CHAPTER 1 LAW AND ITS SOURCES

Introduction
Man is by nature a social being. He comes into contact with other individuals in different capacities. These contacts or associations are the inevitable consequence of modern civilization. In all these associations, he is expected to observe a ode of onduct or a set of rules. The object of these set of rules is to make human associations possible; and ensure that members of the society may live ; and work together in an orderly and peaceful manner.

1.1 WHAT IS LAW

The word !law! is a general term and over a period of time attained different connotations to signify varied purposes. "ersons carrying different vocations prefer to identify !law! as to the purpose the prescribed set of rules are intended to achieve# $ %i& ' itizen may thin( of law as a set of rules, which he must obey. %ii& ' )awyer who !practices law! may thin( of law as a vocation. %iii& ' )egislator may loo( at law something created by him. %iv& ' *udge thin(s of law as a guide and principles to be applied to ma(ing decisions. %v& ' +ocial +cientist may thin( of law as a means of social control. %vi& ' )egal "hilosopher may consider law as !dictate of reason! or !right reasoning. It is often preceded by an ad,ective to give it a more precise meaning e.g. ommercial- Mercantile law, ivil law, riminal law, Industrial law, International law. In the legal sense with which we are concerned in our study of ommercial )aws, the definition of !law!

includes all the rules and principles which regulate our relations with other individuals and the State and which are enforced by the State. DEFINITON OF `LAW` - ARTICLE 13 (3) OF CONSITTUTION OF INDIA
lause . of 'rticle /. of the onstitution of India defines !law! as under (a) !law! includes any 0rdinance, order, bye$law, rule, regulation, notification, custom or usage having the force of law; 'n amendment to an existing law is also law. !)aw! in the context of the provisions of the onstitution of India may also be defined as 1 2It is an 'ct passed by the legislature and assented to by the "resident of India or 3overnor of a +tate.4 5'rts /// and 677 of the onstitution of India8.

1.2 `LAW` AND `STATUTE`

The onstitution of India does not use the term 9+tatute9 but it uses the term 9law9. +tatute has been defined as !the written will of the legislature9. Thus, +tatute or law generally means the laws and regulations of every sort without considering the source from which they emanate. It is because of this the term !law! and !statute! are some times used interchangeably. !Ignorntia juris non excusat! is a familiar maxim. This means !ignorance of law is no excuse!. 'lthough it is not possible for a layman to be aware of every branch lf law, yet he must acquaint himself with the general principals of the law of the country.

1.3

NEED FOR KNOWLEDGE OF `LAW`

1.4 FUNCTIONS AND PURPOSE OF `LAW `

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1.1 LAW IS NOT STATIC

'lthough origins of law in any society may be traced in antiquity, yet law is not static. 's circumstances and conditions in a society change, laws are changed to fit the requirements of the society.

1.2 CLASSIFICATION OF LAW

PU3LIC LAW 1 It is that law which determines and regulates the organization and functioning of the +tate. It also determines the relation of the +tate with its sub,ects. The following laws form part of the public law# $ a) C'(s ! u !'(*0 0*4 1 It is the basic and fundamental law of the land, which determines the nature of the +tate and the structure of the 3overnment. It may be written %as in India, :+' and most other countries& or unwritten %as in ;ngland&. b) A+.!(!s -* !5# 0*4 1 It is the law, which deals with the structure, functions and powers of the organs of the 3overnment. c) C-!.!(*0 0*4 1 It deals with various offences, and has for its ob,ect their prevention by providing for and prescribing certain punishments for them. 2. PRI6ATE LAW $ It is the law, which regulates relations of the citizens with one another, which are of public importance. In this sense, the +tate through its ,udicial organs ad,udicates the matters in dispute between them. "rivate law comprises the following fields. a) P#-s'(*0 0*4s $ It is a special law applicable to a class of people. b) L*4 ', /-'/#- ) 1 It is law relating to transfer of %immovable& property. c) L*4 ', '70!8* !'(s 1 It is law relating to ontract< =uasi contract and Torts

1.9

SOURCES OF LAW

!+ource! means !origin! which something is ultimately derived and often refers to the causes operating before the thing itself comes into being. *urists %legal expert) differ widely s to the origin of law. ne of the legal commentator traces its origin in general awareness of the people at any point of time.

