1.

What are the various ways in which a contract can be discharged? Explain with cases.

Ans: When an agreement, which was binding on the parties to it, ceases to bind them, the
contact is said to be discharged. A contract may be discharged in the following ways:
1.
By Performance of the contract ;
Under a contract each party is bound to perform his part of the obligation. After the parties have
made due performance of the contract, their liability under the contract comes to an end. In such a
case the contract is said to be discharged by performance.
2.
By breach of the contract ;
When a party having a duty to perform a contract fails to do that, or does an act whereby the
performance of the contract by him becomes impossible, or he refuses to perform the contract, there
is said to be a breach of contract on his part. On the breach of contract by one party, the other party is
discharged from his obligation to perform his part of the obligation, and he also gets a right to sue the
party making the breach of contract for damages for the loss occasioned to him due to the breach of
contract. The breach of contract may be either actual, i.e., non-performance of the contract on the
due date of performance, or anticipatory, i.e., before the due date of performance has come. For
example, A is to supply certain goods to B on 1st January. On 1st January A does not supply the goods.
He has made actual breach of contract. On the other hand, if A informs B on 1st December that he will
not perform the contract on 1st January next, A has made anticipatory breach of contract
3.

By impossibility of performance ;
Section 56, which deals with this question, mentions two kinds of impossibility.
Firstly, impossibility existing at the time of the making of the contract.
An agreement to do an act impossible in itself is void. The object of making any contract is that the
parties to it would perform their respective promises. If a contract is impossible of being performed,
the parties to it will never be able to fulfil their object, and hence such an agreement is void. For
example, A agrees with B to discover treasure by magic. The performance of the agreement being
impossible, the agreement is void. Similarly, an agreement to bring a dead man to life is also void.
Secondly, a contract which is possible of performance and lawful when made, but the same
becomes impossible or unlawful thereafter due to some supervening event.
Ex: A Contracts to take in cargo for B at a foreign port. A’s Government afterwards declares war
against the country in which the port is situated. The contract becomes void when war is declared.

The performance of the contract may be possible when the contract is entered into but because of
some event, which the promisor could not prevent, the performance may become impossible or
unlawful.
4.

By Agreement and Novation
Section 62 and 63 deals with contracts in which the obligation of the parties to it may end by
consent of the parties.
Novation
Novation means substitution of an existing contract with a new one. When, by an agreement
between the parties to a contract, a new contract replaces an existing one, the already existing
contract is thereby discharged, and in its pace the obligation of the parties in respect of the new
contract comes into existence.
Ex: For example, A owes B 10,000 rupees. A enters into an agreement with B , and gives B a
mortgage of his (A’s) estate for 5,000 rupees in place of the debt of 10,000 rupees. This is a new

contract and extinguishes the old. In this illustration the parties to the contract remain the same but
there is a substitution of a new contract with altered terms in place of the old one.

Q2. Explain Goods under Sales of Goods Acts. Explain the rights of an unpaid seller.
ANS: As per Sale of Goods Act, 1930, “goods” means every kind of movable 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.
Unpaid seller means a person who has sold the good for a price but price has not been paid to him
unpaid seller has rights against the goods and buyer.

RIGHTS OF AN UNPAID SELLER
The unpaid seller has following rights.
1) Rights against the goods.
i.Rights of lien
The right of lien means lawfully right to retain the goods possession until the full price is received.
Anunpaid seller can exercise his right of lien in following cases. Sec 47-49
I. Where the goods have been sold on the cash basis.
II. Where the goods have been sold on credit basis and the term of credit has expired.
III.Where the buyer has become insolvent even if the period of credit has not been expired
Example: A seller “S” sells a TV set to “B” and delivers it to “B” and since the TV set was not
functioning properly,“B” delivered it back to “S” for the repairs. It was held that “S” can not exercise
his right of lien over TVset.

ii.Right of stoppage of goods in transit
It means stoppage of goods while they are in transit to take possession until the price is paid (sec.
50-52)
Unpaid seller can stop the goods in transit in the following cases.
I. While the buyer becomes insolvent
II. While the goods are out of actual possession of seller, but have not reached buyer’s possessioni.e.
goods are in transit with career.
III.The unpaid seller can stop the goods in transit only for payment of the price of the goods andnot
for any other charges

