Master of Business Administration - Semester 3 MB0051: “Legal Aspects of Business (4 credits

(Book ID: B1207)


1. What are the sources of law? Explain.
Sources of Law The main sources of modern Indian Law, as administered by Indian courts, may be divided into two broad categories: (i) Primary sources and, (ii) Secondary sources. Primary sources of Indian law The primary sources of Indian law are: (a) customs, (b) judicial precedents (stare decisis), (c) statutes and (d) personal law. Customary law : Customs have played an important role in making the law and therefore is also known as customary law. “Customary Law”, in the words of Keeton, may be defined as “those rules of human action, established by usage and regarded as legally binding by those to whom the rules are applicable, which are adopted by the courts and applied as sources of law because they are generally followed by the political society as a whole or by some part of it”. In simple words, “it is the uniformity of conduct of all persons under like circumstances”. It is a generally observed course of conduct by people on a particular matter. When a particular course of conduct is followed again and again, it becomes a custom. Judicial precedents are an important source of law : Judicial precedents are another important source of law. It is based on the principle that a rule of law which has been settled by a series of decisions generally should be binding on the court and should be followed in similar cases. These rules of law are known as judicial precedents. However, only such decisions which lay down some new rules or principles are treated as judicial precedents. Thus, were there is a settled rule of law, it is the duty of the judges to follow the same; they cannot substitute their opinions for the established rule of law. This is known as the doctrine of stare decision. The literal meaning of this phrase is “stand by the decision”. ‘Statute’ – an important source of law : The statutes or the statutory law or the legislation is the main source of law. This law is created by legislation such as Parliament. In India, the Constitution empowers the Parliament and state legislatures to promulgate law for the guidance or conduct of persons to whom the statute is, expressly or by

What is meant by contract? Explain about “quasi contracts” Section 2(h) of the Indian Contract Act. the courts are required to apply the personal law of the parties. supplement or override a narrow rigid system of existing law of the land.implication. In such cases. Its evolution like that of equity can be traced to unsuitability of Common Law so far as the commercial transactions were concerned. 4. the equity is unwritten and is a supplement to common law as a source of law. developed to enlarge. 2. 3. “equity” means a body of legal doctrines and rules emanating from the administrations of justice. therefore. It can pass any law it pleases and can override its own previous Acts and the decisions of the courts. The Statute law consists of the law passed by the Parliament and therefore. The law merchant or lex mercatoria. the common law is found in the collected cases of the various courts of law and is sometimes known as “case law”.” Section 2(b) defines promise in these words: . Statute law. Thus. developed certain rules based upon customs and usages to govern their mercantile transactions. The merchants. Therefore. It is called Statute Law because it is the writ of the state and is in written form (jus scriptum). Mohammedan and Christians. is written law. English law: The chief sources of English Law are 1. The Common Law was found to be unsatisfactory in dealing with disputes between merchants. Personal law: Many times. Statute law. Thus in certain matters. Equity. 2. However. therefore. we follow the personal laws of Hindus. It is another important source of law and is based to a great extent on customs and usages prevalent among merchants and traders of the middle ages. in its technical and narrower sense. made applicable. Section 2(e) defines agreement as “every promise and every set of promises forming consideration for each other. The authority of parliament is supreme but is subject to natural limitations and those lay down by the Constitution. It is sometimes called “enacted law” as it is brought into existence by getting Acts passed by the legislative body. 1872 defines a contract as an agreement enforceable by law. a point of issue between the parties to a dispute is not covered by any statute or custom. is superior to and can override any rule of Common Law or equity. like the common law. These rules were known as Lex Mercatoria or the Law Merchant. Equity and Good Conscience. This source consists of all those unwritten legal doctrines embodying customs and traditions developed over centuries by the English courts. Secondary sources of Indian law the secondary sources of Indian Law are English Law and Justice. Common law. The development of equity as a source of law occurred due to rigours and hardships of the Common Law. The literal meaning of the term “equity” is “natural justice”.

