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meaning and definition of contract:

a written or spoken agreement, especially one concerning employment, sales, or tenancy,
that is intended to be enforceable by law.

Proposal or Offer
Making an offer is one of the initial steps in creating a contract. An offer or a proposal
must be made by the first party, which initiates the contract to the second party. The first
party is often termed as the offeror and the second party is often termed as the offeree. If
the offeree accepts the entire offer without any negotiations or changes, the contract
comes into existence.

Rules Administrating Offers

The following rules must be followed for the validation of an offer

It is mandatory for an offer to be clear, complete, definite and final.

For an offer to be effective, it must be conveyed to the offeree so that the offeree
gets the choice to accept or reject the offer.

The offer can be conveyed orally or in a written document or may be implied by

the conduct.

An offer may be made to the general public or to a specific person or to a specific

group of people.

It is only upon the acceptance of an offer that a contract comes into existence. Acceptance
of an offeree can be defined as the point when the offeree agrees with the terms &
conditions and interest of the offer and gives his consent in compliance of the offer. A
proposal becomes a promise when it is accepted.

Rules Administrating Acceptances

It is mandatory for the acceptance to be unqualified and absolute.

The acceptance must comply with all the terms and conditions of the offer.

Acceptance can be expressed orally or in a written document or may be implied

by the conduct.

A conditional acceptance or a return offer may is considered as a rejection to the

offer and may contribute to lapse of the offer.

The offerer should be conveyed of the acceptance by the offeree. If, in any case,
the offeree intends to accept the offer but does not convey the acceptance, the
offer is not considered accepted.

No communication to the offerer is required for acceptance of an offer that

requires some actions to be invoked as a response or sign of acceptance.

The offeree must accept the offer within the specified time limit of the offer.


some right, interest, profit or benefit accruing to one party, or some forebearance,
detriment, loss or responsibility given, suffered or undertaken by the other."

Consideration is called "executory" where there is an exchange of promises to perform
acts in the future, eg a bilateral contract for the supply of goods whereby A promises to
deliver goods to B at a future date and B promises to pay on delivery. If A does not
deliver them, this is a breach of contract and B can sue. If A delivers the goods his
consideration then becomes executed.

If one party makes a promise in exchange for an act by the other party, when that act is
completed, it is executed consideration, eg in a unilateral contract where A offers 50
reward for the return of her lost handbag, if B finds the bag and returns it, B's
consideration is executed.



For a valid contract, the parties to a contract must have

capacity i.e. competence to enter into a contract. Every

person is presumed to have capacity to contract but there

are certain persons whose age, condition or status renders
them incapable of binding themselves by a contract.
Incapacity must be proved by the party claiming the benefit
of it and until proved the ordinary presumptions remains.
Section 11 of the Contract Act deals with the competency
of parties and provides that "every person is competent to
contract who is of the age of majority according to the law
to which he is subject, and who is of sound mind and is not
disqualified from disqualified from contracting by any law
to which he is subject."
It follow that the following person are incompetent to
(a) minor
(b) person of unsound mind, and
(c) Person disqualified by any law to which they are
Contract entered into by the persons mentioned above are
Every person is competent to contract:
(a) Who is of the age of majority.
(b) Who is of sound mind.
(c) Who is not disqualified from making a contract.
Therefore the following persons are not competent to
(a) A person who is a minor.
(b) A person of unsound mind.
(c) A person who is disqualified from making a contract
Free consent is one of the most important essential elements of a valid contract. The
term free consent refers to meeting of free and fresh minds of two parties of an agreement
when two parties take and understand, purpose, subject matter and terms and conditions
of the agreement in the same sense it is free consent. Both of them must take things in the
same way. They must not understand it in different way. An agreement which is made
freely it becomes a valid contract due to presence of free consent of both the parties. In
any of the free consent of both there will no free consent in the agreement.

Coercion: - threading.


Undue influence: - pressure and misuse of power for unfair advantage.


Fraud, deceiving on cheating the other.


Misrepresentation: - false statement without an intention to deceive the other.


Mistake error

Consent is said to be free when it is not caused by:


Undue influence,


Misrepresentation or



One of the essentials of a valid contract is that the consideration and the object
should be lawful. Every agreement of which the object or consideration is
unlawful is void.
Section 23 mentions the circumstances when the consideration or object of an
agreement is not lawful.
Sec. 23 What consideration and objects are lawful, and what not:
The consideration or object of an agreement is unlawful unless,
1. It is forbidden by law, or
2. is of such nature that, if permitted, it would defeat the provisions of law, or
3. is fraudulent
4. involves or implies injury to the person or property of another; or
5. the Court regards it as immoral or opposed to public policy.

Generally a contract comes into existence as a result of offer made by one party
and its acceptance by the other party, with free will of both the parties. However
under certain conditions even though no will is expressed by both the parties for
creating contractual relations, the law creates and enforces legal rights and
obligations. Such contracts are known as Quasi Contracts. The principle behind
Quasi Contracts is that a person shall not be allowed to enrich himself at the
expense of another.
Section 68 to 72 of the Contract Act deals with 5 different kinds of Quasi
Contracts explained below:
1. Supply of Necessaries to Incapable Person (Section 68):
If a person incapable of entering into a contract, or anyone whom he is legally

bound to support, is supplied by another person with necessaries, suited to his

condition in life, the person who has furnished such supplies is entitled to be
reimbursed from the property of such incapable person.
2. Payment by Interested Person (Section 69):
A person, who is interested in payment of money, which another is bound by law
to pay, and who therefore, pays it, is entitled to be reimbursed by the other.
3. Payment for Non-gratuitous act (Section 70):
Where a person lawfully does anything for another person or delivers anything to
him not intending to do so gratuitously and such other person enjoys the benefit
thereof, the later is bound to make compensation to the former in respect of, or, to
restore the thing so done or delivered.
4. Liability of Finder of Goods (Section 71):
A person who finds the goods belonging to another, and takes them into his
custody is subject to same responsibility as a bailee. He must take reasonable care
of the goods and keep them in sound condition and try to find out its true owner.
5. Payment of Delivery by Mistake or under Coercion (Section 72):
A person to whom money has been paid or anything delivered by mistake or under
coercion must repay or return it.

Performance of Contract :It means the fulfillment of legal obligations created under contract by the promisor and
promisee. Contract comes to an end when both the parties performed the contract
Demand For Performance :Performance is always demanded by the promisee. A third party has no right to demand
performance of the contract. If promisee dies then his legal representative can demand.
Who May Perform :A promisor personally or through his agent, legal representative or third person can fulfill
the promise.
In case of joint promises all the promisors jointly fulfill the promise or any one may be
compelled to perform or each promisor may compel for contribution.