b)Where the unpaid seller has exercised his right of lien or stoppage in transit and gives a noticeto buyer of his intension of resell the goods. “defect” means any fault. c)Where the unpaid seller has expressly reserved his right of resale. . The seller can recover damages only and not the full price iii. purity or standard which is required to be maintained by or under any law of the time being in force under any contract. Moreover the defect has to be in relation to goods only. 2)Rights against buyer personally i. the unpaid seller has the right to resellthe goods in the following circumstances. Q. 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. no defect can be complained therein. However. imperfection or shortcoming in the quality.. from the time it was due until it is paid. a)Where the goods are of perishable nature. This is an exhaustive definition. express or implied or as is claimed by the trader in any manner whatsoever in relation to any goods. quantity. Right of resale If a buyer fails to pay or offer the price within a reasonable time. ANS: Section 2(1)(f) of the Act provides that. “M” canresell those to any other person. Suit for price Where ownership of the goods has passed to the buyer and the buyer refuses to pay the price accordingto the terms of the contract.e. the seller may sue him for damages for non-acceptance. if an item does not fall within the definition of ‘Goods’. “X” can resell to any other person. What are the rights available to a consumer who has suffered from the two. The unpaid seller can recover interest at a reasonable rate on the total unpaid price of goods. Suit for special damages and interest The seller can sue the buyer for special damages where the parties are aware of such damages at thetime of contract. Section 2(1)(g) of the Act provides that. Example: a)“X” sells vegetable to “Y” on credit. i. iii. the coverage of this definition is very wide. Later on gets news that “B”has become insolvent. “N” does not pay. irrespective of delivery of the goods ii. “deficiency” means any fault. “Y” does not pay. shortcoming or inadequacy in the quality. Any type of defect not mentioned here will not be entertained by Consumer Forums.Example: “A” sells TV set to “B”. It means that the Act recognises only those defects which are covered by the definition. “A” can stop delivery.3: Define Defects and Deficiencies. the seller can sue the buyer for price. Suit for damages for non-acceptance Where the buyer refuses to accept and pay for the goods. imperfection. b)“M” sells 100 blankets to “N” and gives him one week for payment. “A” delivers the TV to the carrier to carry it to “B”. potency.

Thus only a customer of a bank having a current or a savings bank account is entitled to draw a cheque on his banker i. signed by the maker. the sum payable may be ‘certain’ although. but it has to be proportionate & rational with the loss or injury suffered by you. 7. Removal of defects or deficiencies in the services. or 8. firm or company. Sometimes accommodation bills are also drawn to help a familiar party. Explain the difference between cheques. Q4. Withdrawal of the hazardous goods from being offered to sale. Always be reasonable in the amount you want to claim as this will make it easier for the court to make a finding in your favor.. There is no limit on amount of compensation you can claim. Award of compensation for the loss or injury suffered. the Redressal Forums may give order for one or more of the following relief to consumer in case of defects or deficiencies found in the product: 1. Discontinuance of unfair trade practices or restrictive trade practices or direction not to repeat them. The amount of the instrument must be certain: The order of the drawer of a cheque or a bill and the promise by the writer of a promissory note must be to pay a certain sum of money and not anything else. The amount of money to be paid must be certain and specified in words and figures. 6. Award for adequate costs to parties.RIGHTS AVAILABLE TO A CONSUMER WHO SUFFERED FROM DEFECTS AND DEFICIENCIES: Depending on the facts and circumstances. 5.. 3. 3.g. Refund of the price paid. Cheque -> A cheque is a bill of exchange on a specified banker and not expressed to be payable otherwise than on demand. 2. or by a creditor on his debtor. Some Common differences: 1. the particular branch of a bank where he has opened his bank account.e. bills of exchange and promissory notes? Ans: Promissory Statements -> A promissory note is an instrument in writing containing an unconditional undertaking signed by the maker to pay a certain sum of money only to a certain person or the bearer of the instrument. 2. Removal of defects from the goods. Replacement of the goods. The name and address of the drawee bank are specifically printed on the cheque form. Bill of Exchange -> A bill of exchange is an instrument in writing containing an unconditional order. Unconditional order/promise: A cheque and a bill of exchange contain an order to the drawee whereas a promissory note contains a promise by the maker to his creditor. e. Thus the main difference between a cheque and a bill on the one hand and a promissory note on the other is that the cheque and the bill contain an order from the creditor to the debtor to pay a sum of money while he promissory note contains an undertaking or promise made by the debtor to his creditor to pay the sum specified therein. According to Section 5. The drawee of a cheque or bill : The main difference between a cheque and a bill is that the former is always drawn on and is payable by a banker specified therein. etc. . while a bill of exchange may be drawn on any person. directing a certain person to pay another person a certain sum of money. securities or goods. A bill of exchange is generally drawn by a seller on his customer. 4.

But no such acceptance is necessary in case of a cheque. They are: Noting Where a note or bill is dishonoured. A note or bill without stamp cannot be admitted in evidence. A bill may be payable at sight or after a period of time specified therein. In a bill the drawer and the payee may be one and the same person The liability of the drawer of a bill is secondary and conditional as the bill needs acceptance. Promissory Note Bill of Exchange In a promissory note there are two parties i. his debtor to pay. to sue the drawer and the endorsers. the holder may. In a bill of exchange there are three parties the drawer. Every bill of exchange which is not expressed to be payable on demand is entitled to 3 days of grace. 1899 requires that the promissory note and the bills of exchange must be stamped. Bill Of Exchange Cheque A bill of exchange may be drawn on any person. A cheque may be crossed Q5: What are the rights of a person if a cheque or BOE given to him are dishonored? ANS: The rights of a person if a BOE GIVEN TO HIM ARE DISHONORED are covered under section 99 and 100 of Negotiable Instruments Act. If cheque is a post-dated cheque is does not constitute an order to the banker till the date specified therein approaches Banks do not make payment of such cheques before the date given in the cheques 5.e. Stamping of promissory notes and bills of exchange is necessary: The Indian Stamp Act. A promissory note cannot be made payable to the maker himself. The time of payment: A cheque is always payable on demand. A promissory not or a bill of exchange in which no time for payment is specified is payable on demand (Section 19). A bill is never crossed A cheque is always drawn on a banker drawn on a banker A cheque does not require acceptance The drawer of a bill of exchange is the creditor who directs the drawee i. Section 99 provides a convenient method of authenticating the fact of dishonour by means of "Noting". drawee and payee A bill of exchange contains an unconditional order to pay. A cheque is not entitled to any days of grace.e. the holder is entitled after giving due notice of dishonour.4. This is not required in case of a cheque. If a bill is payable after a certain period it must be accepted by a drawee. The liability of the maker of a promissory note is primary and absolute A note needs no acceptance as it is signed by the person who is liable to pay. A bill payable after a certain period must be accepted by the drawee before it is presented for payment. through words to this effect are not mentioned therein. It may be stamped either before or at the time of its execution. including a banker A bill of exchange must be accepted before the drawee can be called upon to make payment upon it. 1881. The value of stamp depends upon the value of the note or the bill and whether it is payable on demand or at a future date. Where a bill or note is dishonoured. the maker and payee A promissory note contains an unconditional promise to pay The maker of a promissory note is the debtor himself and he undertakes to pay. if he so .

