Sikkim Manipal University 3rd Semester Fall 2010

MBA – III SEM Legal Aspects of Business - MB0035 SET - 2

Q. 1 a. What is an arbitration agreement? Discuss its essentials.
Answer: Arbitration Agreement:- The foundation of arbitration is the arbitration

agreement between the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them. Thus, the provision of arbitration can be made at the time of entering the contract itself, so that if any dispute arises in future, the dispute can be referred to arbitrator as per the agreement. It is also possible to refer a dispute to arbitration after the dispute has arisen. Arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. The agreement must be in writing and must be signed by both parties. The arbitration agreement can be by exchange of letters, document, telex, telegram etc Court must refer the matter to arbitration in some cases: If a party approaches court despite the arbitration agreement, the other party can raise objection. However, such objection must be raised before submitting his first statement on the substance of dispute. The original arbitration agreement or its certified copy must accompany such objection. On such application the judicial authority shall refer the parties to arbitration. Since the word used is “shall”, it is mandatory for judicial authority to refer the matter to arbitration. However, once the opposite party already makes first statement to court, the matter has to continue in the court. Once other party for referring the matter to arbitration makes an application, the arbitrator can continue with arbitration and even make an arbitral award. 1. It must be in writing [Section 7(3)]:- Like the old law, the new law also requires the arbitration agreement to be in writing. It also provides in section 7(4) that an exchange of letters, telex, telegrams, or other means of telecommunications can also provide a record of such an agreement. Further, it is also provided that an exchange of claim and defense in which the existence of an arbitration agreement is alleged by one party and not denied by the other, will also amount to be an arbitration agreement. It is not necessary that the parties should sign such written agreement. All that is necessary is that the parties should accept the terms of an agreement reduced in writing. The naming of the arbitrator in the arbitration agreement is not necessary. No particular form or formal document is necessary. 2. It must have all the essential elements of a valid contract:- An agreement stands on the same footing as any other agreement. Every person capable of entering into a contract may be a party to an arbitration agreement. The terms of the agreement must be definite and certain; if the terms are vague it is bad for indefiniteness.

Legal Aspects of Business



Sikkim Manipal University 3rd Semester Fall 2010 3. The agreement must be to refer a dispute, present or future, between the parties to arbitration:- If there is no dispute, there can be no right to demand arbitration. A dispute means an assertion of a right by one party and repudiation thereof by another. A point as to which there is no dispute cannot be referred to arbitration. The dispute may relate to an act of commission or omission, for example, with holding a certificate to which a person is entitled or refusal to register a transfer of shares. Under the present law, certain disputes such as matrimonial disputes, criminal prosecution, questions relating to guardianship, questions about validity of a will etc. or treated as not suitable for arbitration. Section 2(3) of the new Act maintains this position. Subject to this qualification Section 7(1) of the new Act makes it permissible to enter into an arbitration agreement “in respect of a defined legal relationship whether contractual or not”. 4. An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement [Section 7(2)]. Appointment of Arbitrator:- The parties can agree on a procedure for appointing the arbitrator or arbitrators. If they are unable to agree, each party will appoint one arbitrator and the two appointed arbitrators will appoint the third arbitrator who will act as a presiding arbitrator [Section 11(3)]. If one of the parties does not appoint an arbitrator within 30 days, or if two appointed arbitrators do not appoint third arbitrator within 30 days, the party can request Chief Justice to appoint an arbitrator [Section 11(4)]. The Chief Justice can authorize any person or institution to appoint an arbitrator. [Some High Courts have authorized District Judge to appoint an arbitrator]. In case of international commercial dispute, the application for appointment of arbitrator has to be made to Chief Justice of India. In case of other domestic disputes, application has to be made to Chief Justice of High Court within whose jurisdiction the parties are situated [Section 11(12)] Challenge to Appointment of arbitrator: An arbitrator is expected to be independent and impartial. If there are some circumstances due to which his independence or impartiality can be challenged, he must disclose the circumstances before his appointment [Section 12(1)]. Appointment of Arbitrator can be challenged only if, (a) Circumstances exist that give rise to justifiable doubts as to his independence or impartiality. (b) He does not possess the qualifications agreed to by the parties [Section 12(3)]. Appointment of arbitrator cannot be challenged on any other ground. The challenge to appointment has to be decided by the arbitrator himself. If he does not accept the challenge, the proceedings can continue and the arbitrator can make the arbitral award. However, in such case, application for setting aside arbitral award can be made to Court. If the court agrees to the challenge, the arbitral award can be set aside [Section 13(6)]. Thus, even if the arbitrator does not accept the challenge to his appointment, the other party cannot stall further arbitration proceedings by rushing to court. The arbitration can continue and challenge can be made in Court only after arbitral award is made. Conduct of Arbitral Proceedings:- The Arbitral Tribunal should treat the parties equally and each party should be given full opportunity to present his case [Section 18]. The Legal Aspects of Business SET-2 2