CLASSIFICATION OF SOURCES
1. 2. F'-.*0 s'u-"#s ! These are the sources from which the law deri"es its force and "alidity. f course# the only authority from which laws can spring and deri"e force and "alidity is $tate. $* #-!*0 s'u-"#s ! %&aterial sources of law% refer to the "arious processes# which result in the e"olution of the materials# which are the constituents of law. &aterial sources may be di"ided into' a) L#8*0 s'u-"#s ( These are the sources# which are recogni)ed by the law itself as authoritati"e e.g. i. $tatute law ( ha"ing its force in legislations; ii. *ase law ( ha"ing its source in precedents; and iii. *ustomary law ( ha"ing its source in customs. b) H!s '-!"*0 s'u-"#s ( The sources# which ha"e no binding# force and which are nor recogni)ed by law are referred to as historical sources e.g. (i) +uristic writings; (ii) ,iterary works; and (iii) -oreign decisions.

1.: SOURCES OF INDIAN LAW

The main sources of the Indian law may be summarized as follows# $ (A) PRINCIPAL SOURCES OF INDIAN LAW

I.

CUSTOMS OR CUSTOMARY LAW

ustom is the most ancient of all the sources of law and has held the most important place in the past though it is importance is now diminishing with the growth of legislation and precedent. ustom is a habitual course of conduct observed uniformly and voluntarily by the people concerned. >o custom shall have the force of law if it in manner violates the ?undamental @ights.

Requisites of a valid custom

In order to be valid and have a binding force as a law, a custom must have the following requisites# $ %i& Antiquity %ii& Reasonableness %iii& Continuous observance %iv& Conformity with Statute law and public policy %v& Consistency %vi& Obligatory force.
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%vii& Peaceable enjoyment

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II. JUDICIAL PRECEDE TS Doctrine of `stare decisis`

This doctrine means adherence to the earlier decision and not unsettling things, which are already decided. This doctrine is based on expediency and public policy. The practice of following precedents is necessary to secure the certainty of and predictability of decisions. This creates confidence in the minds of the litigants and the administration of ,ustice becomes fair. The general rule of doctrine of precedent as regards hierarchy of ourts is that each ourt is absolutely bound by the decisions of the ourts superior to it. 's regards higher ourts, they are, to a certain extent bound by their own decisions. +upreme ourt 1 This is the highest ourt in India. Its decisions are binding on all ourts within the territory of India %'rticle /A/ of the onstitution&. The decisions of the ?ull Bench are binding on the smaller Benches of the ourt. CASE EXAMPLE In .olaknath /s. $tate 'I@ %/CDE& + /DA., the +upreme ourt by a D$*udge Bench gave a decision that ?undamental @ights are not amendable. +ix years later, the +upreme ourt in 0esa"ananda 1harti /s. $tate of 0erala %/CE.& + 66F by a /.$*udge Bench overruled the 3ola(nath ase. High ourts 1 the decisions of a High ourt are binding on all the ourts below it, within its ,urisdiction %Gistrict ourts- ourt of +essions&. +ubordinate or Gistrict ourts 1 These ourts are in districts. They are bound to follow the decisions of the higher ourts.

Why precedents are recognized Hierarchy of Courts

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ratio decidendi %reasoning behind the decision& ' decision of a ourt can be seen from two aspects viz /. Hhat does the case decide between the partiesI and 6. Hhat principle or rule of law does it lay downI 2n deli"ering judgment the judge gi"es reasons for his decisions# and it is these reasons which may be important as precedents in future cases. 3o two cases# which come before the courts# are exactly alike# and to disco"er whether there is a binding precedent it is necessary to establish the ratio decidendi# that is# the exact reason or reasons for the decision. obiter dictum %an incidental or collateral opinion by a judge & 2t means an incidental or collateral opinion which is uttered by a judge while deli"ering a judgment and which is not binding. These are peripheral statements that may be found in the main decision but which do not deal with the central issue. Obiter dicta are not binding, but they may be treated as of Jpersuasive authorityJ *4$5 564&7,5 ! obiter dicta 2n 8 *owasji 9 *o. /s. $tate of &ysore (42: 1;<= >1?)# the petitioner claimed refund of a huge amount of 5xcise duty paid by it se"eral years after the duty was paid. The *ourt rejected the claim for refund pointing out that it would be unjust to re@uire its refund after such lapse of time because the .o"ernment would ha"e# spent the amount for go"ernmental purposes. 1y this decision the dispute was settled. 1ut the *ourt went a step further and added a sentence in judgement as obiter dicta that A nor is there any provision under which the court could deny refund of tax even if the person who paid it has collected it from his customers and has no subsisting liability or intention to refund it to them or for any reason it is impracticable to do so.B This obser"ation of the *ourt contained an implication. 5xcise duty is collected by the manufacturer from a large number of customers and paid it to the .o"ernment. The manufacturer does not pay a pie from his pocket. 2f the duty paid by him is ordered to be refunded the beneficiary of refund would be the manufacturer because he may not be in a position to pay back the 5xcise duty collected by it to the customers. 2t would be impossible for the manufacturer to trace out the customers who were in thousands or perhaps lakhs. Though the manufacturer had claimed refund of that amount to himself no opportunity had been gi"en by the *ourt to the .o"ernment to argue on the tenability of the claim. Chat ob"iously weighed with the judge in ordering the refund was the Athe dharma of the situationB. De assumed that since the excess duty was paid by the manufacturer belonged to him. Chile in fact it did not belong to him. 2t only unjustly enriches him.
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This obser"ation of the $upreme *ourt i.e. obiter dicta was noticed by many Digh *ourts. Taking the "iew that since this expression of opinion was of the highest court of the land and should recei"e respect# they treated this as ratio and started gi"ing refund orders to a number of manufacturers. 2n course of time the refund amounted to hundreds of crores of rupees. ,ater on# the legislature had to rectify the situation by bringing amendments to the stature.