The notary public demands better security and on its refusal makes a protest known as "protest for better security". Sections 138 to 142 deal with these aspects. cause such dishonour to be noted by a notary public on the instrument. the formal protest is drawn up by the notary and when it is drawn up it relates back to the date of noting. Where a bill is required by law to be protested. In order to constitute the said offence (a) such cheque should have been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity. assigned for such dishonour if the instrument has not been expressly dishonoured the reasons why the holder treats it dishonoured and notary's charges. to the drawer of the cheque within fifteen days of the receipt of information by him from the bank regarding the return of the cheque unpaid. shall be punishable with imprisonment for a term which may extend to one year. then instead of a notice of dishonour.the names of the parties for and against whom protest is made. Foreign bills must be protested for dishonour when such protest is required by the law of the place where they are drawn. After the noting has been made. Protest The protest is the formal notarial certificate attesting the dishonour of the bill. notice of protest must be given by the notary public. before the maturity of the bill. INCASE OF DISHONOUR OF CHEQUES Chapter XVII of the Negotiable Instruments Act provides for penalties in case of dishonour of certain cheques for insufficiencies of funds in the accounts. or has suspended payment. A protest to be valid must contain on the instrument itself or a literal transcript thereof.desires. In that case. The provisions contained in this Chapter provide that where any cheque drawn by a person for discharge of any liability is returned by the bank unpaid for the reason of insufficiency of the amount of money standing to the credit of the account on which the cheque was drawn or for the reason that it exceeds the arrangement made by the drawer of the cheque with the banker for that account. the drawer of such cheque shall be deemed to have committed an offence. The noting or minute must be recorded by the notary public within a reasonable time after dishonour and must contain the fact of dishonour. in writing. the holder may have the bill protested for better security. or his credit has been publicly impeached. if any. Foreign promissory notes need not be so protested. and (b) the payee or holder in due course of such cheque should have made a demand for the payment of the said amount of money by giving notice. and based upon the noting which has been effected on the dishonour of the bill. the reason. the date of dishonour. whichever is earlier. or with fine which may extend to twice the amount of the cheque. without prejudice to the-6fher provisions of the Act. the fact and reasons for dishonour together with the place and time of dishonour and the signature of the notary public. Protest affords an authentic evidence of dishonour to the drawer and the endorsee. the drawer. Where the acceptor of a bill has become insolvent. and . or with both. or on a paper attached thereto or partly on each.

e.. the other party is discharged from his obligation to perform his part of the obligation.6: What is meant by breach of contract? What are the remedies available for the same? Ans: When a party having a duty to perform a contract fails to do that. i. Specific Performance and Injunction : Sometimes a party to the contract instead of recovering damages for the breach may have recourse to the alternative remedy of specific performance of the contract. he is entitled to recover the value of what he has done. Quantum meruit : When the injured party has performed a part of his obligation under the contract before the breach of contract has occurred. 1963. 1. or does an act whereby the performance of the contract by him becomes impossible. . Exceptions to Caveat Emptor Ans: The shelter of caveat emptor rule is not available to shelter on the following occasions. non-performance of the contract on the due date of performance. and he also gets a right to sue the party making the breach of contract for damages for the loss occasioned to him due to the breach of contract. The breach of contract may be either actual.(c) the drawer of such cheque should have failed to make the payment of the said amount of money to the payee or the holder in due course of the cheque within fifteen days of the receipt of the said notice. This entitles the injured party to recover compensation for the loss suffered by it due to the breach o9f contract. under this remedy. or he refuses to perform the contract. On the other hand. i. 2. A is to supply certain goods to B on 1st January. Provisions regarding these remedies have been contained in the Specific Relief Act.e. or anticipatory. 3. On 1st January A does not supply the goods. On the breach of contract by one party.. there is said to be a breach of contract on his part. He has made actual breach of contract. When caveat emptor is not applicable buyer can repudiate the contract. Q7. that the holder of such cheque received the cheque in the discharge of a liability Q. if A informs B on 1st December that he will not perform the contract on 1st January next. before the due date of performance has come. Damages : Remedy by way of damages is the most common remedy available to the injured party. For example. unless the contrary is proved. Section 73 to section 75 incorporate provisions in this regard. from the party who caused the breach. It has also been provided that it shall be presumed. A has made anticipatory breach of contract When one of the parties to the contract makes a breach of the contract the following remedies are available to the other party. or an injunction restraining the other party from making a breach of the contract.