Sikkim Manipal University 3rd Semester Fall 2010 Arbitral Tribunal is not bound by Code of Civil Procedure, 1908 or Indian Evidence Act, 1872 [Section 19(1)]. The parties to arbitration are free to agree on the procedure to be followed by the Arbitral Tribunal. If the parties do not agree to the procedure, the procedure will be as determined by the arbitral tribunal. Law of Limitation Applicable: Limitation Act, 1963 is applicable. For this purpose, date on which the aggrieved party requests other party to refer the matter to arbitration shall be considered. If on that date, the claim is barred under Limitation Act, the arbitration cannot continue [Section 43(2)]. If Court sets Arbitration award aside, time spent in arbitration will be excluded for purpose of Limitation Act. So that case in court or fresh arbitration can start. Flexibility in respect of procedure, place and language:- Arbitral Tribunal has full powers to decide the procedure to be followed, unless parties agree on the procedure to be followed [Section 19(3)]. The Tribunal also has powers to determine the admissibility, relevance, materiality and weight of any evidence [Section 19(4)]. Place of arbitration will be decided by mutual agreement. However, if the parties do not agree to the place, the same will be decided by tribunal [Section 20]. Similarly, language to be used in arbitral proceedings can be mutually agreed. Otherwise, Arbitral Tribunal can decide [Section 22]. Submission of statement of claim and defense: The claimant should submit statement of claims, points of issue and relief or remedy sought. The respondent shall state his defense in respect of these particulars. All relevant documents must be submitted. Such claim or defense can be amended or supplemented any time [section 23]. Hearings and Written Proceedings:- After submission of documents and defense, unless the parties agree otherwise, the Arbitral Tribunal can decide whether there will be oral hearing or proceedings can be conducted on the basis of documents and other materials. However, if one of the parties requests the hearing shall be oral. Sufficient advance notice of hearing should be given to both the parties [Section 24]. [Thus, unless one party requests, oral hearing is not compulsory]. Settlement during Arbitration:- It is permissible for parties to arrive at mutual settlement even when arbitration is proceeding. In fact, even the Tribunal can make efforts to encourage mutual settlement. If parties settle the dispute by mutual agreement, the arbitration shall be terminated. However, if both parties and the Arbitral Tribunal agree, the settlement can be recorded in the form of an arbitral award on agreed terms. Such Arbitral Award shall have the same force as any other Arbitral Award [Section 30]. Arbitral Award:- Decision of Arbitral Tribunal is termed as Arbitral Award . Arbitrator can decide the dispute ex aqua ET bono (In justice and in good faith) if both the parties expressly authorize him to do so [Section 28(2)]. The decision of Arbitral Tribunal will be by majority. The arbitral award shall be in writing and signed by the members of the tribunal [Section 29]. The award must be in writing and signed by the members of Arbitral Tribunal [Section 31(1)]. It must state the reasons for the award unless the parties have agreed that no reason for the award is to be given [Section 31(3)]. The award should be dated and place where it is made should be mentioned. Copy of award should be given to each party. Tribunal can make interim award also [Section 31(6)].