PROMISES :When one party makes a promise in consideration of the similar promise made by the
other party is called reciprocal promise.
1. Rules Regarding The Order of Performance :When performance of the promise of one party depends on the prior performance of the
promise by the other party, the promises are called mutual and dependent. If first party
promisor fails to perform its promise according the contract, then it cannot claim the
performance of the reciprocal promise and will also compensate the other party.
2. Mutual & Independent :In this case each party performs his promise independently without waiting the
performance of other party.
3. Mutual and Concurrent :In this case of two promises performed at the same time. The promisor may not perform
his promise unless the promisee is ready to perform his reciprocal promise.
4. Consequence To Prevent The Performance :In case of reciprocal promises if one party to the contract prevents the other party the
contract becomes voidable at the option of the prevented party. Prevented party is also
entitled to compensation for any loss, which he causes due to non-performing of contract.
5. Time and Place :It relates with the rules regarding the determination of time and place.
6. Specified Time :If the time and place is prescribed in the contract then it should be performed at the
specified time and place.
7. Reasonable Time :In this case reasonable time depends on the circumstances of each case.
8. Proper Place :In this regard promisor must ask the promisee where he would like the contract to be

Termination of Contract

Contract creates relation between the parties and binds them over. Termination of such
contractual relations is called discharge of contract. The following are different modes of
discharge or termination of contract.

Discharge by Performance.
Discharge by Breach of Contract.
Discharge by Impossibility.
Discharge by Operation of Law.
Discharge by Lapse of Time.
Discharge by Mutual understanding or by Agreement.

Discharge of contract by Performance

Discharge of contract by Breach

Actual breach and

Anticipatory breach.

Discharge of contract by Impossibility

Pre Contractual impossibility and

Post Contractual impossibility.

Discharge of contract by lapse of time

Discharge of contract by Operation of law

By Death:

By Insolvency:
By lunacy

Discharge of contract by Agreement

By Alterations:

By Renewal:

By Recession

Breach of Contract :Breach means violation of law. The breach of contract means to break the contract or not
to act upon the contract. When any party fails to perform its duties in a lawful contract it
is called breach of contract. The injured party has a right to take action against the party
who has failed to perform his part of contract.
REMEDIES or RIGHTS OF AGGRIEVED PARTY :On the breach of contract following remedies are available to an injured party.
1. Claim for Damages :-

i. :- Special Damage :ii. General Damage :- i

ii. Exemplary Damages :iv :- Nominal Damages :
2. Suit For Injunction :3. Specific Performance :4. Recession Of The Contract :5. Quantum Merit :-


1. Offer and Acceptance.
2. Intention to Create Legal Relationship
3.Lawful Consideration.
4. Capacity of partiesAccording the following persons are incompetent to contract.
(a) Miners,
(b) Persons of unsound mind, and
(c) persons disqualified by law to which they are subject.
5. Free Consent. (1) Coercion, or
(4) Mis-representation, or

(2) Undue influence, or

(3) Fraud, or

(5) Mistake.6. Lawful Object. (a) it is forbidden by law;

(b) it is of such nature that if permitted it would defeat the provision of any law;
(c) it is fraudulent;
(d) it involves an injury to the person or property of any other;
(e) the court regards it as immoral or opposed to public policy.
7. Certainity of Meaning.
8. Possibility of Performance
9. Not Declared to be void or Illegal.
10. Legal Formalities.

Negotiable Instrument, in law, a written contract or other instrument whose benefit can
be passed on from the original holder to new holders. The original holder (the transferor)
must countersign the instrument (as in the case of a cheque) or merely deliver it (as in the
case of a bank note) to the new holder; the new holder is then entitled to the benefit of the
instrument (in the case of a cheque, to the money from the bank; in the case of the bank
note, to the sum promised on the note).
According to section 13 of the Negotiable Instruments Act, 1881, a negotiable instrument
means Promissory note, bill of exchange, or cheque, payable either to order or to

Major features of negotiable instruments are

Easy TransferabilityTitleMust be in writingUnconditional OrderPaymentThe time of payment must be certainThe payee must be a certain personSignatureDeliveryStampingRight ot file suitNotice of transfer-Presumption
.Procedure for suits
Number of transfe
Rule of evidence

Types of Negotiable Instruments




cheques are of different kinds

Bearer Cheque
Crossed Cheque
Open cheque
Order Cheque
Marked Cheque

Not payable or bad cheque

Ante-dated Cheque
Post dated Cheque
Stale Cheque
Multilated Cheque
Digital Cheque- Cheques in Electronic form and Truncated Cheques.
Banker Cheque
Golden Cheque
Travellers Cheque

The parties to a negotiable instrument (bill of exchange, promissory note and a

cheque)are discussed in detail :

Parties to a bill of exchange

1. The Drawer : The person who draws a bill of exchange is called the drawer.
2. The Drawee : The party on whom such bill of exchange is drawn and who is directed
to pay is called the drawee.
3. The Acceptor : The person who accepts the bill is known as the acceptor. Normally the
drawee is the acceptor. But a stranger can also accept a bill on behalf of the drawee.
4. The Payee : The person to whom the amount of the bill is payable is called the payee.
5. The Endorser : When the holder transfers or endorses the instrument to any other
person the holder becomes the Endorser.
6. The Endorsee : The person to whom the bill is endorsed is called the endorsee.
7. The Holder : Holder of bill of exchange means any person who is legally entitled to the
possession of it and to receive or recover the amount due thereon form the parties. He is
either the payee or the endorsee. The finder of a lost bill payable to bearer or a person in
wrongful possession of such instrument is not a holder.
8. Drawee in case of need : The drawer of a bill or even an endorser may write in the
instrument the name of a person directing the holder to resort to such person in case of
need. Such a person is called a drawee in case of need. He is merely in the position of a
drawee who has not accepted the bill. The bill cannot be presented to him for acceptance
but only for payment.
9. Acceptor for Honour : Any person may voluntarily become a party to a bill as an
acceptor by accepting it for the honour of the drawer or of any person. When the original
drawee refuses to accept or refuses to furnish better security when demanded by a notary,
any person may step in to safeguard the honor of the drawer or any endorser and bind

himself by an acceptance. The effect of such acceptance is that the bill is treated as alive
and is not considered to be dishonored till it is dishonored by the acceptor for honor.

Parties to a promissory note

1. The Maker : He is the person who promises to pay the amount stated in the promissory
2. The Payee : The person named in the promissory note to whom the money is payable.
3. The Holder: He may be either the payee or someone else to whom the promissory note
has been endorsed.
4. The Endorser : When the holder transfers or endorses the instrument to any other
person the holder becomes the Endorser.
5. The Endorsee : The person to whom the bill is endorsed is called the endorsee.

Parties to a cheque
1. The Drawee : He is the person who draws the cheque.
2. The Drawee : The banker on whom the cheque is drawn.
3. The Payee : The person to whom the amount of the bill is payable is called the payee.
4. The Holder : Holder of bill of exchange means any person who is legally entitled to the
possession of it and to receive or recover the amount due thereon form the parties. He is
either the payee or the endorsee. The finder of a lost bill payable to bearer or a person in
wrongful possession of such instrument is not a holder.
5. The Endorser : When the holder transfers or endorses the instrument to any other
person the holder becomes the Endorser.
6. The Endorsee : The person to whom the bill is endorsed is called the endorsee.
Dishonour of negotiable instrument means loss of honour or respect for the instrument
in question on the part of the maker, drawee, or acceptor, as the case may be, which
eventually results in non-realization of payment due on the instrument.