When sale is made by means of sample: When goods are sold on the basis of sample. If it is not so. But A supplies giant sain fain seeds. B purchases a bottle from A. there is a sale between A and B according to which A has to sell his harvester to B. In this case. A case on this point is Vorley Vs Whipp. In the same case mis-representation or wrong description can be seen in connection with Harvester. the delivered goods must be in resemblance with sample. . the delivered goods must be in accordance with description. Thus here purpose is mentioned but the seller sells such a bottle which is not qualified for storage of hot water. caveat emptor rule is not applicable and hence buyer can repudiate the contract. There after B comes to know that the delivered machine is not in accordance with given description. Otherwise seller cannot claim the shelter of caveat emptor rule. Court decides that buyer can claim compensation. he cannot claim the protection of caveat emptor rule. Under first point Vorley Vs Whipp is explained. When concealment is made: In case where buyer conceals material facts and thus fraudulently sells goods. In this case a contract of sale gets formed between A and B according to which A has to sell an animal to B out of his (A`s) farm. While selling A gives a lot of description about the machine. B selects an animal and request’s A to confirm that there is no any sickness to that animal. Then caveat emptor rule is not applicable and buyer can repudiate the contract. Court decides that as delivered goods are not in accordance with given description. In this case a contract of sale gets formed between A and B according to which A has to supply English sain fain seeds. A case on the point is Priest Vs Laste. Court decides that buyer can repudiate the contract of Sale. then also caveat emptor rule is not applicable. B Sues for repudiation of contract of sale. When purpose is mentioned: at the time of purchasing the goods if buyer communicates the purpose for the sake of which he is purchasing the goods seller should sell such goods only which are suitable to that purpose otherwise caveat emptor rule is not applicable. Related case is Wallis Vs Prat. At the time of purchasing the bottle the buyer says that it should be qualified for storage of hot water. In this case. There after it comes across death and court decides that B can get the amount back. A case on this point is Smith Vs Green. Actually the animal has been suffering from some sickness and A conceals the fact. When mis-representation is made: When seller sells the goods by giving mis-representation.When Sale is need by means of description: When goods are sold on the basis of description. The contract is based on samples. seller’s fraudulent behavior can be observed and there is no ground to say that buyer is negligent. Hence buyer can repudiate the contract. 2013 and explain how directors of a company are appointed and their responsibilities under the act. As a consequence buyer’s wife gets injured. Q8 Define a company under Companies Act.

Appointment of the Directors a) First Director: The Articles of a company usually mention the names of the first directors by their respective names or prescribe the method of appointing them. They are in charge of the management of the affairs of the company. a company formed or registered under any of the previous company laws  Characteristics of a Company Incorporation offers the following advantages to the business community as compared with all other kinds of business organisations 1. 2013 define the term 'company' as " a company formed and registered under the Act or an existing company i. The number of directors and the additional director must not exceed the maximum strength fixed for the Board by the Articles. Transferable Shares 6. Common Seal 7. Perpetual Succession 4. c) Appointment of directors by the Board of directors: The Board of directors of a company may also appoint the directors as: Additional directors: Any additional director appointed by the directors shall hold office only upto the date of the next annual general meeting of the company. The person whose name is mentioned in the Articles becomes the first director of the company. Such directors are called rotational directors. if the office of any director appointed by the company in a general meeting is vacated before his term of office expires in the normal course. The directors are collectively called the Board of Directors. Independent Corporate Existence / Legal Entity 2.Ans: Clause 20 of the Companies Act. Casual vacancy: In case of either a private or a public company. then the resulting casual vacancy may be filled by the Board of directors at a meeting of the Board. b) Appointment of the directors by the company (sec 255 to 257. then the number of directors and the names of the directors shall be determined in writing by the subscribers of the Memorandum or a majority of them (Clause 64 of Table A).e. The directors are appointed by the shareholders of the company in the general meeting. If no name is mentioned in the Articles. 263 and 264): In the case of a public company or a private company which is a subsidiary of a public company. Capacity to sue and being sued Definition: Director The Directors of a company are selected according to the Articles of Association of the company and the provisions of the Company Act. at least 2/3rds of the total number of directors shall be liable to retire by rotation. Separate property 5. The board is the company’s executive authority. Limited Liability 3. .