A contract where one person makes a legally binding promise to take on the legal responsibilities of another person. 2. it has the following special features: 1." It is a contact of guarantee as the promise is contingent on the default of be assured. These obligations are known as quasi-contracts. 4. access to a variety of products and services at competitive prices: and in those industries where competition is not workable and Government regulation is substituted. if that person defaults in their obligations. for the benefit of the principal-debtor. 2.” obligations are created by law (regardless of agreement) whereby an obligation is imposed on a party and an action is allowed to be brought by another party. Surety's obligation is dependent on principal-debtor's default: There must be a conditional promise to pay on the default of the principal debtor. But Sec. Explain the purpose and meaning of contract of guarantee. (2) A asks a shopkeeper (o sell certain goods to C promising. The Right to be Heard .to be protected against the marketing of goods which are hazardous to health or life. 127 provides that anything done or any promise made. The Right to Safety . A proposal when accepted becomes a promise. A contract of guarantee is a species of general contract and as such all the essentials of a valid contract must be present. consideration is necessary. deceitful or grossly misleading information. What are the rights of consumer under consumer protection act? 1. 3. advertising. the proposal is said to be accepted. The Right to Choose . However. 4. like any other contract. The Right to Information . wherever possible. Thus. 3. or other practices. Separate consideration for guarantee not necessary: For a contract of be protected against fraudulent. and to be given the facts s/he needs to make an informed choice. "I will see that you are be assured that consumer interests will receive full and sympathetic consideration in the formulation of Government policy. it will not be a contract of guarantee but of indemnity. may be a sufficient consideration to the surety for giving the guarantee. Examples :( 1) A asks B to sell certain goods on credit to C promising "I will pay the amount in case C fails to pay.“When the person to whom the proposal is made signifies his assent thereto. labeling. an assurance of satisfactory quality and service at fair prices. and fair and expeditious treatment in its administrative tribunals." This is not a contract of guarantee as the promise of the guarantee is not conditional on default of the buyer. there is no need for a separate consideration between the . If the promise is not conditional on default. It is a contract of indemnity.

It is the result of an agreement on the basis of which the rights and duties of the partners are defined. The business must be continuous in nature. Also joint ownership of a property cannot be termed as partnership. there is no contract of guarantee. Business: The purpose of a Partnership firm is to carry on a business. 3. If there is no agreement over the profit sharing ratio these are to be shared equally. Agreement among Partners: Partnership comes into existence by an agreement among the partners willing to enter into a partnership. if there is no consideration. it is the consideration received by the debtor. i. Whether a contract of guarantee is a contract of Uberrimae Fidei.. a contract of good faith requiring full disclosure of material facts likely to affect the willingness of the guarantor. i.Principal debtor and the surety consideration received by the Principal debtor is sufficient for the surety.. the surety himself will be liable to pay the debt. good faith. Hence. the debt or promise is the basis of guarantee. In case there is no such debt or promise. Partnership is not the result of any operation of Law. Two or more Persons: Minimum number of persons to start a partnership is two however there is no maximum limit on the number of partners according to the Indian Partnership Act.e. 3. 1. Any agreement to share the profits of an illegal business is not partnership.. The business must be legal.debtor. the principal-debtor need not be competent to contract. In that case. there cannot be a valid guarantee. a contract of guarantee is not a contract of uberrimae fidei. the debt may even be void. there must be an existing debt or a promise whose performance is guaranteed. Strictly speaking. There must be existing debt or promise whose performance is guaranteed: For a contract of guarantee. A person not having the right to share profits cannot be . 2. 4. But the Indian Companies Act has restricted the number of partners in a Banking Business to ten and for any other business it is 20. Coming together for a single venture is not partnership. [Kashiba v. there should not be any misrepresentation or active concealment of material facts by the creditor. What is partnership? Explain the nature of partnership under „law of partnership?. the principaldebtor is not liable but the surety is liable as the principal. They share the profits or losses of the business among themselves according to a predetermined ratio. However.e. Actually speaking.e. A partnership is an arrangement where parties agree to cooperate to advance their mutual interests. 5. In such a case. 4. Principal debtor need not be competent to contract: Although the creditor and the surety must be capable of entering into contract. yet. Shripat]. i. Agreement to share profits: In a Partnership business the main aim of the partners is to carry on some business for the purpose of earning profits. However. The agreement can be written or oral.