Dishonour by non-acceptance:
Any type of negotiable instruments, i.e., bill of exchange, promissory note, or cheque
may be dishonoured by non-payment by the drawee/acceptor thereof. But a bill may also
be dishonoured by non-acceptance because bill of exchange is the only negotiable
instrument which requires its presentment for acceptance and non-acceptance thereof, can
amount to dishonour.

When is a bill said to be dishonoured by Non-Acceptance?

A bill is said to be dishonoured by non-acceptance in the following circumstances.

When the drawee or one of the several drawees, not being partners, commit
default in acceptance upon being duly required to accept the bill. In this regard
Section 63 expressly provides that the holder must, if so required by the drawee of
a bill of exchange presented to for acceptance, allow the drawee forty-eight hours
(exclusive of public holidays) to consider whether he will accept it.
Where presentment is required and the bill remains unrepresented.
Where the drawee is incompetent to enter into a valid contract.
Where the bill is given a qualified acceptance.
If the drawee is a fictitious person.
If the drawee cannot be found even after reasonable search.
Where the drawee has either become insolvent or is dead and the holder does not
present the bill to the assignee or legal representative of the insolvent or deceased

Dishonour of negotiable instrument by Non-payment:

A promissory note, bill of exchange, or cheque is said to be dishonoured by non-payment
when the maker of the note, acceptor of the bill, or drawee of the cheque commit default
in payment upon being duly required to pay the same. Also the holder of a bill or pro-note
may treat it as dishonoured, without placing for payment when presentment for payment
is excused expressly by the maker of the pro-note, or acceptor of the bill and the note or
bill when overdue remains unpaid.
discharge of negotiable instruments
(i) Discharge by payment in due course
(ii) By cancellation (a) Intentional (b) Apparent
(iii) Discharge by Release
(iv) Discharge by allowing drawee
(v) Discharge by delay in presentment of cheques
(vi) Cheque payment to order
(vii) Draft drawn by one bank to another
viii) Accepting qualified acceptance
(ix) Discharge by operation of law
(x) Material Alteration
(xi) Payment of Altered instrument
(xii) Notice of Dishonour

definition of insurance is that, it is a contract between the

insurer and the insured whereby, in consideration of payment of premium

by the insured, the insurer agrees to make good any financial loss the

insured may suffer due to the operation of a peril (risk) insured.

1. Life insurance (assurance). Insurance which deal with the insurance
of human life. Provides social security.
2. Non-life insurance
v Fire insurance
v Marine insurance
v Personal accident insurance
v Vehicle insurance
v Crop insurance
v Burglary insurance
A contract of insurance :is a legal agreement between two or more parties
and has to comply with all elements of the law of contract Act.
Insurance contract is the contract between the insurer and insured, in
consideration of a sum to make good financial loss of the insured, subject to
the limit of the insured specific property against peril and during the stated
All insurance contracts must have five elements of a valid contract as
follows:1. Offer and acceptance. The person who want to take the cover against
a particular peril offers his risk through the proposal form to the
insurance company. The insurance company may or may not accept
the risk. Therefore, offer come from the insured person.
2. Legal consideration. The promise (insurer) promise to pay a fixed sum
of money at a given contingency. So the insurer must have something
in return for his promise. The premium paid is the consideration given
by the insured to the insurer.
3. Parties must have capacity to enter into contract. Every person is
competent to contract who has attained the age of majority and of
sound mind as well as not disqualified by the law from contracting.4. Free consent. Both
parties must make decision to enter into contract
without any influence in their decision making. The consent must not
be caused by fraud, undue influence, mistake and misrepresentation.
5. Legal object. The purpose for which the contract is entered must be
legally lawful. The contract should not be against the public interest.
1. The principle of utmost good faith
2. The principle of insurable interest
3. Principle of indemnity
4. The principle of proximate cause
5. Principle of contribution.
6. The principle of subrogation
Definition of Sale
Section 4 of the Sales of Goods Act, 1930 defines a sale of goods as a contract of sale
whereby the seller transfers or agrees to transfer the property in goods to the buyer for

price. The term contract of sale includes both a sale and an agreement to sell.
A contract of sale is made by an offer to buy or sell goods for a price and the acceptance
of such offer by the other party. The contract may be oral or in writing. A contract of sale
may be absolute or conditional.
Formalities of a contract of sale: Section 5 of the Act specifically provides for the
following three steps or formalities in a contract of sale:
1) Offer and Acceptance: A contract of sale is made by an offer to buy or sell the goods
for a price and acceptance of such offer.
2) Delivery and Payment: It is not necessary that the payment for the goods to the seller
and delivery of goods to the buyer must be simultaneous. They can be made at different
times or in instalments as per the contract.
3) Express or Implied: The contract can be in writing, oral or implied. It can also be
partly oral and partly written.
The five essential features of a contract of sale are as discussed below:
1) Two partied
2) Subject matter to be goods
3) Transfer of ownership of goods
4) Consideration is price.
5) Essential elements of a valid contract

5) Essential elements of a valid contract: All the essentials of a valid contract must be
present. viz., competent parties, free consent, legal object and so on. The transfer of
possession and ownership under the Act has to be voluntary and not be tainted with fraud
or duress.
basis of Distinction

It is an executed contract.

Agreement to Sell
It is an executory contract.
The property passes when it
sale on the expiry of
The property in the goods sold passes becomes
time or the fulfilment of
Transfer of property
to the buyer at the time of contract. It certain conditions.
It takes place at
passes immediately.
a future time or subject to
fulfilment of conditions.
It creates a right in rem a right to
It creates a right in personam right
Conveyance of property enjoy the goods against the whole
against the seller.
world including the seller.
Transfer of risk

The transfer of risk takes place

There is no transfer of risk of loss

immediately. It is related to
ownership and when ownership is
goods as ownership is not
transferred, the risk also passes to the of
The loss will be borne
person. If there is loss of goods, it
even though the goods
will fall on the buyer even though the are in possession
of the buyer.
goods maybe in the possession of the
the property has passed to the The seller can only sue for
Right of seller in case of Since
the seller can sue the buyer for damages, unless the price was
price of the goods.
payable at a particular date.
Right of buyer in case of He can also sue the third party who He can sue the seller for damages
bought those goods for the goods.

He cannot claim the goods but only

a rateable dividend for the money
The seller can refuse to deliver the
Insolvency of buyer
goods to the Official Assignee or
before paying the price has a lien over the property.
Insolvency of seller in
possession of goods

He can claim the goods from the

Official assignee or Receiver.

Definition and Nature of Partnership : 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 of themacting for all. The English Partnership Act defines Partne
as the relation which subsists between personscarrying on business in common with a
of profit. If we elaborate we find this definition points out thefollowing essential elem
ents of partnership:
1. There must be at least two persons.
2. That it is the result of an agreement.
3. That it is organised to carryon a business.
4. That the persons concerned agree to share the profits of the business.
5. That the business is to be carried on by all or anyone of them acting for all.