Legal Aspects of Business



Sikkim Manipal University 3rd Semester Fall 2010 Cost of Arbitration- Cost of arbitration means reasonable cost relating to fees and expenses of arbitrators and witnesses, legal fees and expenses, administration fees of the institution supervising the arbitration and other expenses in connection with arbitral proceedings. The tribunal can decide the cost and share of each party [Section 3 1(8)]. If the parties refuse to pay the costs, the Arbitral Tribunal may refuse to deliver its award. In such case, any party can approach Court. The Court will ask for deposit from the parties and on such deposit, the Tribunal will deliver the award. Then Court will decide the costs of arbitration and shall pay the same to Arbitrators. Balance, if any, will be refunded to the party [Section 39]. Intervention by Court - One of the major defects of earlier arbitration law was that the party could access court almost at every stage of arbitration - right from appointment of arbitrator to implementation of final award. Thus, the defending party could approach court at various stages and stall the proceedings. Now, approach to court has been drastically curtailed. In some cases, if the party raises an objection, Arbitral Tribunal itself can give the decision on that objection. After the decision, the arbitration proceedings are continued and the aggrieved party can approach Court only after Arbitral Award is made. Appeal to court is now only on restricted grounds. Of course, Tribunal cannot be given unlimited and uncontrolled powers and supervision of Courts cannot be totally eliminated. Arbitration Act has Over-Riding Effect:- Section 5 of Act clarifies that notwithstanding anything contained in any other law for the time being in force, in matters governed by the Act, the judicial authority can intervene only as provided in this Act and not under any other Act. Modes of Arbitration:(a) Arbitration without the intervention of the court. [Sec.3 to 19] (b) Arbitration with the intervention of the court when there is no suit pending [Sec.20] (c) Arbitration with the intervention of the court where a suit is pending. [Sec.21 to 25]

b. What do you mean by mediation.
Answer: Meditation is a holistic discipline during which time the practitioner trains his or

her mind in order to realize some benefit. Meditation is generally an internal, personal practice and most often done without any external involvement, except perhaps prayer beads to count prayers. Meditation often involves invoking or cultivating a feeling or internal state, such as compassion, or attending to a specific focal point. The term can refer to the state itself, as well as to practices or techniques employed to cultivate the state. There are hundreds of specific types of meditation. The word, meditation, means many things dependent upon the context of its use. People practice meditation for many reasons, within the context of their social environment. Meditation is a component of many religions, and has been practiced since antiquity, particularly by monastics. A 2007 study by the U.S. government found that nearly 9.4% of U.S. adults (over 20 million) have used meditation within the past 12 months, up from 7.6% (more than 15 million people) in 2002. To date, the exact mechanism at work in meditation remains unclear, while scientific research continues.

Q. 2 a. What kinds of rights are considerable under consumer rights.
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Sikkim Manipal University 3rd Semester Fall 2010
Answer: Consumer Right is defined as the right to be informed about the quality,

quantity, potency, purity, standard and price of goods or services, as the case may be, so as to protect the consumer against unfair trade practices Even though strong and clear laws exist in India to protect consumer rights, the actual plight of Indian consumers could be declared as completely dismal. Very few consumers are aware of their rights or understand their basic consumer rights. Of the several laws that have been enacted to protect the rights of consumers in India, the most significant is the Consumer Protection Act, 1986. Under this law, everyone, including individuals, a Hindu undivided family, a firm, and a company, can exercise their consumer rights for the goods and services purchased by them. It is important that, as consumers, we know at least our basic rights and about the courts and procedures that deal with the infringement of our rights. In general, the rights of consumers in India can be listed as under: * The right to be protected from all types of hazardous goods and services * The right to be fully informed about the performance and quality of all goods and services * The right to free choice of goods and services * The right to be heard in all decision-making processes related to consumer interests * The right to seek redressal, whenever consumer rights have been infringed * The right to complete consumer education The Consumer Protection Act, 1986 and various other laws like the Standards, Weights & Measures Act have been formulated to ensure fair competition in the market place and free flow of true information from the providers of goods and services to those who consume them. However, the success of these laws would depend upon the vigilance of consumers about their rights, as well as their responsibilities. In fact, the level of consumer protection in a country is considered as the correct indicator of the extent of progress of the nation. The production and distribution systems have become larger and more complicated today. The high level of sophistication achieved by the providers of goods and services in their selling and marketing practices and various types of promotional activities like advertising resulted in an increased need for higher consumer awareness and protection. In India, the government has realized the plight of Indian consumers and the Ministry of Consumer Affairs, Food and Public Distribution has established the Department of Consumer Affairs as the nodal organization for the protection of consumer rights, redressal of all consumer grievances and promotion of standards governing goods and services offered in India. A complaint for infringement of consumer rights could be made under the following circumstances in the nearest designated consumer court:

* The goods or services bought by a person or agreed to be bought by a person suffer from one or more deficiencies or defects in any respect. * A trader or a service provider resorting to restrictive or unfair trade practices. * A trader or a service provider charging a price in excess of the price displayed on the goods or the price that had been agreed upon between the parties or the price that had been stipulated under any law in force. * Goods or services that pose a hazard to the safety and life of a person offered for sale, knowingly or unknowingly, causing injury to health, safety or life. is Legal Aspects of Business SET-2 5

Sikkim Manipal University 3rd Semester Fall 2010 India s only online consumer protection site offering consumer report, consumer review and different opinions on different products and companies.