specify as necessary to effectively safeguard the interests of the company or its shareholders or public interest. Duties of the Directors of a Company The duties of the director of a company are as follows: a) The director must exercise their powers honestly and for the benefit of the company as a whole. skill and diligence: The directors should carry out their duties with reasonable care in handling the official matters and exercise high degree of skill and diligence as is expected from persons of their knowledge and status. The proportional representation may be a single transferable vote or by a system of cumulative voting or otherwise.Alternate director: An alternate director may be appointed by the Board of directors of the company if it is so authorized by (i) Articles of the company or (ii) a resolution passed by the company in the general meeting. . f) Appointment of directors by the Central Government (Sec 408): Sec 408 empowers the Government to appoint such directors to the Board of a company as the Company Law Board may. The appointment will be for a period not exceeding 3 years on any one occasion. The appointment shall be made once in 3 years and interim casual vacancies shall be filled in the manner as provided in the Articles. g) Qualification based on the number of shares held by the person in the company No person can hold the office of the director in more than 2 companies. He is not bound to bring any special qualifications to his office. creditors who have substantial interest in the company. The number of directors so appointed should not exceed 1/3rd of the total number of directors and they are not liable to retire by rotation. e) Appointment by proportional representation(Sec 265): The articles of a company may provide for the appointment of not less than 2/3rds of total number of directors of a public company or of a private company according to the according to the principle of proportional representation. or other creditors like banks and other financial institutions who have advanced loans to the company to appoint their nominees to the Board. He shall act for the original director during his absence for a period of at least 3 months from the state in which the Board meetings are actually held. by order in writing. In certain cases the Articles gives substantial power to the debenture holders. d) To attend the Board meetings and the statutory meetings of the company. d) Appointment of directors by third parties: Directors are also appointed by the third parties like the debenture holders. They must not take out any secret profit out of their position. e) It is the duty of the director not to delegate his functions except to the extent authorized by the Act or the constitution of the company. Any director appointed by the Central government shall not be required to hold any qualification shares nor can is his tenure liable to termination by retirement of directors. b) The directors must not place themselves in a position in which there is a conflict between their duties to the company and their personal interests. c) Duties of care.

 Tribunal may inquire into the revival and rehabilitation of sick units. in case of a company's inability to pay debts.  If the number of members is reduced below the statutory minimum i.  A person authorised by the Central Government. The Tribunal may instead of winding up.f) It is obligatory on the part of the director to disclose his interests in any contract to be entered by the company and the number of shares held by him. or suspends its business for a whole year. Winding up a Registered Company The Companies Act provides for two modes of winding up a registered company. friendly relations with foreign States.  A contributory or contributories. pays debts and finally distributes any surplus among the members in accordance with their rights. on any ground provided prior approval of the Central Government has been obtained. The procedure for winding up differs depending upon whether the company is registered or unregistered. called the liquidator. the security of the State. It its revival is unlikely. Grounds for Compulsory Winding Up or Winding up by the Tribunal  If the company has. The petition for winding up to the Tribunal may be made by : The company.  If default is made in delivering the statutory report to the Registrar or in holding the statutory meeting. order the holding of statutory meeting or the delivery of statutory report.9: What are the various ways in which a company can be wound up? ANS: Winding up of a company is defined as a process by which the life of a company is brought to an end and its property administered for the benefit of its members and creditors. It also includes an existing company. Q. is appointed and he takes control of the company.e. A petition on this ground may be filed by the Registrar or a contributory before the expiry of 14 days after the last day on which the meeting ought to have been held.  The Registrar. 1956 is known as a registered company. the dissolution of the company takes place. public order. which had been formed and registered under any of the earlier Companies Acts. in case of passing a special resolution for winding up. An administrator. the company will have no assets or liabilities.  If the company fails to commence its business within one year of its incorporation. On dissolution.  If the tribunal is of the opinion that it is just and equitable that the company should be wound up. A company formed by registration under the Companies Act. by a Special Resolution. The winding up on this ground is ordered only if there is no intention to carry on the business and the Tribunal's power in this situation is discretionary. resolved that the company be wound up by the Tribunal.  If the company is unable to pay its debts.  If the company has made a default in filing with the Registrar its balance sheet and profit and loss account or annual return for any five consecutive financial years  If the company has acted against the interests of the sovereignty and integrity of India. in case of investigation into the business of the company where it appears from the report of the inspector that the affairs of the company have . the company's name is struck off the register of the companies and its legal personality as a corporation comes to an end. collects its assets. At the end of winding up. decency or morality. below seven in case of a public company and two in the case of a private company. When the affairs of a company are completely wound up. in case of a failure to hold a statutory meeting or to file a statutory report or in case of reduction of members below the statutory minimum. the tribunal can order its winding up.  A creditor.