1. Association of at least Two Persons:

2. Agreement:
3. Business:
4. Sharing of Profits:

5. Mutual Agency: Test of Partnership:


the name of the firm;


the principal place of business of the firm;

(3) name of the other place (if any) where the firm
carries on business;
(4) the date on which each partner joined the firm;
(5) the names in full and addresses of the partners;
(6) the duration of the firm. Furthermore, every cha
nge in the names and addresses of
the partnersor place of business should be notified to
the Registrar of Firms from time to time.

Meaning and Nature of Company

According to the Companies Act, 1956, A company is a person, artificial, invisible,
intangible, and existing only in the contemplation of the law. Being a mere creature of the
law, it possesses only those properties which the character of its creation confers upon it
either expressly or as incidental to its very existence.
It can clearly be defined that

A company is defined as a group of people that contributes money or the worth of

money to a common stock to employ it in some trade or business. The people in
this group share the profit or loss (as the case may be) arising as a result.

The common stock is usually denoted in terms of money and is the capital of the

The persons who contribute to the common stock are the members.

The proportion of the capital entitled to each member is called the members

Shares are always transferrable subject to the restrictions and liabilities offered by
the rights to transfer shares.

The main characteristics of a company are discussed below.

Incorporated Association

A company can be created only under the registration of the Company Act.

It comes into existence from the date when the certificate of incorporation is

At least seven persons are required to form a public company.

At least two persons are required to form a private company.

Artificial Legal Person

The board of directors works as the only brain of the company.

It has the rights to acquire and dispose the properties, to enter into contract with
third parties in its own name, and can sue and can be sued in its own name.

However, it cannot be considered as a citizen as it cannot enjoy the rights of a


Separate Legal Entity

Individual members cannot be sued.

Similarly, the company in any way is not liable for the individual debts of the

The properties of the company can only be used for the development, betterment,
maintenance, and welfare of the company and cannot be used for personal
benefits of the shareholders.

A member cannot claim any ownership rights over the company either singlehandedly or jointly.

The members of the company can enter into contracts with the company in the
same manner as any other individual can.

The Income Tax Act also recognizes company as a separate legal entity.

Perpetual Existence
Common Seal
Limited Liability
Transferrable Shares
Delegated Management
Meaning of Memorandum of Association
The Memorandum of Association is considered as the constitution of a company. It

provides the foundation to the structure or the building of the company. The
memorandum of association is defined as a companys charter. It defines the limitations
of a companys powers.

Particular parts of the memorandum can be altered by the company whenever and
however required.

The memorandum of association enables shareholders, creditors and investors to

know the permitting range of the company.

It regulates the companys external affairs.

Importance of Memorandum
The memorandum of association comes with its own importance

It defines the limitations of the company.

The whole structure of the company is built on the basis of the memorandum.
It defines the scope of activities of the company.
It sets out a companys written goals.

Clauses of Memorandums

The Name Clause

Registered Office Clause

Object Clause

Liability Clause

Capital Clause

Association clause

Articles of Association
Articles of Association can be considered as a contract between the members and the
company. These articles bind the present as well as the future members of the company.
The company and its members are bound by the articles as soon as the document is

Members have various rights and duties towards the company.

The articles together with the memorandum of association make the constitution
of the company.

Purpose of an Article

The article of association contains the following details

The voting powers of officers, directors and shareholders.

The form of business that the company carries out.
The form of freedom to change the companys internal regulations.
The rights, duties and powers of the company and its members.

articles of Association of a Company

The articles of association records clearly the duties and purpose of the company
and its members.
It is filed with the registrar of companies.

Registration of the Articles

Every private company, whether a company limited by guarantee or an unlimited

company, should be registered with the registrar of companies along with the
memorandum according to section 26 of the Companies Act, 1956.

For a company limited by shares, it is not mandatory to have its own articles.

A company limited by shares may partly or totally adopt the table A of the
Schedule of the Companies Act, 1956.

If a company limited by shares does not have any articles of association, then the
table A of the schedule of the Companies Act will be applied by default, until and
unless it is modified.

There are 3 ways for a company limited by shares

It may totally adopt table A.

It may totally exclude table A and form its own articles of association.

It may adopt just a part of table A and create its own articles of association.

It is not needed to register the articles of association of a company if it totally

adopts table A.

For a company adopting table A, it should be mentioned in the memorandum of

association that the company has adopted table A as its articles of association.

Directors, as the word suggests, are a special group of people who direct the company.
The directors give certain direction to all the other members of the company to achieve
certain goals.

Duties of Directors

Duty of Good Faith

Duty of Care
Duty Not to Delegate
Liabilities of Directors
Breach of Fiduciary Duty
Ultra-verse Acts
Mala Fide Acts
Liabilities under the Companies Act
Any misstatement in the prospectus of a company or failure to state any particulars in the
prospectus of a company, according to the prerequisites of the section 56 and schedule II
of the Companies Act, 1956, will result in liability of the directors.

The directors will be personally liable for the above mentioned defaults and will
compensate for any damage or loss taken by the third party.

According to section 62 of the Companies Act, 1956, if any loss is faced by a

shareholder due to untrue or misleading statements in the prospectus of a
company, then the directors will be held liable and will have to compensate for
the loss.

Appointment and Removal of Directors

An association, a firm, a corporation or any other body with artificial legal identity
cannot be appointed as a director.

For a public company or a private company, which is a subsidiary of a public

company, two-thirds of the total number of directors are appointed by the
shareholders. The remaining one-third of the directors are selected in accordance
with the manner prescribed in the articles of association of the company, failing
which, the remaining one-third is also appointed by the shareholders.

The articles of a company may provide the conditions for retirement of the
directors at every annual general meeting.

If the articles remain silent, all the directors are appointed by the shareholders.

Formal, considered and transparent elections can be conducted for election of


Evaluation of skills and abilities of the board is done from time to time to ensure
smooth progress and need for succession in the board.

Re-elections and re-appointments of the directors are conducted from time to


Qualifications of Directors
General Qualifications
A director having a professional and ethical mind should have knowledge and experience
in specific fields. With a commitment to create long term values and commitment to the
shareholders, a director should fully understand his obligations and practices.

Enough time should be given to the director to perform his duties effectively.

A director should be able to judge himself and inform the board if he faces any
hindrances or obstructions in the course of his work.

Specific Qualifications
The chairman of the board of directors, beyond the duties mentioned above, must fulfill
the following responsibilities

To act as the chairman of the board in the board of directors meetings.

To exercise a casting vote in case of tie in the directors meeting.
To call for the meetings of the board of directors.
To preside over the shareholders meetings.

Removal of Directors
A director may be removed from his office by other directors before the expiry of his
term in case of any conduct of offence and in case the director is no longer found to be
qualified to hold his designation and does not resign from his post voluntarily.

The resulting vacancy may be fulfilled by the appointment of another director.