b. Distinguish between Memorandum of Association and Articles of Association.
Answer: Memorandum of Association:- The memorandum of association of a

company, often simply called the memorandum (and then often capitalized as an abbreviation for the official name, which is a proper noun and usually includes other words), is the document that governs the relationship between the company and the outside. It is one of the documents required to incorporate a company in the United Kingdom, Ireland and India, and is also used in many of the common law jurisdictions of the Commonwealth. Requirements While it is still necessary to file a memorandum of association to incorporate a new company, it no longer forms part of the company’s constitution and it contains limited information compared to the memorandum that was required prior to 1 October 2009. It is basically a statement that the subscribers wish to form a company under the 2006 Act, have agreed to become members and, in the case of a company that is to have a share capital, to take at least one share each. It is no longer required to state the name of the company, the type of company (such as public limited company or private company limited by shares), the location of its registered office, the objects of the company, and its authorized share capital.[1] Companies incorporated prior to 1 October 2009 are not required to amend their memorandum. Those details which are now required to appear in the Articles, such as the objects clause and details of the share capital, are deemed to form part of the Articles. Capacities The memorandum no longer restricts what a company is permitted to do. Since 1 October 2009, if a company s constitution contains any restrictions on the objects at all, those restrictions will form part of the articles of association. Historically, a company’s memorandum of association contained an objects clause, which limited its capacity to act. When the first limited companies were incorporated, the objects clause had to be widely drafted so as not to restrict the board of directors in their day to day trading. In the Companies Act 1989 the term "General Commercial Company" was introduced which meant that companies could undertake "any lawful or legal trade or business."The Companies Act 2006 relaxed the rules even further, removing the need for an objects clause at all. Companies incorporated on and after 1 October 2009 without an objects clause are deemed to have unrestricted objects. Existing companies may take advantage of this change by passing a special resolution to remove their objects clause. If the company is to be a non-profit making company, the articles will contain a statement saying that the profits shall not be distributed to the members.

Articles of association:- The term articles of association of a company, or articles of incorporation, of an American or Canadian Company, are often simply referred to as articles (and are often capitalized as an abbreviation for the full term). The Articles are a requirement for the establishment of a company under the law of India, the United Kingdom and many other countries. Together with the memorandum of association, they constitute the constitution of a company. The equivalent term for LLC is Articles of Organization. Roughly equivalent terms operate in other countries, such as Gesellschaftsvertrag in Germany, statutes’ in France, statutes in Poland. [1] The Legal Aspects of Business SET-2 6

Sikkim Manipal University 3rd Semester Fall 2010 following is largely based on British Company Law, references which are made at the end of this Article. The Articles can cover a medley of topics, not all of which is required in a country s law. Although all terms are not discussed, they may cover:

 The issuing of shares (also called stock), different voting rights attached to different classes of shares.  Valuation of intellectual rights, say, the valuations of the IPR of one partner and, for example, the real estate of the other.  The appointments of directors - which shows whether a shareholder dominates or shares equality with all contributors.  Directors meetings - the quorum and percentage of vote.  Management decisions - whether the board manages or a founder  Transferability of shares - assignment rights of the founders or other members of the company do.  Special voting rights of a Chairman, and his/her mode of election  The dividend policy - a percentage of profits to be declared when there is profit or otherwise  Winding up - the conditions, notice to members  Confidentiality of know-how and the founders agreement and penalties for disclosure  First right of refusal - purchase rights and counter-bid by a founder. A Company is essentially run by the share holders, but for convenience, and day-to-day working, by the elected Directors. Usually, the shareholders elect a Board of Directors (BOD) at the Annual General Meeting (AGM), which may be statutory (e.g. India). The number of Directors depends on the size of the Company and statutory requirements. The Chairperson is generally a well-known outsider but he /she may be a working Executive of the company, typically of an American Company. The Directors may, or may not be employees of the Company.

3. Write a short note on unfair trade practices and Restrictive trade practice.
Answer: Unfair trade practices:- The law of unfair competition serves five purposes.