The business can be carried by any one or more of them or by all of them. Pine Labs had written some software for Gemalto under a Master Service Agreement(MSA). The owner of the copyright in an existing work or the prospective owner of the copyright in a future work may assign to any person the copyright either wholly or partially and either generally or subject to limitations and either for the whole term of the copyright or any part thereof: Provided that in the case of the assignment of copyright in any future work.However. It made no difference whetehr the MSA was treated as an assignment or an agreement to assign Copyright infringement is punishable under § 63 of the Copyright Act: Offence of infringement of copyright or other rights conferred by this Act. Business is to be carried on by all or any of them acting for all: Each partner has the right to participate in the proceedings of the business. or . the copyright reverted to Pine Labs. musical and artistic works and producers of cinematograph films and sound recordings. In the absence of any of these a partnership business cannot come into existence. dramatic. Write a note on the following on Copy Right Act.e. the assignment shall take effect only when the work comes into existence. it is a bundle of rights including. (Section 18) Section 19 lays down the modes of assignment. being the author was the first owner of the copyright and after five years. In a recent judgement. Any person who knowingly infringes or abets the infringement of(a) the copyright in a work. Pine Labs. they are not actively involved in the activities of the firm. communication to the public. rights of reproduction. for works made in the course of an author's employment under a contract of service.assignment can only be in writing and must specify the work. the period of assignment and the territory. In fact. 6.These were the essentials of a partnership firm. 5. the duration shall be deemed to be five years and after five years the copyright shall revert to the author.Though in the MSA Pine Labs had assigned the copyright in the works to Gemalto.The Court held that though Gemalto may have paid for the software. As a principal he is bound by the acts of the other partners. Section 19(5) provides that if period of assignment is not specified it shall be deemed to be 5 years and section 19(6) provides that if the territorial extent of assignment is not specified it shall be presumed to extend within India. Some partners may be sleeping i. In this case. adaptation and translation of the work. There could be slight variations in the composition of the rights depending on the work. the employer is the first owner of the copyright.called partner. inter alia. However the partners can agree that one or more partners among is not liable to share the losses. the author of a work is the first owner of the copyright( Section 17). the period of assignment was not specified. Each partner is an agent as well as a principal. a division bench of the Delhi High Court in Pine Labs Private Limited vs Gemalto Terminals India Limited the Court has held that in case the duration of assignment is not specified. As an agent he can bind all the other partners by his acts. Copyright is a right given by the law to creators of literary.

Introduction: A contract is said to be discharged when the rights and obligation created by it come to end. for adequate and special reasons to be mentioned in the judgment. Master of Business Administration .Construction of a building or other structure which infringes or which. impose a sentence of imprisonment for a term of less than six months or a fine of less than fifty thousand rupees. if completed. The contract act 1872 provides various ways in which a contract may be discharge or terminated.Semester 3 MB 0051: “Legal Aspects of Business (4 credits) (Book ID: B1207) ASSIGNMENT. would infringe the copyright in some other work shall not be an offence under this section.(b) any other right conferred by this Act. shall be punishable with imprisonment for a term which shall not be less than six months but which may extend to three years and with fine which shall not be less than fifty thousand rupees but which may extend to two lakh rupees: Provided that the court may. . Explanation.Set 2 1) Explain different modes of discharge of contracts. . Modes of discharge of contract: Following are different modes in which a contract may be discharged.

(i) Novation: When the parties to the contract agree to substitute a new contract for a contract. (iii) Alteration: . (ii) Offer of performance: An offer to perform is known as Tender' or 'Offer' of performance when the promisor offers to perform the obligation but the other party refuses accept. (a) Ways to terminate the contract: Following are different ways to discharge a contract by agreement. Modes of rescission: Rescission may occur. (iv) It must be made by a person who is able to perform the promise. (v) It must be made to the promise or his agent. that is called Novation. (vii) In case of tender of money exact amount should be tendered. (i) By mutual consent of the parties. (iii) It must be made at proper place. the other party may rescind the contract. Kinds of Novation: (a) A Novation involving the change of parties.(I) Performance: Performance is a common mode of discharge of a contract. it is called actual performance. (b) A Novation involving substitution of a new contract in the place of old contract. of performance made to stranger is invalid. (vi) An offer. (a) Types of performance: Performance may be of two types. (ii) When are party fails to reform his contractual obligation. the offer is equivalent to performance. It is a common of discharge when the parties to a contract perform their share of promises the contract is discharged. (ii) It must be made at proper time. Essentials of a valid offer of performance. (i) Actual performance: When each party to a contract fulfil the obligations arising under the contract according to the terms and conditions of the contract. (ii) Rescission: When all or some of the terms of contract are cancelled the contract is said to be rescined. (II) By agreement: A contract can also be discharged by the fresh agreement between the parties. (i) It must be unconditional .