Voluntary resignation and rotations are the most common ways for the removal of

The company must issue a special notice to all the directors of the company in
case of the removal of any director/s.

Winding up of a company is defined as the condition when the life of the company is
brought to an end. The properties of the company are administered for the profit of its
members and its creditors.

Steps of Winding Up
The following steps are followed in the case of a company winding up

An administrator, usually denoted as a liquidator, is appointed in the context of

liquefaction or winding up of a company.

The liquidator takes control over the company, assembles its assets, pays debts of
the company and finally distributes any surplus amongst the members according
to their rights and liabilities.

The company has no assets or liabilities at the end of liquefaction or winding up.

The dissolution of a company takes place when the assets and liabilities of a
company are completely wound up.

On the context of winding up, the name of the company is stuck off from the list
of companies and its identity as a separate legal person is lost.

If a company is unable to pay its debts or the debts taken by the company is worth
more than the assets it owns and no agreements have been made with the
creditors, then the company is considered insolvent and is subjected to
compulsory liquidation or compulsory winding up.

If an insolvent owes money to a natural person, he may ask the court of law to
make a compulsory winding up order against the company.

On the issuance of the order, the order is informed by the court to the official
receiver, who eventually becomes the liquidator.

The official receiver informs the creditors and conducts interviews with the
directors of the company on the context of the winding up.

If it is believed by the official receiver that the company has enough assets to pay
its creditors, then the official receiver will seek for the appointment of an
insolvency practitioner as the liquidator.

The appointment of the liquidator is done either by calling a creditors meeting for
the creditors to elect a liquidator by vote or by requesting the Secretary of the
State to appoint one.

If there are no assets left, then the official receiver will become the liquidator.

The following are the general powers of a liquidator

Illustrating or defending any action, suit, prosecution or any legal proceedings on

behalf of the company

Carrying out the business of the company as far as it is beneficial for the company

Paying the creditors

Making any compromise or arrangements with the creditors

Compromising all the calls, debts and liabilities, which may result in further debts
on the company

Compulsory Winding Up

The primary objective of the liquidator is to raise as much funds as needed to pay
the creditors.

The company will then be dissolved and its name will be struck off from the list
of companies in the registrars office.

Any surplus money left will be distributed amongst the shareholders of the

This legal process ends with the companys name struck off from the list of
companies in the registrars office.

After the name is struck off, the company ceases to exist anymore.

Winding up involves the following

Every contract of the company, including individual contracts are completed,

transferred or ended. The company is no more able to do business.

Any outstanding legal disputes are settled.

All the assets of the company are sold.

Money owed to the company, if any, is collected.

Funds raised are distributed to the creditors.

Consequences of Winding Up

As Regards the Company Itself

Winding up doesnt take away the existence of the company completely.

The company continues to exist as a corporate entity till its dissolution.
All the ongoing business of the company is administered by the liquidator during
the phase of liquidation.

As Regards the Shareholders

Contributors a new statutory liability comes into existence.

Every transaction of share during the liquefaction done without the approval of
the liquidator is termed void.

As Regards the Creditors

The creditors cannot file a case against the company except with the consent of
the court.
If the creditors already have decrees, they cannot proceed with the execution.

As Regards the Management

With the appointment of the liquidator, all the powers of the directors, chief
executives and other officers tend to cease.

Only the powers to give notice of resolution and the power of appointment of the
liquidator upon winding up of the company are given to the members.

Consumer Protection Act, 1986 is an Act of the Parliament of India enacted in 1986 to
protect the interests of consumers in India. It makes provision for the establishment of
consumer councils and other authorities for the settlement of consumers' disputes and for
matters connected therewith.
the right to be protected against the marketing of goods and services which are hazardous
to life and property.

the right to be informed about the quality, quantity, potency, purity, standard and
price of goods or services,
the right to seek redressal against unfair trade practices or restrictive trade
practices or unscrupulous exploitation of consumers; and
the right to consumer education.
the right against consumer exploitation
the right to choose

Consumer Protection Council

Consumer Protection Councils are established at the national, state and district level to
increase consumer awareness.[1]

The Central Consumer Protection Council

The Central Govt. shall by notification establish with effect from such date as it may
specify in such notification a Council to be known as the Central Consumer Protection
Consumer Disputes Redressal Agencies

District Consumer Disputes Redressal Forum (DCDRF): Also known as the

"District Forum" established by the State Government in each district of the State.
The State Government may establish more than one District Forum in a district. It
is a district level court that deals with cases valuing up to 2 million
State Consumer Disputes Redressal Commission (SCDRC): Also known as the
"State Commission" established by the State Government in the State. It is a state
level court that takes up cases valuing less than 10 million (US$150,000)[1]
National Consumer Disputes Redressal Commission (NCDRC): Established by
the Central Government.

Filliin a complent :

At first identify the Jurisdiction of the Forum where the complaint is to be
filed. This issue needs to be identified from two angles of jurisdiction i.e. Territorial and

District Forum
State Commission to
National Commissi

Upto Rs. 20 Lakhs

Rs. 20 Lakhs to Rs. 1 Crores
1 Crores and above

Step 2: You will be required to pay a prescribed fee along with your complaint before
the District Forum, State Commission & the National Commission as the case may be.
Step 3: Then you have to draft your complaint stating facts necessary to establish a
cause of action.
Step 4: At the end of the complaint you have to put your signatures. In case any other
person is authorised to file the complaint then complaint has to be accompanied with
authorisation letter.
Step 5: Dont forget to mention the name, description and address of the complainant
and the name, description, address of the opposite party or parties against whom relief is
Step 6: Copies of all the documents supporting your allegations. In this you can put on
record the copy of the bill of the goods bought, warranty and guarantee documents and
also a copy of the written complaint and notice made to the trader requesting him to
rectify the product.
Step 7: You can also ask for compensation costs which should be specifically alleged in
the complaint. Besides compensation, a consumer can also ask for the refunds, damages,
litigation costs, and interest amount. You must give the breakup of amount claimed under
different heads but do remember to claim compensation or other relief as per the
pecuniary value of the forums.
Step 8:

Explain in your complaint as to how the case falls within the jurisdiction of this

Step 9:

Complaint must clearly state as to what relief is sought against the opposite

Step 10: The Act provides for limitation period of two years from the date of cause of
action. In case there is delay in filing the complaint, please explain the delay which can
be can be condoned by the Tribunal.
Step 11: You are also required to file an affidavit along with the complaint that facts
stated in the complaint are true and correct.
Step 12: The complainant can present the complaint in person or by his/her authorised

representative without engaging any advocate. The complaint can be sent by registered
post. A minimum of 5 copies of the complaint is to be filed in the forum. Besides this you
have to file additional copies for each opposite party.

Essential Remedies
(a) Removal of Defects:
(b) Replacement of Goods:
(c) Refund of Price:
(d) Award of Compensation:
e) Removal of Deficiency in Service:
(f) Discontinuance of Unfair/Restrictive Trade Practice:
g) Stopping the Sale of Hazardous Goods:
(h) Withdrawal of Hazardous Goods from the Market:
(i) Payment of Adequate Cost:

rademark (TM)
A distinctive mark, motto, device or emblem that a manufacturer stamps, prints, or affixes
to product, so that they can be distinguished.