First, the law seeks to protect the economic, intellectual, and creative investments made by businesses in distinguishing themselves and their products. Second, the law seeks to preserve the good will that businesses have established with consumers. Third, the law seeks to deter businesses from appropriating the good will of their competitors. Fourth, the law seeks to promote clarity and stability by encouraging consumers to rely on a Legal Aspects of Business SET-2 7

Sikkim Manipal University 3rd Semester Fall 2010 merchant s good will and reputation when evaluating the quality of rival products. Fifth, the law seeks to increase competition by providing businesses with incentives to offer better goods and services than others in the same field. Although the law of unfair competition helps protect consumers from injuries caused by deceptive trade practices, the remedies provided to redress such injuries are available only to business entities and proprietors. Consumers who are injured by deceptive trade practices must avail themselves of the remedies provided by state and federal Consumer Protection laws. In general, businesses and proprietors injured by unfair competition have two remedies: injunctive relief (a court order restraining a competitor from engaging in a particular fraudulent or deceptive practice) and money damages (compensation for any losses suffered by an injured business). General Principles The freedom to pursue a livelihood, operate a business, and otherwise compete in the marketplace is essential to any free enterprise system. Competition creates incentives for businesses to earn customer loyalty by offering quality goods at reasonable prices. At the same time, competition can also inflict harm. The freedom to compete gives businesses the right to lure customers away from each other. When one business entices enough customers away from competitors, those rival businesses may be forced to shut down or move. The law of unfair competition will not penalize a business merely for being successful in the marketplace. Nor will the law impose liability simply because a business is aggressively marketing its product. The law assumes, however, that for every dollar earned by one business, a competitor will lose a dollar. Accordingly, the law prohibits a business from unfairly profiting at a competitor s expense. What constitutes unfair competition varies according to the Cause of Action asserted in each case. These include actions for the infringement of Patents, Trademarks, and copyrights; actions for the wrongful appropriation of Trade Dress, trade names, trade secrets, and service marks; and actions for the publication of defamatory, false, and misleading representations. Restrictive trade practice: The restrictive trade practices, or antitrust, provisions in the Trade Practices Act are aimed at deterring practices by firms which are anti-competitive in that they restrict free competition. This part of the act is enforced by the Australian Competition and Consumer Commission (ACCC). The ACCC can litigate in the Federal Court of Australia, and seek pecuniary penalties of up to $10 million from corporations and $500,000 from individuals. Private actions for compensation may also be available. These provisions prohibit: • • • Most Price Agreements (see Cartel and Price-Fixing) Primary boycotts (an agreement between parties to exclude another) Secondary boycotts whose purpose is to cause substantial lessen competition (Actions between two persons engaging in conduct hindering 3rd person from supplying or acquiring goods or services from 4th) Misuse of market power – taking advantage of substantial market power in a particular market, for one or more proscribed purposes; namely, to eliminate or damage an actual or potential competitor, to prevent a person from entering a market, or to deter or prevent a person from engaging in competitive conduct. Exclusive dealing – An attempt to interfere with freedom of buyers to buy from other suppliers, such as agreeing to supply a product only if a retailer does not stock a competitor’s product. Most forms of exclusive dealing are only prohibited if they have the purpose or likely effect of substantially lessening competition in a market. Third-line forcing: A type of exclusive dealing, third-line forcing involves the supply of goods or services on the condition that

Legal Aspects of Business



Sikkim Manipal University 3rd Semester Fall 2010 the acquirer also acquires goods or services from a third party. Third-line forcing is prohibited per se. Resale price maintenance – fixing a price below which resellers cannot sell or advertise Mergers and acquisitions that would result in a substantial lessening of competition. A priority of ACCC enforcement action in recent years has been cartels. The ACCC has in place an immunity policy, which grants immunity from prosecution to the first party in a cartel to provide information to the ACCC allowing it to prosecute. This policy recognizes the difficulty in gaining information/evidence about price-fixing behaviors.

Q. 4. Present a detail note on Shops and Establishment Act.
Answer: Shops and Establishment Act: Objectives:- To provide statutory obligation