(i) the period fixed for the duration of the company by the articles has expired. Voluntary Winding Up of a Registered Company When a company is wound up by the members or the creditors without the intervention of Tribunal. It shall be accompanied by a copy of the report of auditors on Profit & Loss Account and Balance Sheet. or the liquidator. It will state that the company will be able to pay its debts in full in a specified period not exceeding three years from commencement of winding up.  Duty of liquidator to call creditors' meeting in case of insolvency of the company and place a statement of assets and liabilities before them. The provisions applicable to creditors' voluntary winding up are as follows: The Board of Directors shall convene a meeting of creditors on the same day or the next day after the meeting at which winding up resolution is to be proposed. There are two conditions for such winding up: A declaration of solvency must be made by a majority of directors. whether ordinary or special. integrity or security of India or against public order. or (ii) some event on the happening of which company is to be dissolved. members or any other person.  Liquidator's duty to make an account of winding up and lay the same before the final meeting.  Power of liquidator to accept shares or like interest as a consideration for the sale of business of the company provided special resolution has been passed to this effect. or all of them if they are two in number.  Filling up of vacancy caused by death. .  Sending the notice of appointment of liquidator to the Registrar.  The Central or State Government.  Liquidator's duty to convene a General Meeting at the end of each year.  Cessation of Board's power on appointment of liquidator except so far as may have been sanctioned by the General Meeting. It may take place by: By passing an ordinary resolution in the general meeting if :. It shall also be advertised in the Official Gazette and also in two newspapers circulating in the place of registered office. etc. The provisions applicable to members' voluntary winding up are as follows: Appointment of liquidator and fixation of his remuneration by the General Meeting. decency.  By passing a special resolution to wind up voluntarily for any reason whatsoever. it must be advertised in the Official Gazette and also in some important newspaper circulating in the district of the registered office of the company. and  Shareholders must pass an ordinary or special resolution for winding up of the company. It requires the holding of meetings of creditors besides those of the members right from the beginning of the process of voluntary winding up. It shall be made five weeks preceding the date of resolution for winding up and filed with the Registrar. The Companies Act (Section 484) provides for two methods for voluntary winding up:Members' voluntary winding up It is possible in the case of solvent companies which are capable of paying their liabilities in full. Creditor's voluntary winding up It is possible in the case of insolvent companies. resignation or otherwise in the office of liquidator by the general meeting subject to an arrangement with the creditors. the winding up proceedings are dominated by the creditors. Within 14 days of passing the resolution. it is called as voluntary winding up. if the company has acted against the sovereignty. Notice of meeting shall be sent by post to the creditors simultaneously while sending notice to members. morality. It is the creditors who get the right to appoint liquidator and hence.been conducted with intent to defraud its creditors. has happened. and also a statement of assets and liabilities upto the latest practicable date.

any legal proceeding can be filed only with the leave of the Tribunal. a foreign company carrying on business in India can be wound up as an unregistered company even if it has been dissolved or has ceased to exist under the laws of the country of its incorporation.  A copy of resolution passed at creditors' meeting shall be filed with Registrar within 30 days of its passing. However.  If the company is unable to pay its debts.  On the making of winding up order. A statement of position of the company and a list of creditors along with list of their claims shall be placed before the meeting of creditors. the liquidator shall call a final meeting of the company as well as that of the creditors through an advertisement in local newspapers as well as in the Official Gazette at least one month before the meeting and place the accounts before it. Every person shall be considered a contributory if he is liable to pay any of the following amounts: Any debt or liability of the company.  It shall be done at respective meetings of members and creditors.  Contributory means a person who is liable to contribute to the assets of a company in the event of its being wound up.  Cessation of board's powers on appointment of liquidator.  If the Tribunal regards it as just and equitable to wind up the company. an unregistered company includes any partnership. As soon as the affairs of the company are wound up.  Fixation of remuneration of liquidator by creditors or committee of inspection.  Circumstances in which unregistered company may be wound up are as follows: If the company has been dissolved or has ceased to carry on business or is carrying on business only for the purpose of winding up its affairs.  Any cost. But it will not cover the following: A railway company incorporated by an Act of Parliament or other Indian law or any Act of the British Parliament. charges and expenses of winding up. liquidator shall send to Registrar a copy of accounts and a return of resolutions. Q. or company consisting of more than seven persons at the time when petition for winding up is presented.  A company registered under the Companies Act. the nominee of creditors shall be the liquidator. Within one week of meeting. In case of difference.  Any sum for adjustment of rights of members among themselves. association. 1956  A company registered under any previous company laws.  A five-member Committee of Inspection is appointed by creditors to supervise the work of liquidator. The provisions relating to winding up of a unregistered company: Such a company can be wound up by the Tribunal but never voluntarily.  An illegal association formed against the provisions of the Act.10: How have the MRTP / Competition Act tried to restrict the concentration of economic power in the hands of a few people? Ans: Restrictive Trade Practice means a trade practice which tends to bring about manipulation of price or its conditions of delivery or to affect flow of supplies in the market relating to goods or . Winding up an Unregistered Company According to the Companies Act.

Public Company limited by Guarantee and having no share capital 4. Public unlimited Company not having share capital Public Limited Companies 1. if it deems fit. Public Company limited by shares 2. the following agencies. Public unlimited Company having share capital 5. Private unlimited Company not having share capital One Person Company (OPC) 1.services in such a manner as to impose on the consumers unjustified costs or restrictions and shall included  Delay beyond the period agreed to by a trader in supply of such goods or in providing the services which has led or is likely to lead to rise in the prices  Any trade practice which requires a consumer to buy. Private Company limited by shares 2. OPC unlimited Company having share capital 5. Q. .There shall be established for the purposes of this Act. Private unlimited Company having share capital 5.12 Power of various forums and their jurisdictions? Ans: Establishment of Consumer Disputes Redressal Agencies. OPC Company limited by Guarantee and having no share capital 4. Private Company limited by Guarantee having share capital 3. hiring or availing of other goods or services. Private Company limited by Guarantee and having no share capital 4. hire or avail of any goods or services as a condition precedent to buying. establish more than one District Forum in a district. . and (c) a National Consumer Disputes Redressal Commission established by the Central Government by notification. Q11 What are various types of companies that can be registered under the Companies Act. OPC Company limited by shares 2. OPC unlimited Company not having share capital. 2013. 2013? Ans: There are totally 15 types of companies can be formed under the Companies Act. Public Limited Companies 1. namely:— (a) a Consumer Disputes Redressal Forum to be known as the "District Forum" established by the State Government in each district of the State by notification: Provided that the State Government may. (b) a Consumer Disputes Redressal Commission to be known as the "State Commission" established by the State Government in the State by notification. Public Company limited by Guarantee having share capital 3. OPC Company limited by Guarantee having share capital 3.