Creditors may accept lesser amount than what is due in discharge of the whole debt. • • • • • • • (i) Destruction of subject matter. (iv) Release of waiver: Waiver means the intentional abandonment of a right. the contract is said to be altered. Ways of termination: Following are different ways of discharge under operation of law. (III) By impossibility: Impossibility discharge the parties. (b) Factors causing impossibility of performance of contract: The following are the factors causing impossible of the performance of the contract. which a person is entitled to under a contract. (vi) Merger: It takes place when an inferior right accuring under a contract merger into a superior right accuring to the same party or some other contract. (ii) Failure of ultimate purpose (iii) Death (iv) Personal incapacity (v) Change of law (vi) Declaration of war (IV) Discharge by laps of time: A contract may be discharge by laps of time. (a) Categories of impossibility: Following are categories of impossibility. (v) Remission: Remission of performance means that a promise can discharge the promisor also without a new agreement but not only without consideration. the rights and liabilities are transferred to officer known as receiver so contract is discharged. (a) Insolvency: Where the court declares a person as insolvent. (ii) Subsequent impossibility: Sometimes a contract.When one or more of the contract is altered by actual consent of the parties. the contract is rendered void. The contract should be performed with in a reasonable time. (V) By operation of law: A contract may be discharged by operation of law. If a contract is not discharge within a specified time. (i) Initial impossibility: Initial impossibility is that which is known or unknown to the parties. the contract is discharged. If the act becomes impossible after the formation of contract. is capable of being performed when entered into. (b) By unauthorized: . But some subsequent event renders the performance impossible.

the insurance companypromises to indemnify (or pay) the insured for any losses he suffers as a result of automobile accidents. his intention not be perform the contract on his part.If the terms of the contract.will step in to pay or perform the obligation. or pay. without the consent of the other party the contract is discharged and cannot be enforced. one party agrees to act on behalf of another should that second party default. Conclusion: To conclusion it can be said that. where performance is due. in an automobile insurance contract. the injured party has not only a right damages but it is also discharge from performing his part of the contract. Common contracts of guarantee include a loan • . Depending on the contract. (iv) Implied breach: In implied breach party to the contract does not act. (VI) By breach of contract: A contract may be discharged by breach if one of the parties to a contract break the promise. or contract of guaranty. Which makes the performance of the contract impossible. For instance. The most common type of contracts of indemnity are insurance contracts. written on a document are materially altered by one party. (ii) Anticipatory breach: An anticipatory breach contract occurs before the time fixed for performance has arrived. the guarantor -. In plain terms. those losses could be caused by the party promising to pay or by any other individual. 2) Distinguish between a contract of guarantee and a contract of indemnity. when the rights and obligations arising out of a contract are extinguished the contract is said to be discharged. the other party for certain types of loss. • Contracts of Guarantee In a contract of guarantee. It may happen in two ways. Contracts of Indemnity Simply put. (i) Actual breach: It occurs when a party fails to perform a contract.the party who has agreed to act on behalf of another -. The contractual tie may be loosened and contract may be terminated under different modes under contract act. a contract of indemnity is any agreement whereby one party agrees to indemnify. this means that if an individual fails to pay her guaranteed debt or to perform some other duty or obligation. (iii) Express breach: In express breach a party to contract communicates to the other party.

with a co-signer and a student loan. in a contract of guarantee there are at least two parties responsible. To avoid misunderstanding. including the original promise to pay or perform and the guarantor's promise to pay or perform in the event of default. Key Differences In spite of their basic similarities. contracts of indemnity are inherently different from contracts of guarantee. there is a single promise. with a private gain. While in a contract of indemnity only one party is liable or responsible to compensate for the loss. • 3) Briefly state special features of a partnership on the basis of which its existence can be determined under the Indian Partnership Act? A partnership is an association of two at more persons to carry on as co-owners of a business and to share its profits and losses. if a 1km remains unregistered. Formation: According to the Partnership Act of 1932. while contracts of guarantee involve. 2. indirectly at least. If persons between 2 and 20 enter Into agreement oral or verbal for carrying on a business. there are multiple promises. Section 4 of the Partnership Act defines partnership as “the relation between persons who have agreed to share the profits of a business carried on by all or any one of them acting for all. Chief Features of Firm. In a contract of guarantee. it has to face certain disabilities or disadvantages. the party who might default. then partnership is formed (10 in case of banking business). The important business decisions are taken with the consent of all other partners.” ‘Persons who have entered into partnership with one another are called individual partners and collectively a firm and the name under which their business is carried on is called the firm name”. and the party agreeing to pay). t is not binding for partnership to be register However. Most importantly. Management: In a partnership business. by contrast. or contract: the promise to pay in the event of an unexpected loss. duties. a minimum of three (the party who might suffer a loss in the event of default or failure to pay. In a contract of indemnity. The salient features of partnership are as under 1. A person who has special skill or ability can be admitted to the partnership without any capita contribution. it is desirable that the articles of partnership be prepared in writing with legal assistance. Financing: The capital is made available to the firm by the partners as per terms of the agreement. where the government guarantees payment if the student should default. there is no special mode for the creation of a partnership. It is not necessary that all the partners should contribute equally to the partnership. contracts of indemnity usually involve only two parties (the party who might suffer some loss and the party who agrees to pay). The articles of partnership should cover the rights. . every partner has a right to take part in its management. 3. obligations and the arrangements which the parties have mutually agreed upon.