and rights to employees and employers in the unorganized sector of employment, i.e., shops and establishments. Scope And Coverage - A state legislation; each state has framed its own rules for the Act. - Applicable to all persons employed in an establishment with or without wages, except the members of the employer’s family. State government can exempt, either permanently or for a specified period, any establishments from all or any provisions of this Act. Main Provisions - Compulsory registration of shop/establishment within thirty days of commencement of work. Communications of closure of the establishment within 15 days from the closing of the establishment. - Lays down the hours of work per day and week. - Lays down guidelines for spread-over, rest interval, opening and closing hours, closed days, national and religious holidays, over time work. - Rules for employment of children, young persons and women - Rules for annual leave, maternity leave, sickness and casual leave, etc. Rules for employment and termination of service. - Maintenance of registers and records and display of notices. - Obligations of employers. - Obligations of employees. About What: 1. To regulate conditions of work and employment in shops, commercial establishments, residential hotels, restaurants, eating houses, theatres, other places of public entertainment and other establishments. 2. Provisions include Regulation of Establishments, Employment of Children, Young Persons and Women, Leave and Payment of Wages, Health and Safety etc. Applicability & Coverage:- 1. It applies to all local areas specified in Schedule-I 2. Establishment means any establishment to which the Act applies and any other such establishment to which the State Government may extend the provisions of the Act by notification. 3. Employee means a person wholly or principally employed whether directly or through any agency, whether for wages or other considerations in connection with any establishment. 4. Member of the family of an employer means, the husband, wife, son, daughter, father, mother, brother or sister and is dependent on such employer Returns: Legal Aspects of Business SET-2 9

Sikkim Manipal University 3rd Semester Fall 2010 1. Form-A or Form-B (as the case may be) {Section 7(2) (a), Rule 5}:- Before 15th December of the calendar year, i.e. 15 days before the expiry date The employer has to submit these forms to the authority notified along with the old certificate of registration and the renewal fees for minimum one year’s renewal and maximum of three year’s renewal. 2. Form-E (Notice of Change) {Rule 8}:- Within 15 days after the expiry of the quarter to which the changes relate in respect of total number of employees qualifying for higher fees as prescribed in Schedule-II and in respect of other changes in the original statement furnished within 30 days after the change has taken place. (Quarter means quarter ending on 31st March, 30th June, 30th September and 31st December) Registers: 1. Form-A {Rule 5} Register showing dates of Lime Washing etc 2. Form-H, Form-J {Rule 20(1)} (if opening & closing hours are ordinarily uniform) Register of Employment in a Shop or Commercial Establishment. 3. Form-I {Rule 20(3)}, Form-K:- (if opening & closing hours are ordinarily uniform) Register of Employment in a Residential Hotel, Restaurant, Eating-House, Theatre, or other places of public amusement or entertainment. 4. Form-M {Rule 20(4)} Register of Leave:- This and all the above Registers have to be maintained by the Employer. 5. Visit Book:- This shall be a bound book of size 7” x 6” containing at least 100 pages with every second page consecutively numbered, to be produced to the visiting Inspector on demand. The columns shall be: i. Name of the establishment or Employer. ii. Locality iii. Registration Number iv. Date and v. Time.

Q. 5 a. What is a cyber crime. What are the categories of cyber crime.
Answer: Cyber Crime:- It refers to all the activities done with criminal intent in cyberspace or using the medium of Internet. These could be either the criminal activities in the conventional sense or activities, newly evolved with the growth of the new medium. Any activity, which basically offends human sensibilities, can be included in the ambit of Cyber crimes. Because of the anonymous nature of Internet, it is possible to engage in a variety of criminal activities with impunity, and people with intelligence, have been grossly misusing this aspect of the Internet to commit criminal activities in cyberspace. The field of cyber crime is just emerging and new forms of criminal activities in cyberspace are coming to the forefront each day. For example, child pornography on Internet constitutes one serious cyber crime. Similarly, online pedophiles, using Internet to induce minor children into sex, are as much cyber crimes as any others. Categories of cyber crimes: Cyber crimes can be basically divided in to three major categories: 1. Cyber crimes against persons; Legal Aspects of Business SET-2 10