or carry on business or have a branch office. and (b) to call for the records and pass appropriate orders in any con¬sumer dispute which is pending before or has been decided by any District Forum within the State. . as the case may be.— (a) a person who is. Jurisdiction of the State Commission. who shall be its President: Provided that no appointment under this clause shall be made except after consultation with the Chief Justice of the High Court. the District Forum shall have jurisdiction to entertain complaints where the value of the goods or services and the compensation. — (1) Each State Com¬mission shall consist of— (a) a person who is or has been a Judge of a High Court. actually and voluntarily resides.—(1) The National Commission shall consist of— (a) a person who is or has been a Judge of the Supreme Court. acquiesce in such institution. or carries on business or has a branch office.Composition of the District Forum. or has failed to exercise a jurisdiction so vested or has acted in exercise of its jurisdiction illegally or with material irregularity. namely:— (i) be not less than thirty-five years of age. claimed ''does not exceed rupees twenty lakhs. to be appointed by the Central Government. Composition of the State Commission. Composition of the National Commission.—(1) Subject to the other provisions of this Act. one of whom shall be a woman. who shall be its President. if any. the State Commission shall have jurisdiction— (a) to entertain— (i) complaints where the value of the goods or services and compensation. if any. who shall be its President. Provided that no appointment under this clause shall be made except after consultation with the Chief Justice of India. where there are more than one. who shall have the following qualifications. or has been. or personally works for gain. — (1) Subject to the other provisions of this Act. at the time of the institution of the complaint. (b) two other members. provided that in such case either the permission of the District Forum is given. actually and voluntarily resides or carries on business or has a branch office or personally works for gain. — (1) Each District Forum shall consist of. or personally work for gain. arises. at the time of the institution of the complaint. (ii) possess a bachelor's degree from a recognised university Jurisdiction of the District Forum. or (b) any of the opposite parties. wholly or in part. (2) A complaint shall be instituted in a District Forum within the local limits of whose jurisdiction.— (a) the opposite party or each of the opposite parties. or (c) the cause of action. or is qualified to be a District Judge. or the opposite parties who do not reside. appointed by the State Government. where it appears to the State Commission that such District Forum has exercised a jurisdiction not vested in it by law. and (ii) appeals against the orders of any District Forum within the State. where there are more than one. claimed exceeds rupees twenty lakhs but does not exceed rupeesone crore.

2. Conciliation Conciliation involves direct discussion and bargaining between disputing parties to arrive at a . be the return of property wrongfully takenby anoth er. such as a household. given by a court to an individual who brings a legal action. Ans: Financial assistance provided to the indigent by the government. Q15. who are the final users of products or services. or has acted in the exercise of its jurisdiction illegally or with material irregularity. Define Relief. and (b) 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 State Commission has exercised a jurisdiction not vested in it by law. claimed exceeds rupees one crore. if any. compensation for an injury in the formof damages. for example. and (ii) appeals against the orders of any State Commission. — Subject to the other provisions of this Act. 1. The consumer's use is final in the sense that the product is usually not improved by the use. Q13 Define consumers? Ans: A consumer is a person or group of people. The redress. the National Commission shall have jurisdiction— (a) to entertain— (i) complaints where the value of the goods or services and compensation. The relief sought in a lawsuit might. or has failed to exercise a jurisdiction so vested. What are the various alternate dispute resolution machinery available in India? Ans: The law codified in section 89 recognizes four different types of methods under ADR stated as follows. or enforcement of a contract. Q14. Arbitration Arbitration involves procedurally simplified and expedited fact finding and decision by a neutral third party. which decision is only binding on the parties in the instant case and carries no precedential effect.Jurisdiction of the National Commission. or benefit.

In 1991. One of the most famous examples of a trade secret is the formula for Coca-Cola.copyrights and trademarks. device. If the economic value of a piece of information relies on it being kept private. But whether it is an article or process the invention must have utility. When something or some phenomena which is . and Coca-Cola can now be sold in that country. method. Patents:  A patent denotes a grant from the Government of a monopoly in respect of an invention.  A patent relates either to a specialised article or to a specialised process of manufacturing an article. While patents and copyrights require you to disclose your information in the application process (information that eventually becomes public). It is a grant conferring on the patentee for a limited period a monopolistic or exclusive right of making. you could not buy Coca-Cola in India because Indian law required that trade-secret information be disclosed. Judicial settlement including settlement through Lok Adalat Lok Adalats were setup with an intent to provide free and competent legal services to the economically deprived sections of the society. 3. novelty and productivity. it could be a trade secret. but who has no decision making power. process. also referred to by the code name "Merchandise 7X. Mediation Mediation is a voluntary and consensual process wherein the disputing parties are assisted in reaching a mutually agreeable settlement by a neutral third party. The individuals who know the secret formula have signed nondisclosure agreements. pricing information. and it is rumored that they are not allowed to travel together. technique. A trade secret could be a formula. Tradesecret protection can potentially last longer than that of patents (20 years) and copyrights (100 years). In the past. Part III of the Act comprising sections 61 to 81 deal with the procedure for conciliation. computer program. Trade secrets are very different from patents. whose role is to facilitate communications and discussions. Georgia. 4. The formula.mutually acceptable resolution of disputed issues. India changed its laws regarding trademarks. Invention is different from discovery. trade secrets require you to actively keep the information secret. customer lists or other non-public information. selling or licensing the invention. 2." is known to only a few people and kept in the vault of a bank in Atlanta. Trade secrets: A trade secret is any information that allows you to make money because it is not generally known. This noble initiative was implemented to secure the faith of the rural masses in social justice and promote the ideals of equality before law and equal protection before law as embedded in our constitution MISCELLANEOUS ANS: 1.