III.

STATUTE LAW OR LE!ISLATIO

It is a law that is created by legislation 1 "arliament or +tate 'ssembly. )egislation is that source of law, which consists in the declaration, or promulgation %transmission& of legal rules by an authority duly empowered by the onstitution in that behalf. It is some times called jus scriptum %written law&. +ome prefer to call it as !enacted law!. In modern times, !legislation! is the most important source of law in all the countries. Types of ,egislation

,- Supreme *egislation
' legislation is said to be supreme when it proceed from the supreme or sovereign power in the +tate 1 "arliament or the +tate )egislature$ and is incapable of being repealed, annulled or controlled by any other legislative authority. However $ 2an" #a$ $%ic% ta&es a$a" or a'ri(ges t%e )un(a*enta# Rig%ts con+erre( '" Part III and an" #a$ *a(e in contra,ention o+ t%is c#ause s%a##- to t%e extent o+ t%e contra,ention- 'e ,oi( 4 5'rticle /.%6& of onstitution of India8. )egislation is said to be subordinate when it proceed from any authority other than the supreme or sovereign authority in the +ate. It is made under the powers delegated to it by the supreme authority. There are F forms of subordinate legislation# %i& !ecutive 1 The rule ma(ing power under of the +tatues is conferred on the executive %i.e. the branch of the government that executes the laws or runs the administration&. %ii& "udicial # The ,udiciary has powers to frame rules for the regulation of their procedures and administration. %iii& $unicipal 1 Municipal bodies are delegated powers by the 'ct, which brings them into existence to frame rules, and by$laws for the area under their ,urisdiction for carrying on various activities entrusted to them. %iv& Autonomous 1 The autonomous bodies, li(e :niversities, are given power by the +tate to ma(e rules and by$laws for their administration. %v& Colonial 1 The laws of the countries which are not independent or which are the control of some other +tate, are sub,ect to the supreme legislation of the +tate under who control they are.

2- Su.ordinate *egislation

I.. PERSO AL LAW

$ources of Dindu law 1 (a) the !Shruti! %what is heard&. This includes the four Kedas %@ig Keda, La,ur Keda, +ama Keda and 'tharva Keda&< (b) the !Smriti% %what is remembered &. The main three smritis are# the codes of Manu, La,nanaval(ya and >arada. The +tatutes codifying the Hindu law enacted post independence era include (a) The Hindu Marriage 'ct /CFF (b) The Hindu +uccession 'ct /CFD (c) The Hindu Minority and 3uardianship 'ct /CFD and (d) The Hindu 'doptions and Maintenance 'ct /CFD. $ources of &ohammedan ,aw 1 (a) The Moran %voice of 3od< paramount authority& (b) The Hadis %actions and sayings of the "rophet& (c ) i,ma %opinions of companions of "rophets& (d) =aiiyas %reasoning by analogy& (e) Gigests and commentaries on Mohammedan )aw %compiled by command of 'urangzeb, the Mughal ;mperor&. The +tatutes enacted post independence include %a& the Ha(f 'ct /CFA %b& The Muslim Homen %"rotection of @ights on Givorce& 'ct /CND.