Restriction on Transfer of Interest: No partner can transfer h share to any other person without the prior consent or willingness of all other partners. Conditions and Warranties: A stipulation in a contract of sale with reference to goods may be a condition or a warranty [Sec. In case. Example asked a car dealer to suggest him a suitable car for touring purposes. 6. it is not registered within the meaning of Income Tax Act. For example.4. if a partners leaves. Some of the statements or representations made by the seller are considered essential and they go to the root of the contract. Implied Authority: Each partner is an agent of the other partners and at the same time of the firm. Dehra Duni Basmati Rice. the firm will be assessed on total profit. 12(1)]. He may be compelled to pay the entire debt of the partnership from his personal assets. Unlimited Liability of Partners: The liability of the partners of a firm is unlimited. the contract will fail and it will entitle the aggrieved party to put an end to the contract. a condition is regarded as the very basis or foundation of the contract. Taxation: If a firm is registered under the Income Tax Act. 4) Distinguish between condition and warranty. This poses a serious handicap for the individual partners with large personal assets. then the creditors may those to sue any one or all of the partners to satisfy the debt. Condition: A condition is a stipulation which is essential to the main purpose of the contract. Held.Thus. If there is a breach of a condition. 5. The regular acts of business such as buying. B accordingly purchased the car but found it unfit for the purpose. 12(2)]. this authority automatically comes to each of the partners. 7. It operates at the pleasure of the partners. etc. State the circumstance under which a condition can be waived and treated as a warranty. it is considered as a stipulation which forms part of the contract of sale. Kashmiri Apples. selling of goods. the profit of the firm is first divided among the partners and then assessed separately. the suitability of the car for touring . dies. Duration: The partnership is a temporary form of business ownership. This is an implied authority the moment the agreement is entered into between the partners. If the business suffers losses end the assets of the partnership are not sufficient to meet its obligations. the breach of which gives rise to a right to treat the contract as repudiated [Sec. by a partner is considered the act of the firm or the act of all the partners. This stipulation in a contract of sale may be a condition or a warranty. The dealer suggested buying a "Buggatti" car. It is usual for a seller to make certain representations and statements in praise of his goods while selling goods to the buyer. hiring of employees etc. The partnership can come to an end. 8. declared bankrupt or insane it is also dissolved by the partners by obtaining a degree from the court. Where the statement of representation made by the seller is an assertion of fact.

the buyer has the option to treat the breach of condition as a breach of warranty. what . though called a warranty in the contract and vice-versa [Sec. creditors and those who deal with the company to know what is permitted range of enterprise. It is the document which informs all persons dealing with the company. B can claim damages for a breach of condition as a breach of warranty [Hardy & Co.” In the words of Charles Worth. Warranty: A warranty is a stipulation collateral to the main purpose of the contract.It is the fundamental document of the company. who in turn sold them by sample to C. It should be noted that whether a stipulation in a contract of sale is a condition or a warranty depends in each case on the construction of the contract. B sued A. It is the principal document of the company and no company can be registered without the memorandum of association. When a contract of sale is subject to any condition to be fulfilled by the seller. The goods were not found according to the sample. 13(1)].purposes was so important that its non-fulfdment defeated the very purpose. he may (a) waive the condition altogether or (b) treat the breach of the condition as a breach of warranty and claim damages [Sec. According to Lord Macmillan. When a breach of condition is to be treated as a breach of warranty? The law has provided two cases. 12(4)]. Marshal. In such a case. Hence B could return the car and get back the price [Baldry v. to know what its permitted range of enterprise is. as B had accepted the goods by selling them to C.The Memorandum of Association is the constitution of the company and provides the foundation on which its structure is built. C rejected the goods and gave a notice to B. v.It should be noted that this option once exercised becomes final and the party later on cannot insist on the fulfilment of the condition. MEANING: . The party will have to accept the goods but can claim damages for breach of warranty. It clearly states the objectives of the company. “the memorandum of association is the company’s charter and defines the limitations of its powers. Its purpose is to enable shareholders. C could reject the goods but not B.A warranty is not regarded as the very basis of a contract or its foundation. Hence a breach of warranty does not give the aggrieved party. Hillerns and Fowler]. creditors and those who deal with the company. A stipulation may be a condition. Held. defines its scope of operations and its relationship with the outsiders. “The purpose of the memorandum is to enable the shareholder. 12(3)]. one optional and the other compulsory. It has been described as the constitution of charter of the company. Hence C can get the price back but B cannot get the refund. The breach of which gives rise to a claim for damages but not a right to reject the goods and treat the contract as repudiated [Sec. 5) What is meant by Memorandum of Association? Explain in brief. a right to reject the goods and repudiate the contract. It defines the scope of the company’s activities as well as its relation with the outside world. Example:Certain goods were sold by sample by A to B.