Sikkim Manipal University 3rd Semester Fall 2010 2. Cyber crimes against property; and 3. Cyber crimes against government. 1. Cyber crimes against persons:- Cyber crimes committed against persons include various crimes like transmission of child-pornography, harassment of any one with the use of a computer and cyber stalking. The trafficking, distribution, posting, and dissemination of obscene material including pornography, indecent exposure, and child pornography constitute the most important cyber crimes known today. These threaten to undermine the growth of the younger generation and also leave irreparable scars on the minds of the younger generation, if not controlled. Similarly, cyber harassment is a distinct cyber crime. Various kinds of harassments can and do occur in cyberspace, or through the use of cyberspace. Harassment can be sexual, racial, religious, or of any other nature. Cyber harassment as a crime also brings us to another related area of violation of privacy of citizens. Violation of privacy of online citizens is a cyber crime of a grave nature. Cyber stalking: The Internet is a wonderful place to work, play and study. The net is merely a mirror of the real world, and that means it also contains electronic versions of real life problems. Stalking and harassment are problems that many persons especially women, are familiar within real life. These problems also occur on the Internet, in the form of “cyber stalking” or “online harassment”. 2. Cyber crimes against property:- The second category of Cyber crimes is Cyber crimes against all forms of property. These crimes include unauthorized computer trespassing through cyberspace, computer vandalism, and transmission of harmful programs and unauthorized possession of computerized information. 3. Cyber crimes against Government:- The third category of Cyber crimes is Cyber crimes against Government. Cyber Terrorism is one distinct kind of crime in this category. The growth of Internet has shown that individuals and groups to threaten international governments as also to terrorize the citizens of a country are using the medium of cyberspace. This crime manifests itself into Cyber Terrorism when an individual “cracks” into a government or military maintained website, for the purpose of perpetuating terror. Since Cyber crime is a newly emerging field, a great deal of development has to take place in terms of putting into place the relevant legal mechanism for controlling and preventing cyber crime. The courts in United States of America have already begun taking cognizance of various kinds of fraud and cyber crimes being perpetrated in cyberspace. However, much work has to be done in this field. Just as the human mind is ingenious enough to devise new ways for perpetrating crime, similarly, human ingenuity needs to be canalized into developing effective legal and regulatory mechanisms to control and prevent cyber crimes. A criminal mind can assume very powerful manifestations if it is used on a network, given the reachability and size of the network. Legal recognition granted to Electronic Records and Digital Signatures would certainly boost E – Commerce in the country. It will help in conclusion of contracts and creation of rights and obligations through electronic medium. In order to guard against the misuse and fraudulent activities over the electronic medium, punitive measures are provided in the Act. The Act has recognized certain offences, which are punishable. They are: Tampering with computer source documents (Sec 65) Any person, Legal Aspects of Business SET-2 11

Sikkim Manipal University 3rd Semester Fall 2010 who knowingly or intentionally conceals, destroys or alters or intentionally or knowingly causes another person to conceal, destroy or alter any; i. Computer source code when the computer source code is required to be kept by law for the time being in force. ii. Computer programme. iii. Computer system and iv. Computer network - Is punishable with imprisonment up to three years, or with fine, which may extend up to two lakh rupees, or with both. Hacking with computer system (Sec 66):- Hacking with computer system is a punishable offence under the Act, It means any person intentionally or knowingly causes wrongful loss or damage to the public or destroys or deletes or alters any information residing in the computer resources or diminishes its value or utility or affects it injuriously by any means, commits hacking. Such offenses will be punished with three years imprisonment or with fine of two lakh rupees or with both. Publishing of information which is obscene in electronic form (Sec 67):- Whoever publishes or transmits or causes to be published in the electronic form, any material which is lascivious or appeals to prurient interest or if its effect is such as to tend to deprave and corrupt persons who are likely, having regard to all relevant circumstances, to read, see or hear the matter contained or embodied in it shall be punished on first conviction with imprisonment for a term extending up to 5 years and with fine which may extend to one lakh rupees. In case of second and subsequent conviction imprisonment may extend to ten years and also with fine which may extend up to two lakh rupees. Failure to comply with orders of the controller by a Certifying Authority or any employee of such authority (Sec 68):- Failure to comply with orders of the Controller by any Certifying Authority or by any employees of Certifying Authority is a punishable offence. Such persons are liable to imprisonment for a term not exceeding three years or to a fine not exceeding two lakh rupees or to both. Fails to assist any agency of the Government to decrypt the information (Sec 69):- If any subscriber or any person-incharge of the computer fails to assist or to extend any facilities and technical assistance to any Government agency to decrypt the information on the orders of the Controller in the interest of the sovereignty and integrity of India etc. is a punishable offence under the Act. Such persons are liable for imprisonment for a term, which may extend to seven years. Unauthorized access to a protected system (Sec 70):- Any person who secures access or attempts to secure access to a protected system in contravention of the pro visions is punishable with imprisonment for a term which may extend to ten years and also liable to fine. Misrepresentation before authorities (Sec 71): Any person who obtains Digital Signature Certificate by misrepresentation or suppressing any material Legal Aspects of Business SET-2 12