Distinctiveness of Mark: more distinctive to avoid confusion. Very distinctive

marks are considered strong (fanciful, arbitrary, or suggestive) & are the most
TM Infringement: Once a TM has been registered with the state or federal
government, a firm is entitled to its exclusive use for marketing purposes. If
copied to a substantial degree or used (intentionally or not) its infringed.
Owner need not register to get protection, but it proves date of inception & is
renewable between 5-6yrs after 1st & every 20yrs after 2nd.
A mark is not required to be used before an application is filed, if bona fide
intention to use the mark in commerce.
Intent to Use Provision requires that the mark be put into commerce within 6

months after filing with PTO. This can be extended to 30 months or total 3 years
from the date of notice of TM approval to make use of mark & file the required
use statement. The act has cut the costs for small companys marketing.

Service Mark (SM)

Similar to a TM but is used to distinguish the services of one person or company from
those of another.

Certification Mark
Used by 1+ persons, other than the owner, to certify the region, materials, mode of
manufacture, quality, or accuracy of the goods or services.

Collective Mark
When members of cooperative, association use a certification mark, or other organization
it is called a collective mark. (For ex, the Good Housekeeping Seal of Approval) They
appear at the end of movies to indicate the various associations & organizations that
participated in making of the movies.

Trade Names
TMs apply to products, trade names to business. May be protected as trademarks or
service marks if used as such (e.g., Apple Computer, Inc. uses the trade name Apple). It is
directly related to a business & to its goodwill.

A grant from the fed government that conveys & secures to an inventor the exclusive
right to make, use, & sell an invention for a period of 17 years. Lesser periods are given
for designs, as opposed to inventions.

Requirement: the invention, discovery, or design is

Not obvious in the light of the technology of the time.
Patent Infringement: if a firm makes, uses, or sells anothers patented design,
product, or process without the patent owners permission, the tort of patent
infringement exists. All features dont have to be copied unless it is a patented
process. Cost of detection & monitoring can be so high that owners cant protect
their patents, making them valueless.
Patents for Computer Software: Before computer programs did not meet the
novel & non-obvious requirements because many software products simply
automated procedures that can be performed manually. Basis for software is often
a mathematical equation or formula, which is not patentable. In 1981, the
Supreme Court held right to obtain a patent for a process that incorporated a

computer program.

Intangible right granted by statute to the author or originator of certain literary or artistic
productions. Works crafted after 1/1/78 are automatically given statutory copyright
protection for the life of author plus 50yrs. Publishing houses get 75 years from date of
publication or 100 years from date of creation, which ever is first.

Protected Expression: Books, records, films, works of art, architectural plans,

menus, music videos, & product packaging. Must be original and:
Literary works
Musical works
Dramatic works
Pantomimes & choreographic works
Pictorial, graphic, & sculptural works
Films & other audiovisual works
Sound recordings.
Recently, include software & architectural plans.
Protected: if fixed in a durable medium from which it can be preconceived,
reproduced, or communicated. DOESNT include idea, procedure, process,
system, method of operation, concept, principle or discovery, regardless of the
form in which it is described, explained, illustrated, or embodied in a work may
be freely used by others. Notable Fact: math, history, names & addresses not
protected (thus white pages are not copyright protected).
Copyright Infringement: When the form or expression of an idea is copied.
Doesnt need to be exact; nor a replica. Penalties range from actual damages or
statutory damages (<=$100K) imposed at the courts discretion, to criminal
proceedings for willful violations (which may result in fines &/or imprisonment).
Fair Use Doctrine: copyright infringement may not apply for criticism, comment,
news reporting, teaching, scholarship or research. Consider:
The purpose & character of the use
The nature of work
The amount & substantiality of the copy
The effect of the use upon the potential market for or value of the work.
Software: programs in the list of creative works; because of the unique nature of
programs, the courts have had many problems in applying & interpreting the 80
Language Problem: readable by machines, source code, & binary-language; a
programs source code was held to be copyrightable.
Program Structure, sequence, & org protection: also copyrightable.
Look & feel protection: Apples Mac computer is not protectable under a look &
feel theory.
TEST requires a court to divide a program into its component parts & then
determine whether each individual component is
Protectable as an expression of an idea or

Unprotectable because it is an idea or a technique dictated by utilitarian

International Copyright Issues: US is a party to a number of international
treaties, including the Berne Convention (covers all who sign) & the Universal
Copyright Convention.

Trade Secrets
Info that cannot be patented, copyrighted or trademarked are protected against
appropriation by a competitor (i.e., customer lists, plans, R&D, pricing, marketing
technology, production technology, & anything that makes an individual company unique
& that would have value to a competitor). Definition: formula, pattern, device, or
compilation of info, which is used to obtain advantage.
Ideas & their expression: unlike copyright & trademark protection, trade secrets extend to
both ideas & to their expression (no registration or filing requirements, this may be well
suited for software.)
Rule: one who discloses or uses anothers trade secret, without a privilege to do so, is
liable to the other if

He discovered the secret by improper means or

His disclosure or use constitutes a breach of confidence reposed in him by the
other disclosing the secret to him.

Remedies under the Trademarks Act

Civil remedies in Trademark:
# Injunction/ stay against the use of the trademark
# Damages can be claimed
# Accounts and handing over of profits
# Appointment of local commissioner by the court for custody/ sealing of infringing
material / accounts
# Application under order 39 rule 1 & 2 of the CPC for grant of temporary / ad interim
ex-parte injunction
Remedies under copyright act :
The Act also provides for compensatory civil remedies against infringement of copyright,
by awarding damages. The purpose of award of damage is restoration to plaintiff as if no
damage had been done or as his position was before infringement. The court14has
observed that in cases of blatant infringement, an award of damage may be passed under
following three heads:

(a) Compensatory or Actual Damages;

(b) Damages to Reputation;
(c) Punitive Damages.
Remedies under Patents Act 1970
Where any person threatens any other person by any means, with proceedings for
infringement of a patent15, any person aggrieved thereby may bring a suit against him
praying for following reliefs:
(a) A declaration that the threats are unjustifiable;
(b) An injunction against continuance of threats; and
(c) Such damages, if any.
(a) for an injunction restraining the defendant from any apprehended act of such
(b) for an order requiring the defendant to deliver up or destroy any product covered by
the patent in relation to which the patent is alleged to have been infringed or any article in
which the product is inextricably comprised;
(c) for damages in respect of the alleged infringement;
(d) for an account of the profits derived by the defendant from the alleged infringement;
(e) for a declaration that the patent is valid and has been infringed by the defendant

Information Technology Act, 2000

The Information Technology Act, 2000 (also known as ITA-2000, or the IT Act) is an
Act of the Indian Parliament (No 21 of 2000) notified on 17 October 2000. It is the
primary law in India dealing with cybercrime and electronic commerce. It is based on the
United Nations Model Law on Electronic Commerce 1996 (UNCITRAL Model)
recommended by the General Assembly of United Nations by a resolution dated 30
January 1997

1. It is objective of I.T. Act 2000 to give legal recognition to any transactionwhich is done
by electronic way or use of internet.
2. To give legal recognition to digital signature for accepting any agreementvia computer.
3. To provide facility of filling document online relating to school admission
orregistration in employment exchange.