(3) SECONDAR; SOURCES OF INDIAN LAW /,- ()S%#C"0 "1)#%2 &'D 3 D C 'SC#"'C"
In the absence of any rule of specific law, usage or custom or personal law on a particular point arising before the ourts, the ourts apply the doctrine of 2,ustice, equity and good conscience4 which means 2in substance and in circumstances the rule of ;nglish law4 as applicable to Indian society and circumstances.

/2- "'3*#SH *&W

a& *ommon ,aw %of ;ngland& The chief source of the ;nglish )aw is ommon law as supplemented by ;quity and +tatute )aw.
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LAW & SOURCES

The expression! ommon )aw %of ;ngland& conveys those unwritten legal doctrines embodying ;nglish customs and ;nglish traditions which have been developed over centuries by the ;nglish ourts. b& 5@uity %synonymous with !,ustice!& The term !equity! has its origin in the )atin word ! Aequitas! means $ !fair! or !,ustice according to natural law! or !right! or simply !natural ,ustice!. %5xample 1 Goctrine of >atural *ustice, ;quitable set$off&. c& $tatute ,aw It refers to Acts of Parliament.

1.< LEGISLATI6E $ECHANIS$ IN INDIA

The onstitution of is basically ?ederal in structure with stri(ing :nitary features. The Indian created a new norm of federalism and that is the ! *ooperati"e -ederalism!. onstitution has

Two levels of government

(1) The Central Government $ It is also called the :nion of India, which comprises of $ &a' the territories of the +tates< &b' the :nion Territories %specified in the ?irst +chedule&# and &c' such other territories as may be acquired. (2 The !tate Governments $ ;very +tate has its own separate 3overnment. It owes its existence to the onstitution and its powers are defined by the onstitution itself. The ?irst +chedule to the onstitution contains the )ist of the +tates %"art I& and the :nion Territories %"art II&.

"5%"'% 6 *&WS !&D" 72 *"3#S*&%#8" 7 D#"S

'rticle 6AF of the onstitution of India empowers the "arliament and the )egislature of a +tate to ma(e laws for the country and the +tate respectively. 'rticle 6AF, inter alia, stipulates as under# $ 4rticle 2E= 5xtent of laws made by 7arliament and by the ,egislatures of $tates The "arliament may ma(e laws for the whole or any part of the territory of India, and The )egislature of a +tate may ma(e laws for the whole or any part of the +tate. The law made by "arliament may have extra$territorial operation. The onstitution of India has put certain limitations on the legislative powers of the "arliament as well the +tate 'ssembly.

S)7("C% !&%%"R 6 *&WS !&D" 72 *"3#S*&%#8" 7 D#"S

4rticle 2EF of the onstitution, inter alia, provides for the sub,ect matter of laws to be made by "arliament and by the )egislatures of +tates. The sub,ect matters have been specified in the +eventh +chedule to the onstitution. "arliament $ ;xclusive power relating to any of the matters enumerated in )ist I. %J Gnion ,istJ$ contains ;< 5ntries&. The +tate )egislature $ ;xclusive power relating any of the matters enumerated in )ist II. % H$tate ,istH$ contains FF 5ntries&. "arliament besides the +tate )egislature 1 ;mpowered to ma(e laws relating to matters enumerated in )ist III %J*oncurrent ,istJ 1 contains E< 5ntries&. "arliament has power to ma(e laws with respect to any matter for any part of the territory of India not included in a +tate notwithstanding that such matter is a matter enumerated in the +tate )ist. ,ist 2 1 :nion )ist. It has CE entries. It contains those sub,ects which are of national interest or importance or which need national control and uniformity of policy throughout the country. 5xample# $ Gefence, 'ir ?orce, 'tomic ;nergy, ?oreign 'ffairs, Income Tax, BI, Ban(ing, Insurance, @eserve Ban( of India, Incorporation, regulation and winding of up of corporations, +toc( ;xchange, Bills of exchange, "atents, @ailways, *udges of +upreme ourt and High ourts etc. ,ist 22 1 +tate )ist. It has DD entries. It contains such sub,ects, which are of local %+tate& interest and on which the local control is more expedient. 5xample# $ "ublic 0rder, "olice, local 3overnment, public health and sanitation, trade and commerce within the +tate, fairs, betting and gambling etc. ,ist 222 1 oncurrent )ist. It has AE entries. It contains such sub,ect, which though are of local importance yet need uniformity on national level or at least some parts of the country i.e. with respect to more than one +tate. 5xample' ( riminal )aw, ;ducation, Marriage and divorce, Transfer of "roperty, ontracts, +ocial +ecurity etc.