Sikkim Manipal University 3rd Semester Fall 2010 fact from the Controller or Certifying Authority as the case may be punished with imprisonment for a term which may extend two years or with fine up to one lakh rupees or with both. Breach of confidentiality and privacy (Sec 72):- Any person in pursuant of the powers conferred under the act, unauthorized secures access, to any electronic record, books, register, correspondence, information, document or other material without the consent of the person concerned discloses such materials to any other person shall be punished with imprisonment for a term which may extend to two years, or with fine up to one lakh rupees or with both. Publishing false particulars in Digital Signature Certificate (Sec 73):- No person can publish a Digital Signature Certificate or otherwise make it available to any other person with the knowledge that: a. The Certifying Authority listed in the certificate has not issued it; or b. The subscriber listed in the certificate has not accepted it; or c. The certificate has been revoked or suspended Unless such publication is for the purpose of verifying a digital signature created prior to such suspension or revocation. Any person who contravenes the provisions shall be punishable with imprisonment for a term, which may extend to two years or with fine up to rupees one lakh or with both.

b. Mention the provisions covered under IT Act.
Answer: IT Act:- Publication of Digital Signature Certificate for fraudulent purpose

(Sec 74): Any person knowingly creates, publishes or otherwise makes available a Digital Signature Certificate for any fraudulent or unlawful purpose shall be punished with imprisonment for a term which may extend to two years or with fine up to one lakh rupees or with both. Search and Arrest Any Police Officer not below the rank of a Deputy Superintendent of Police or any other officer of the Central Government or a State Government authorized in this behalf may enter any public place, search and arrest without warrant any person found therein who is reasonably suspected or having committed or of committing or of being about to commit any offence under this Act.

Q. 6 Ishaan is a fresher and recently is appointed as a part-time employee in Consumer Redressal Dispute Agency. As his superior, how will you guide him regarding the redressal forums, the nature of making complaints and the working of the agency.
Answer: Redressal forum:- Twenty-five years ago, consumer action in India was virtually unheard of. It consisted of some action by individuals, usually addressing their own grievances. Even this was greatly limited by the resources available with these individuals. There was little organized effort or attempts to take up wider issues that affected classes of consumers or the general public. All this changed in the Eighties with the Supreme Court-led concept of public interest litigation. It gave individuals and the newly formed consumer groups, access to the law and introduced in their work the broad public interest perspective. Telepress Features Several important legislative changes took place during this period. Significant were the amendments to the Monopolies and Restrictive Trade Practices Act (hereafter "MRTP Act") and the

Legal Aspects of Business



Sikkim Manipal University 3rd Semester Fall 2010 Essential Commodities Acts, and the introduction of the Environment Protection Act and the Consumer Protection Act. These changes shifted the focus of law from merely regulating the private and public sectors to actively protecting consumer interests. The Consumer Protection Act, 1986 (hereafter "the Act") is a remarkable piece of legislation for its focus and clear objective, the minimal technical and legalistic procedures, providing access to redressal systems and the composition of courts with a majority of non-legal background members. The Act establishes a hierarchy of courts, with at least one District Forum at the district level (Chennai has two), a State Commission at the State capitals and the National Commission at New Delhi. The pecuniary jurisdiction of the District Forum is up to Rs. one lakh and that of the State Commission is above Rs. one lakh and below Rs. 10 lakhs. All claims involving more than Rs. 10 lakhs are filed directly before the National Commission. Appeals from the District Forum are to be filed before the State Commission and from there to the National Commission, within thirty days of knowledge of the order. How to make a complaint:- This section explains how to make a complaint using our Complaints Registration Form. It tells you what information you need to include on the form, and where you need to send your completed form. Definition of a complaint The UK Border Agency defines a complaint as “any expression of dissatisfaction about the services provided by or for the UK Border Agency and/or about the professional conduct of UK Border Agency staff, including contractors.” The following will not be treated as complaints: Letters relating to the decision to refuse a UK visa. Visa applicants are expected to raise this using the existing appeal channels. Letters chasing progress on an application unless it is outside our published processing times. What information should you send? You should make your complaint using our Complaints Registration Form. It is important that you give as much information about yourself as possible. The Complaints Registration Form tells you the type of information we need. This will help us to find the information relevant to your case and to contact you about it. If possible you should also include: Full details about the complaint (including times, dates and locations); The names of any UK Border Agency / Visa Application Centre staff you have dealt with; Details of any witnesses to the incident (if appropriate); Copies of letters or papers that are relevant; and any travel details that relate to your complaint. What happens next. How we will deal with your complaint page explains.

How we handle your complaint. What to do if you are not happy with the outcome of your complaint or. Legal Aspects of Business SET-2 14

Sikkim Manipal University 3rd Semester Fall 2010 How we have handled it. What will happen after your complaint has been dealt with…

Legal Aspects of Business



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