and the buyer
becomes insolvent. This is based on the rule, that where one of the parties to the
contract is unable to fulfill the promise required of him, the other party is absolved from
performing his obligation.
TERMINATION OF LIEN (SECTION 49)
1. The unpaid seller of goods loses his lien thereon
a. When he delivers the goods to a carrier or other bailee for the purpose of transmission
to the buyer without reserving the right of disposal of the goods.
b. When the buyer or his agent lawfully obtains possession of the goods.
c. By waiver thereof.
2. The unpaid seller of goods, having a lien thereon does not lose his lien by reason only
that he has obtained a decree for the price of the goods.
Stoppage in Transit: Subject to the provisions of this Act, when the buyer of goods
becomes insolvent, the unpaid seller who has parted with the possession of the goods
has the right of stopping them in transit, that is to say, he may resume possession of the
goods as long as they are in the course of transit, and may retain them until payment or
tender of the price. (Section 50)
The following are the conditions required to be fulfilled for the applicability of Section
50.
e) The seller should be unpaid
f) The buyer must be insolvent
g) The property in the goods should have passed from the seller to the buyer
h) The goods should be in transit.
Case2
X sees a book displayed in a shelf of a book shop with a price
tag of Rs. 85. X tenders Rs. 85 on the counter and asks for
the book. The bookseller refuses to sell saying that the book
has already been sold to someone else and he does not have
another copy of that book in the stock. Is the bookseller
bound to sell the book to X?
The given case is under the chapter of offer and invitation to an offer which
means the signification by one person to another of his willingness to enter
in to a contract with him on certain terms. It may be expressed or implied
from the conduct of the parties. In this set case Mr. X wanted to purchase
the book which is already sold to other person therefore book seller refuses
the proposal and refuse to sell the book therefore x sue the bookseller.
Judgment : As mentioned above as per the section 2(a) says when one
person signifies to another his willingness to do or to abstain from doing
anything, with a view to obtaining assent of that other to such act or
abstinence, he is said to make a proposal. Every expression of willingness
of a person to enter into a contract may not be an offer in the legal sense.
Therefore, an offer must be distinguished from invitation to offer. Many
statements which appear to be offer are not really offers but mere invitation
to offer. In this case purchaser makes the offer. Books are not offers and its
already being sold to the other party hence it is not legal action to sale the
particular sold copy to the other party. Therefore book seller is not bound
to sale the book to X.
ASSIGNMENT C
Q1 Any person is a holder in due course if he has obtained the negotiable instrument
a) For consideration
b) By gift
c) Before its maturity
(b) 5 years
(c) 7 years
(d) 8 years
(e) 10 years.
Q9 Which of the following statements is false in respect of a contract of guarantee under
the Indian Contract Act,
1872?
(c)An agreement made by the certified guardian of a minor with authority for benefit of
minor
(d)An agreement made by a minor agent on behalf of his principal
(e)An agreement by a minor to repay a loan taken for supply of necessaries to him during
his minority.
Q18 As per section 166 of the Companies Act, 1956, the first annual general meeting of a
company should be held within
(a) 6 months of its incorporation
(b)12 months of its incorporation
(c)15 months of its incorporation
(b)When the pawnor fails to perform his part of the promise, the pawnee may sell the
pledged goods after giving the pawnor a reasonable notice of sale
(e)The bailee may retain not only those goods of the bailor in respect of which some
particular service has been rendered, but also other goods in the possession of the bailee
belonging to the bailor.
Q26 Section 165 of the Companies Act, 1956, in respect of conduct of statutory meeting
is applicable to
(d) Hiten Desai being the finder of lost goods can retain
the diamond ring against everyone except the true
owner
(e)Premchand can retain the diamond ring against everyone including the true owner.
Q28 Under the Companies Act, 1956, up to what date a director appointed to fill casual
vacancy shall hold office?
(a) The last day on which the annual general meeting should have been held
(b) Until the original director, in whose place he is appointed, returns back
(a)Mr. Ramlal did not get any title against the true
owner
(b)The true owner cannot recover any possession as Mr. Ramlal had bought at a public
auction
(c)As Mr. Ramlal had purchased the car in good faith, Mr. Ramlal can enjoy possession
of the car
(d)The true owner can file a suit against the auctioneer for fraudulently selling a stolen
car
(e)The auctioneer is personally liable to the true owner for damages only and the true
owner has no right to
obtain possession of the car.
Q30 Which of the following statements is false under the Companies Act, 1956?
a)The Board of directors should authenticate the accounts before submission to auditors
(b)The Profit and Loss account should reveal the details of auditors remuneration
(c)The provision of depreciation is necessary to show true and fair picture of the accounts
Q37 Which of the following statements is true under the Negotiable Instruments Act,
1881?
(a) Every holder is a holder in due course
(b) Escrow
(c) Accommodation bill
(d)Trade bill
(e) Ambiguous instrument.
Q40 Which of the following matters requires passing of special resolution and also the
approval of the Central Government under the Companies Act, 1956?
(a) Increase in the paid up capital
(b) Rectification of name of the company under section 22 of the Companies Act,1956