queen.” This is an exhaustive definition which explains the nature and scope of memorandum. If the company has a name which is undesirable or resembles the name of any other existing company. How capital will it raise it’s its nationality is? It regulates the company’s external affairs. • It explains the scope of activities of the company.the company is formed to do. These words are used to ensure that all persons dealing with the company should know that the liability of its members is limited. Importance of Memorandum: Memorandum is the fundamental document of a company which contain conditions upon which the company is incorporated. 1956”. WHO. World Bank etc. The name should not be objectionable in the opinion of the government. “ Memorandum means the Memorandum of association of a company as originally framed or as altered from time to time in pursuance of any previous Companies law or of the Companies Act. . • It is a basic document of the company with regard to its constitution • It is a charter of the company which sets out its written goals • The memorandum of association contains the following six clauses:Clauses of Memorandum: The memorandum of association contains the following clauses: The Name Clause: A company being a separate legal entity must have a name. The word ‘limited’ must be used at the end of the name of a Public and ‘Private Limited’ is used by a Private Company. Purpose:The main purpose of the memorandum is to explain the scope of activities of the company. The outsiders will understand the limits of the working of the company and their dealings with it should remain within the prescribed scope.” The contents of the memorandum are explained in Section B of the Act. Definition: . this name can be changed by passing an ordinary resolution. government bodies and the names of world bodies like UNO. The prospective shareholders know the areas where company will invest their money and the risk they are taking in investing the money.According to Section 2(28) of the Companies Act. The investment knows where their money will be spent and outsiders also know the nature of activities the company is authorized to take up. A company may select any name which does not resemble the name of any other company and it should not contain the words like king. This document is important for the following reasons. Section 2 (28) of the Companies Act defines a memorandum as “the memorandum of association of a company as originally framed or as altered from time to time in pursuance of any previous Company Law or of this Act. • The whole structure of the company is built upon memorandum. The name of the company must be painted outside every place where business of the company is carried on. Memorandum defines the limitations on the powers of the company established under the Act. while the articles of association regulate its internal affairs. emperor.

whichever is earlier. mention may also be made in the clause to enable the public to know the exact nature of capital structure of the company. By confining the activities within a specified field. This helps the Registrar to have correspondence with the company. The division of capital into equity share capital and preference share capital should also be mentioned. Moreover. The object clause offers protection to the shareholders by ensuring that the funds raised for the undertaking are not going to be risked in any other undertaking. Association Clause: This clause contains the names of signatories to the memorandum of association. The number of shares in each category and their value should be given. No activity can be taken up by the company which is not mentioned in the object clause Moreover. The Companies (Amendment) Act 1965 requires that in cause of companies formed after this amendment. The place of registered office can be intimated to the Registrar within 30 days of incorporation or commencement of business. The object clause should decide carefully because it is difficult to alter this clause later on. It means that the memes will be liable to pay only the unpaid balance of their shares. If the office is to be shifted from one state to another state it involves alteration in the memorandum. Each subscriber must take at least one share in the company. But if the company wants to shift its registered office from one town to another town in the same state. The creditors also feel protected by this clause. and (b) other objects. the address of which should be communicated to the Registrar of Companies. Main objects will include objects to be pursued by the company on incorporation and objects incidental or ancillary to the attainment of the main objects. Object Clause: This is one of the important clauses of the Memorandum of Association. the memorandum must state separately (a) main objects. They are free to add anything to it provided it is not contrary to the provisions of the Companies Act and other laws of the land. the investors i.e.. The choice of the object clause lies with the subscribers to the memorandum. The liability of the members may be limited by guarantee. The object clause can be changed to enable a company to carry on its activities more economically. A company can shift its registered office from one play to another n the same town with intimation to the Register. shareholders will know the sphere of activities which the company can undertake. It determines the rights and powers of the company and also defines its sphere of activities. Liability Clause: This clause states that the liability of the members is limited to the value of shares held by them. Other objects will include all other objects which are not included in the main objects. It also states the amount which every member will undertake to contribute to the assets of the company in the event of its winding up.e. the investors i. If some special rights and privileges are conferred on any type of shareholders. Capital Clause: The clause states the total capital of the proposed company. or by improved means to carry on some business which under existing circumstances may conveniently by combined with the object clause. a special resolution is required to be passed.Registered Office Clause: Every company should have a registered office. The memorandum must be signed by at least seven persons in the cause of public limited company and by at least two persons in the case of private limited company. The subscribers declare that they agree to incorporate the company and agree to take the shares stated against their . it serves the public interest also. shareholders will not mentioned in the object clause..