Residuary Legislative Powers

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LAW & SOURCES

4rticle 2E> of the onstitution further empowers the "arliament with the residuary powers of legislation to ma(e any law with respect to any matter not enumerated in the oncurrent )ist or +tate )ist. +uch power shall include the power of ma(ing any law imposing a tax not mentioned in either of those )ists.

C#RC)!S%&'C"S WH"' $&R*#&!"'% !&2 *"3#S*&%" ' !&%%"RS R"*&%#'3 % S%&%" *#S%
The "arliament has been empowered to legislative on matters relating to the +tate )ist in the following three circumstances# $

(A) I( =# N* !'(*0 !( #-#s /&rticle 24:Circumstances of enactment There shall be a declaration by the ouncil of +tate%s& by resolution supported by not less than two(thirds of the members present and voting. The law made by "arliament shall be operational till the resolution remains in force. Consideration for enactment It is resolved by the concerned ouncil of +tate %s& that it is necessary or expedient in national interest that "arliament should ma(e laws with respect to any matter enumerated in the +tate )ist specified in the resolution. Period of operation of State Assembly resolution ' resolution passed by the +tate 'ssembly shall remain in force for such period not exceeding one year. This may be extended by a further period of one year by passing a fresh resolution by the concerned +tate 'ssembly.

(3) W=!0# /-'"0*.* !'( ', E.#-8#(") !s !( '/#-* !'( /&rticle 29; Guring such period, the "arliament shall have power to ma(e laws for the whole or any part of the territory of India. The onstitution contemplates three types of emergency +ecurity of India or part thereof is threatened by external aggression or armed rebellion %'rticle .F6& ?ailure of onstitution machinery in +tate%s&. %'rticle .FD& ?inancial stability or credit of India or any part thereof is threatened %'rticle .D7&. Period of operation ' law made by "arliament cease to have effect on the expiration of a period of six months after the "roclamation has ceased to operate.

(C) L#8!s0* # ,'- 4' '- .'-# S * #s 7) "'(s#( *(+ *+'/ !'( ', su"= 0#8!s0* !'( 7) *() ' =#- S * # /&rticle 292Circumstances of enactment If it appears to the )egislatures of two or more +tates to be desirable that law with regard to any of the matters of the +tate list be made by the "arliament. @esolutions to that effect are passed by both the Houses of the )egislatures of concerned +tates. The law thus made by the "arliament may also apply to such other +tate%s&, which afterwards adopt the said law by resolution passed by each of the Houses of the )egislature of that +tate. The 'ct so passed by "arliament may be amended by the "arliament and not by the concerned +tate%s&.

RD#'&'C" !&<#'3 $ W"R 6 $R"S#D"'%

'rticle /6. of the onstitution empowers the "resident to promulgate 0rdinances during recess of the "arliament. Circumstances when President may promulgate Ordinance Hhen the "arliament is in recess and the "resident is satisfied that circumstances exist which render it necessary for him to ta(e immediate action, he may promulgate such 0rdinances as the circumstances appear to him to require. 'n 0rdinance shall have the same force and effect as an 'ct of "arliament. (alidity period of Ordinance ;very such 0rdinance %a& shall be laid before both Houses of "arliament and shall cease to operate at the expiration of six wee(s from the reassembly of "arliament, or, if before the expiration of that period resolutions disapproving it are passed by both Houses, upon the passing of the second of those resolutions<9 and %b& may be withdrawn at any time by the "resident.

1.1> INTERNATIONAL AGREE$ENTS?RESOLUTIONS AS LEGISLATI6E FACILITATOR

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The term H.lobali)ation of ,awH refers to the degree to which the whole world lives under a single set of legal rules. :nited >ations has been the front$runner in harmonization of such rules that simultaneously affect different countries. 's an accepted international practice, the member countries of the :nited >ations pass resolution on matters affecting the interest of such countries. 'nd in deference to such a decision, ta(en at the highest forum of the international body, each of the member country enacts legislations in its country on the similar line %as adopted in the :> 3eneral 'ssembly&. India being a constituent member of :nited >ations, has also passed similar legislations 1 onsumer "rotection 'ct /CND, ;nvironmental )aws, Trade Mar(s 'ct /CCC, "atent 'ct /CE7, Information Technology 'ct 6777 and 'rbitration and onciliation 'ct /CCD. The influence of :> with specific regard to these enactments shall be studied later in this study text.

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