4. According to I.T. Act 2000, any company can store their data in electronicstorage.
5. To stop computer crime and protect privacy of internet users.
6. To give legal recognition for keeping books of accounts by bankers andother
companies in electronic form.
7. To make more power to IPO, RBI and Indian Evidence act for restrictingelectronic


1. Information technology act 2000 is not applicableon the attestation for creating
trust viaelectronic way. Physical attestation is must.

2. I.T. Act 2000 is not applicable on the attestationfor making will of any body.
Physical attestation bytwo witnesses is must.

3. A contract of sale of any immovable property.

4. Attestation for giving power of attorney ofproperty is not possible via

electronic record.



What is Digital Signature?

A digital signature is an electronic signature that can be used to authenticate the identity
of the sender of a message or the signer of a document, and possibly to ensure that the
original content of the message or document that has been sent is unchanged. Digital
signatures are easily transportable, cannot be imitated by someone else, and can be
automatically time-stamped. The ability to ensure that the original signed message
arrived means that the sender cannot easily repudiate it later.
Importance of digital signature in business world (Why?)
Reliability and Security:
Defining e-Governance
2.2.1 Although the term e-Governance has gained currency in recent years, there is no
standard definition of this term. Different governments and organizations define this term
to suit their own aims and objectives. Sometimes, the term e-government is also used
instead of e-Governance

Types of Interactions in e-Governance

G2G (Government to Government)
G2B (Government to Business)
G2E (Government to Employees)
G2C (Government to Citizens)
Benefits of e-Governance
Better access to information and quality services for citizens:
Simplicity, efficiency and accountability in the government:
Expanded reach of governance:
computer related Offences:
Cyber offences are the unlawful acts which are carried in a very sophisticated manner in
which either the computer is the tool or target or both. Cyber crime usually includes:
(a) Unauthorized access of the computers
(b) Data diddling
(c) Virus/worms attack
(d) Theft of computer system
(e) Hacking
(f) Denial of attacks
(g) Logic bombs
(h) Trojan attacks
(i) Internet time theft
(j) Web jacking
(k) Email bombing
(l) Salami attacks
(m) Physically damaging computer system.
The offences included in the IT Act 2000 are as follows:
1. Tampering with the computer source documents.
2. Hacking with computer system.
3. Publishing of information which is obscene in electronic form.
4. Power of Controller to give directions
5. Directions of Controller to a subscriber to extend facilities to decrypt information
6. Protected system
7. Penalty for misrepresentation
8. Penalty for breach of confidentiality and privacy
9. Penalty for publishing Digital Signature Certificate false in certain particulars
10. Publication for fraudulent purpose
11. Act to apply for offence or contravention committed outside India
12. Confiscation

13. Penalties or confiscation not to interfere with other punishments.

14. Power to investigate offences.
Penalties: Imprisonment up to 3 years and / or
Fine: Two lakh rupees.

UNIT-5 ::
The Competition Act, 2002 was enacted by the Parliament of India and governs Indian
competition law. It replaced the archaic The Monopolies and Restrictive Trade Practices
Act, 1969. Under this legislation, the Competition Commission of India was established
to prevent activities that have an adverse effect on competition in India
It is a tool to implement and enforce competition policy and to prevent and punish anticompetitive business practices by firms and unnecessary Government interference in the
market. Competition laws is equally applicable on written as well as oral agreement,
arrangements between the enterprises or persons.

i. Quality of products and services,

ii. Healthy competition,
iii. Faster mergers and acquisitions of companies,
iv. Regulation of acquisitions and mergers coming within the threshold limits,
v. allowing dominance with prevention of its abuse to give effect to the second generation
economic reforms on the pattern of the global standards set by the more developed
countries, etc.

Anti-Competitive Agreements
Enterprises, persons or associations of enterprises or persons, including cartels, shall not
enter into agreements in respect of production, supply, distribution, storage, acquisition or
control of goods or provision of services, which cause or are likely to cause an
"appreciable adverse impact" on competition in India. Such agreements would
consequently be considered void. Agreements which would be considered to have an

appreciable adverse impact would be those agreements which

Directly or indirectly determine sale or purchase prices,

Limit or control production, supply, markets, technical development, investment
or provision of services,
Share the market or source of production or provision of services by allocation of
inter alia geographical area of market, nature of goods or number of customers or
any other similar way,
Directly or indirectly result in bid rigging or collusive bidding.

Abuse of Dominant Position

Section 4 of the Competition Act, 2002 expressly prohibits any enterprise or group from
abusing its dominant position. The term 'Dominant Position' includes a position of
strength, enjoyed by an enterprise or group, in relevant market, in India, which enables it
a) Operate independently of competition forces prevailing in the relevant market; or
b) Affect its competitors or consumers or the relevant market in its favour.
The terms 'Dominance' is also referred to as market power which is defined as the ability
of the firm to raise prices or reduce output or does both independently of its rivals and
Directly or indirectly imposing discriminatory conditions in the purchase or sale of goods
or service, or setting prices in the purchase or sale (including predatory pricing) of goods
or services;

Limiting or restricting the production of goods or provision of services or market

therefore; or limiting technical or scientific development relating to goods or
services to the prejudice of customers;

Indulging in practice or practices resulting in the denial of market access;

Making conclusion of contracts subject to acceptance by other parties of

supplementary obligations, which has no connection with the subject of such

Utilization of the dominant position in one relevant market to enter into, or

protect, another relevant market.

The Act is designed to regulate the operation and activities of combinations, a term,

which contemplates acquisition, mergers or amalgamations. Combination that exceeds

the threshold limits specified in the Act in terms of assets or turnover, which causes or is
likely to cause adverse impact on competition within the relevant market in India, can be
scrutinized by the Commission.

Competition Commission of India

Competition Commission of India[8] is a body corporate and independent entity
possessing a common seal with the power to enter into contracts and to sue in its name. It
is to consist of a chairperson, who is to be assisted by a minimum of two, and a maximum
of ten, other members.[9][10]
It is the duty of the Commission to eliminate practices having adverse effect on
competition, promote and sustain competition, protect the interests of consumers and
ensure freedom of trade in the markets of India. The Commission is also required to give
opinion on competition issues on a reference received from a statutory authority
established under any law and to undertake competition advocacy, create public
awareness and impart training on competition issues.
Commission has the power to inquire into unfair agreements or abuse of dominant
position or combinations taking place outside India but having adverse effect on
competition in India, if any of the circumstances exists:

An agreement has been executed outside India

Any contracting party resides outside India
Any enterprise abusing dominant position is outside India
A combination has been established outside India
A party to a combination is located abroad.
Any other matter or practice or action arising out of such agreement or dominant
position or combination is outside India.