then printed copy of the Memorandum as altered must be field with the Registrar within three months of the order. investors. When this change is allowed by the Board.names. Earlier this power was vested with the court but the Company Law (Amended) Act. • The company is enabled by change to carry on some new business with convenience and advantage. • The company may enlarge the local area of its operations. • The company will be able to attain its objectives by new and improved means. This change can be affected only with the approval of Company Law Board. This clause is a limitation on the company beyond which it cannot carry its activities. The object clause can be changed by passing a special resolution and by getting the permission of the Company Law Board. Registered Office (Section 17): The change in registered office place from one state to another requires a change in memorandum. If the company is registered with an undesirable name then it can change it with an ordinary resolution with the approval of the Central Government. A petition is also made to the Company Law Board for issuing a confirmation. its change may affect the activities of the company. The Central Government can also direct the company within 12 months of its registration to change its name and this will have to be done within three months. Object Clause (Section 17): The object clause is the most important clause in the memorandum. This change affects the interests of shareholders. The procedure provided for different clauses varies. employees etc. The change in situation and objects clause is allowed only under certain situations. It will be allowed when it necessary for any of the following reasons: The change is necessary to allow the company to carry on its business more economically or efficiently. The following procedure is followed for carrying out a change in the memorandum: Name clause (Section 25): A company may change its name by passing a special resolution and with the prior approval of the Central government. Company Law has prescribed a particular procedure for making a change in the memorandum. A copy of the resolution should be field with the Registrar within 30 days of passing the resolution. The full addresses and occupations of subscribers and the witnesses are also given. • To sell whole of part of the company’s property. creditors. The change in name will be effective when it is resisted with the Registrar. 1974 has transferred it to Company Law Board. • To restrict or abandon any of the objects specified in the memorandum. • To amalgamate with any other company or body of persons. Any change in various clauses of memorandum may have an adverse effect on any of the parties connected with the company. • . The signatures of subscriber are attested by at least one witness each. Alteration of a Memorandum of Association Memorandum of Association is a basic document of the company.

Further. 2002. Karnataka (2000). however.Liability clause: If articles so permit. Prior to the Act being passed by the Parliament. video cassettes or in any other electronic mode. Rajasthan (2000). floppies. the successor to the repealed J&K Right to Information Act. The RTI Act mandates timely response to citizen requests for government information. The Fol Act. Some of these State level enactments have been widely used. take certified samples of materials of work. became the basis for the Freedom of Information Bill. Under the provisions of the Act. While the Delhi RTI Act is still in force. The officer concerned should also accord his consent for making the liability unlimited. It applies to all States and Union Territories of India. any citizen (excluding the citizens within J&K) may request information from a 'public authority' (a body of Government or 'instrumentality of State') which is required to reply expeditiously or within thirty days. the Central Government appointed a working group under H. The first draft of . the Act explicitly overrides the Official Secrets Act and other laws in force as on 15 June 2005 to the extent of any inconsistency. Madhya Pradesh (2003). never came into effective force as it was severely criticised for permitting too many exemptions. Delhi (2001). and obtain information in the form of printouts. which is covered under a State-level law. 2004 and its 2008 amendment. relaxes the Official Secrets Act of 1889 which was amended in 1923 and various other special laws that restricted information disclosure in India. At the national level. the RTI Laws were first successfully enacted by the state governments of Tamil Nadu (1997). The Act. works and records. It was passed by Parliament on 15 June 2005 and came fully into force on 13 October 2005. In other words. tapes. The Act also requires every public authority to computerise their records for wide dissemination and to proactively publish certain categories of information so that the citizens need minimum recourse to request for information formally. except the State of Jammu and Kashmir. in an extremely diluted form. take copies of documents. there was no upper limit on the charges that could be levied and there were no penalties for not complying with a request for information. Shourie to draft legislation. Goa (1997). The Right to Information (RTI) Act is a law enacted by the Parliament of India to provide for setting out the practical regime of right to information for citizens. the liability of the Directors Managing Directors or Manager can be made unlimited by passing a special resolution.The failure of Fol Act led to sustained pressure for a better National RTI enactment. Assam (2002) and Jammu and Kashmir (2004). inspect documents.D. Maharashtra (2002). given the experience of state governments in passing practicable legislation. diskettes. Jammu & Kashmir has its own Right to Information Act of 2009. The RTI Act specifies that citizens have a right to: request any information (as defined). Capital Clause: A change in capital clause involving an increase in the authorized capital can affected by passing an ordinary resolution in the general Meeting 6) Write short note on Right to Information Act. 2000 which eventually became law under the Freedom of Information (Fol) Act. but also for requests that would involve 'disproportionate diversion of the resources of a public authority'. The Shourie draft. not only under the standard grounds of national security and sovereignty.