and standardization of products. a patent right is not inherent in any invention. & its members. becomes known. the Government is satisfied that the invention deserves a patent. and price. › This shows that there is a veil drawn between the company and its members. sale. or railway. Cartels e xist primarily in Europe. The corporate entity will be disregarded only in exceptional cases. 3. If any person invents a new machine or other article. and the members will be disregarded. But sometimes the necessity of the situation may compel the authorities to disregard the corporate legal entity & look to individual members who are in fact the real beneficial owners of all corporate property. that is why it is said that a patent is a grant from the Government.  Unlike a copyright. for example. Judicial Provisions Fraud Or Improper Conduct: For Benefit Of Revenue: Enemy Character: . But it must be keep in mind that a separate legal entity is still a general rule.Also. Lifting the corporate veil: DOCTRINE: › When a Company registered under the act. 3. The Court will Lift the veil where it is essential to secure justice. agreements between enemies for intercommunicationby post. He gets such a right only if he applies to the Government and after necessary inquiries. › This veil is partition or curtain between the co. it does not mean he has a patented right in respect thereof. being illegal in the United States under ANTITRUST LAWS. telegraph. all the dealings with the company will be in the name of company. 4. an agreement between two hostile powers for the delivery of prisoners or deserters. or author izing certain nonhostile intercoursebetween each other that would otherwise be prevented by the sta te of war. has come into existence. designed to prevent ext reme or Unfair Competition and allocate markets. Invention indicates some thing which formerly did not exist. tele phone. exchange ofpatent rights.existing but unknown. and to promote the interchange of knowledge resulting from scie ntific and technical research. s o as to obtain a Monopoly and restrictcompetition in any particular industry or commodity. 2. it is discovery. In war. This case may be divided in: – Under Judicial Interpretation – Under Statutory Provision • 1. › Following this principle the Courts in most cases have refused to go behind the curtain & see who are the real persons composing the company. in public interest or for the benefit of revenue. And this fact known as Lifting the corporate veil. an association by agreement of companies or sections of companies having common interests. Cartelisation: A combination of producers of any product joined together to control its production.

the judiciary at the higher level also interprets the Constitution and resolves disputes between the centre and states as well as between different states.  It forms all forms of authorities within the bounds.  It keeps equilibrium between fundamental rights and social justice. 3. Justice K. It protects the fundamental rights guaranteed by the Constitution and is the mechanism to seek recourse to constitutional remedies. it is one of the three pillars of Indian democracy. Role of judiciary in India: The judiciary of India is a powerful and independent institution. Subba Rao explains the role/function of the judiciary as thus  It is a balancing wheel of the federation.4. Along with the legislature and the executive. Company Avoiding Legal Obligations: Single Economic Entity: Agency Or Trust: Public Interest: Statutory Provisions Reduction Of Number Of Members: Fraudulent Trading: Misdescription Of The Company: Holding And Subsidiary Companies: 5. 2. It is a mechanism for the legal redressal of disputes and prosecution of legal offenders as well. 5.  It controls the Administrative Tribunals. 7. Apart from this. Hierarchy of Indian legal system . 4. 6. 6. It also strikes down any law that contravenes the Constitution in letter and spirit. • 1.

who offers information that bears on the case but who has not been solicited by any of the parties to assist a court. E. LEGAL TERMS AND MAXIMS: A. in order to determine whether any irregula rities or errors occurred that justify review of the case. Writ of Certiorari: A writ that a superior appellate court issues in its discretion to an inferior court. is alleged to have taken place. . Volenti Non fit injuria: a defence in tort that means where a person engages in an event accepting and aware of the risks inherent in that event. ordering it to pro duce a certified record of a particular case ithas tried. Amicus Curiae: Someone who is not a party to a case. or seek compensation for an injury suffered during the event. the person in whom the right is vested . C. false imprisonment and trespass on land or the mere wrongful acts are actionable without proof of special damage . typically a criminal one. battery . D. B. On the strength of this maxim the libel . It is sufficient to show that there is violation of a legal right and the law will presume damage . assault . then they cannot later complain of. Injuria sine damnum: According to this maxim whenever there is an invasion of a legal right . Alibi: a claim or piece of evidence that one was elsewhere when an act. is entitled to bring an action though he has suffered no actual harm and may recover damages .7.