The Foreign Exchange Management Act, 1999 (FEMA) is an Act of the Parliament of
India "to consolidate and amend the law relating to foreign exchange with the objective
of facilitating external trade and payments and for promoting the orderly development
and maintenance of foreign exchange market in India

Main Features

Activities such as payments made to any person outside India or receipts from
them, along with the deals in foreign exchange and foreign security is restricted. It
is FEMA that gives the central government the power to impose the restrictions.
Without general or specific permission of the MA restricts the transactions
involving foreign exchange or foreign security and payments from outside the
country to India the transactions should be made only through an authorised
Deals in foreign exchange under the current account by an authorised person can
be restricted by the Central Government, based on public interest generally.
Although selling or drawing of foreign exchange is done through an authorized

person, the RBI is empowered by this Act to subject the capital account
transactions to a number of restrictions.
Residents of India will be permitted to carry out transactions in foreign exchange,
foreign security or to own or hold immovable property abroad if the currency,
security or property was owned or acquired when he/she was living outside India,
or when it was inherited by him/her from someone living outside India.

The Foreign Exchange Management Act (FEMA) was an act passed in the winter session
of Parliament in 1999, which replaced Foreign Exchange Regulation Act. This act seeks
to make offences related to foreign exchange civil offences. It extends to the whole of

The Main Features of the FEMA:

The following are some of the important features of Foreign Exchange Management
i. It is consistent with full current account convertibility and contains provisions for
progressive liberalisation of capital account transactions.
ii. It is more transparent in its application as it lays down the areas requiring specific
permissions of the Reserve Bank/Government of India on acquisition/holding of foreign
iii. It classified the foreign exchange transactions in two categories, viz. capital account
and current account transactions.
iv. It provides power to the Reserve Bank for specifying, in , consultation with the central
government, the classes of capital account transactions and limits to which exchange is
admissible for such transactions.
v. It gives full freedom to a person resident in India, who was earlier resident outside
India, to hold/own/transfer any foreign security/immovable property situated outside
India and acquired when s/he was resident.
vi. This act is a civil law and the contraventions of the Act provide for arrest only in
exceptional cases.
vii. FEMA does not apply to Indian citizens resident outside India.
Amount of Penalty
Any contravention, under FEMA, may invite following kinds of penalties:

If, the amount against which offence is quantities, then penalty will be "THRICE" the sum
involved in contravention.

Where the amount cannot be quantified the penalty may be imposed upto two lakh

If, the contravention is continuing everyday, then Rs. Five Thousand for every day after
the first day during which the contravention continues.

Further in addition to the penalty, any currency, security or other money or property involved in
the contravention may also be confiscated.

The Right to Information Act, 2005 of India

This Act allows the public to seek information from any governmental department,
thereby increasing accountability and transparency of the establishment, and allowing it
to share power with the humblest and poorest of the society.

Salient Features of the Right to Information Act, 2005

The Act extends to the whole of India except Jammu & Kashmir.
It provides a very definite day for its commencement i.e. 120 days from
It shall apply to Public Authorities.
All citizens shall have the right to information, subject to provisions of the Act.
The Public Information Officers/Assistant Public Information Officers will be
responsible to deal with the requests for information and also to assist persons
seeking information.
Fee will be payable by the applicant depending on the nature of information
Certain categories of information have been exempted from disclosure under
Section 8 and 9 of the Act.
Intelligence and security agencies specified in Schedule II to the Act have been
exempted from the ambit of the Act, subject to certain conditions.

Right to information and obligations of public authorities

1) Every public authority shall
(a) maintain all its records duly catalogued and indexed in a manner and the form which
facilitates the right to information under this Act and ensure that all records that are
appropriate to be computerised are, within a reasonable time and subject to availability of
resources, computerised and connected through a network all over the country on
different systems so that access to such records is facilitated;
(b) publish within one hundred and twenty days from the enactment of this Act,











(iii) the procedure followed in the decision making process, including channels of
(iv) the norms set by it for the discharge of its functions;
(v) the rules, regulations, instructions, manuals and records, held by it or under its control
a statement of the categories of documents that are held by it or under its control;
(vii) the particulars of any arrangement that exists for consultation with, or representation
by, the members of the public in relation to the formulation of its policy or
(viii) a statement of the boards, councils, committees and other bodies consisting of two
or more persons constituted as its part or for the purpose of its advice, and as to whether
meetings of those boards, councils, committees and other bodies are open to the public,
(x) the monthly remuneration received by each of its officers and employees, including

Application Procedure for requesting information

1. Apply in writing or through electronic means in English or Hindi or in the official
language of the area, to the PIO, specifying the particulars of the information
sought for.

2. Reason for seeking information are not required to be given;

3. Pay fees as may be prescribed (if not belonging to the below poverty line

time limit to get the information

1. 30 days from the date of application

2. 48 hours for information concerning the life and liberty of a person

3. 5 days shall be added to the above response time, in case the application for
information is given to Assistant Public Information Officer.

4. If the interests of a third party are involved then time limit will be 40 days (maximum
period + time given to the party to make representation).

5. Failure to provide information within the specified period is a deemed refusal


1. Application fees to be prescribed which must be reasonable.

2. If further fees are required, then the same must be intimated in writing with calculation
details of how the figure was arrived at;

3. Applicant can seek review of the decision on fees charged by the PIO by applying to
the appropriate Appellate Authority;

4. No fees will be charged from people living below the poverty line

5. Applicant must be provided information free of cost if the PIO fails to comply with the
prescribed time limit

ground for rejection

1. If it is covered by exemption from disclosure.

2. If it infringes copyright of any person other than the State.

What is not open to disclosure?

i. information, disclosure of which would prejudicially affect the sovereignty and
integrity of India, the security, strategic, scientific or economic interests of the
State, relation with foreign State or lead to incitement of an offence

ii. 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;

iii. information, the disclosure of which would cause a breach of privilege of

Parliament or the State Legislature;

iv. information including commercial confidence, trade secrets or intellectual

property, the disclosure of which would harm the competitive position of a third
party, unless the competent authority is satisfied that larger public interest warrants
the disclosure of such information;

v. information available to a person in his fiduciary relationship, unless the

competent authority is satisfied that the larger public interest warrants the
disclosure of such information;

vi. information received in confidence from foreign Government;

vii. information, the disclosure of which would endanger the life or physical safety
of any person or identify the source of information or assistance given in

confidence for law enforcement or security purposes;

viii. information which would impede the process of investigation or apprehension

or prosecution of offenders;

ix. cabinet papers including records of deliberations of the Council of Ministers,

Secretaries and other officers;

x. information which relates to personal information the disclosure of which has no

relationship to any public activity or interest, or which would cause unwarranted
invasion of the privacy of the individual;

xi. Notwithstanding any of the exemptions listed above, a public authority may
allow access to information, if public interest in disclosure outweighs the harm to
the protected interests.