the reply of the PIO is necessarily limited to either denying the request (in whole or part) and/ or providing a computation of further fees.Considering that providing each and every information asked for under the Act may severely jeopardise national interest. including the executive. it is the PIO's obligation to provide information. the disclosure of which would harm the competitive position of a third party. Notwithstanding any . if the request pertains to another public authority (in whole or part) it is the PIO's responsibility to transfer/forward the concerned portions of the request to a PIO of the other authority within five days.the Right to Information Bill was presented to Parliament on 22 December 2004. and cabinet papers including records of deliberations of the Council of Ministers.Information available to a person in his fiduciary relationship. Information which has been expressly forbidden to be published by any court of law or tribunal or the disclosure of which may constitute contempt of court. directly or indirectly by funds" provided by the government are also covered by the Law. Further. Hence. trade secrets or intellectual property. If information is not provided within the time limit. the disclosure of which would cause a breach of privilege of Parliament or the State Legislature. information not provided in the times prescribed is to be provided free of charge. The Act also specifies time limits for replying to the request. The Law is applicable to all constitutional authorities. legislature and judiciary. the reply is to be given within 35 days of receipt. Under the Act. it is treated as deemed refusal. every public authority is required to designate Assistant Public Information Officers (APIOs) to receive RTI requests and appeals for forwarding to the PIOs of their public authority. Subsequently. if life or liberty of any person is involved. controlled or substantially financed" by government. information including commercial confidence. some exemptions to disclosure are provided for in the Act. When any person submits a request to the PIO for information in writing. information which would impede the process of investigation or apprehension or prosecution of offenders.The information under RTI has to be paid for except for Below Poverty Level Card (BPL Card) holders. Secretaries and other officers are some of the exemptions. information received in confidence from foreign Government. any institution or body established or constituted by an act of Parliament or a state legislature. the reply is to be given within 30 days of receipt. in a landmark decision of 30 November 2006 (Sarbajit Roy versus DERC) the Central Information Commission reaffirmed that privatised public utility companies continue to be within the RTI Act their privatisation notwithstanding. In the case of APIO. In addition. However. Further. Refusal with or without reasons may be ground for appeal or complaint. The time between the reply of the PIO and the time taken to deposit the further fees for information is excluded from the time allowed. the time limit is 45 days but with the prior approval of the Central Information Commission. more than a hundred amendments to the draft Bill were made before the bill was finally passed. or non-Government organizations "substantially financed.In case of information concerning corruption and Human Rights violations by scheduled Security agencies. If the request has been made to the PIO.Bodies or authorities established or constituted by order or notification of appropriate government including bodies "owned. information. all authorities covered must appoint their Public Information Officer (PIO).The RTI Act specifies that a citizen making the request is not obliged to disclose any information except his/her name and contact particulars. While private bodies are not within the Act's ambit directly. the PIO is expected to reply within 48 hours. If the request is transferred by to PIO to another public authority the time allowed to reply is computed from the day on which it is received by the PIO of the transferee authority.

The officer who is the head of all the information under the Act is Chief Information Commissioner (CIC). a public authority may allow access to information. At the end of year CIC is required to present a report which contains: the number of requests made to each public authority. . details of disciplinary action taken against any officer in respect of the administration of the Act. if public interest in disclosure outweighs the harm to the protected interests.of these exemptions. the number of decisions when applicants were not given permission to access to the documents which they request. the provisions of the Act under which these decisions were made and the number of times such provisions were filed. and the amount of charges collected by each public authority under the Act.

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