Mock Test Paper

Module 1: CS Executive Old

Paper – 3: Economic and Commercial Laws – Suggested

Answers

PART A

Question 1
(a) What is meant by contracts "uberrimae fidei"? Which contracts are in

general may be treated as contracts "uberrimae fidei"?

Answer
Contracts uberrimae fidei means contracts requiring utmost good faith.

The followings are the contracts which are generally may be treated as

contracts "uberrimae fidei":-

(a) Contract of insurance of all kinds: The assured must disclose to the

insurer all material facts and whatever he states must be correct and

truthful.

(b) Company prospectus: When a company invites the public to

subscribe for its shares, it is under statutory obligation to disclose

truthfully the various matters set out in the Companies Act. Any

person responsible for nondisclosure of any of these matters is liable

to damages. Also, the contract to buy shares is voidable where there

is a material false statement or nondisclosure in the prospectus.

(c) Contract for the sale of land: The vendor is under a duty to the

purchaser to show good title to the land he has contracted to sell.

(d) Contracts of family arrangements: When the members of a family

make agreements or arrangements for the settlement of family

 property, each member of the family must make full disclosure of

every material fact within his knowledge.

(b) What are the short-term and long-term objectives of India's foreign

trade policy?

Answer
India’s Foreign Trade Policy (FTP) has, conventionally, been formulated for

five years at a time and reviewed annually. The focus of the FTP has been to

provide a framework of rules and procedures for exports and imports and

a set of incentives for promoting exports. The Foreign Trade Policy seeks to

achieve the following short term and long term objectives:

(i) To provide a stable and sustainable policy environment for foreign

trade in merchandise and services;

(ii) To link rules, procedures and incentives for exports and imports with

other initiatives such as “Make in India”, “Digital India” and “Skills

India” to create an “Export Promotion Mission for India”;

(iii) To promote the diversification of India’s export basket by helping

various sectors of the Indian economy to gain global competitiveness

with a view to promoting exports;

(iv) To create an architecture for India’s global trade engagement with a

view to expanding its markets and better integrating with major

regions, thereby increasing the demand for India’s products and

contributing to the government’s flagship “Make in India” initiative;

(v) To provide a mechanism for regular appraisal in order to rationalise

imports and reduce the trade imbalance.

(c) What obligations may be imposed upon an exporter, who receives

advance payment from a buyer outside India, under Foreign Exchange

Management Act (FEMA), 1999?

Answer
Where an exporter receives advance payment (with or without interest),

from a buyer outside India, the exporter has been put under an obligation

to ensure that -

(i) The shipment of goods is made within one year from the date of receipt

of advance payment;

(ii) The rate of interest, if any, payable on the advance payment does not

exceed London Inter-Bank Offered Rate (LIBOR) + 100 basis points, and

(iii) The documents covering the shipment are routed through the

Authorised Dealer through whom the advance payment is received.

However, in the event of the exporter's inability to make the shipment,

partly or fully, within one year from the date of receipt of advance payment,

no remittance towards refund of unutilised portion of advance payment or

towards payment of interest, shall be made after the expiry of the said

period of one year, without the prior approval of the Reserve Bank of India.

In case the export agreement provides for shipment of goods extending

beyond the period of one year from the date of receipt of advance payment,

the exporter shall require the prior approval of the Reserve Bank of India.

(d) What constitutes ‘abuse of dominance’, under Competition Law?

Answer
Dominance refers to a position of strength which enables an enterprise to

operate independently of competitive forces or to affect its competitors or

consumers or the market in its favour. Abuse of dominant position impedes

fair competition between firms, exploits consumers and makes it difficult

for the other players to compete with the dominant undertaking on merit.

Abuse of dominant position includes:

▪ imposing unfair conditions or price,

▪ predatory pricing,

▪ limiting production/market or technical development,

▪ creating barriers to entry,

▪ applying dissimilar conditions to similar transactions,

▪ denying market access, and

▪ using dominant position in one market to gain advantages in another

market.

(e) What is meant by "Geographical indications" under intellectual property

rights?

Answer
Geographical indication in relation to goods means an indication which

identifies such goods as agricultural goods, natural goods or manufactured

goods as originating, or manufactured in the territory of a country, or a

region or locality in that territory, where a given quality, reputation or other

characteristic of such goods is essentially attributable to its geographical

origin and in case where such goods are manufactured goods one of the

activities of either the production or of processing or preparation of the

goods concerned takes place in such territory, region or locality, as the case

maybe.

It may be noted that any name which is not the name of a country, region

or locality of that country shall also be considered as the geographical

indication if it relates to a specific geographical area and is used upon or in

relation to particular goods originating from that country, region or locality,

as the case may be.

India enacted the Geographical Indications of Goods (Registration &

Protection) Act, 1999. This Act seeks to provide for the registration and

better protection of geographical indications relating to goods in India.

Examples of Indian Geographical Indications are Darjeeling Tea,

Kanchipuram Silk Saree, Alphanso Mango, Nagpur Orange, Kolhapuri

Chappal etc,.

Attempt all parts of either Q. No. 2 or Q. No. 2A

Question 2
(a) Ram, a tenant entered into an agreement of lease with Shyam, the

owner, for ten years. The lease agreement did not contain the

provisions for cleaning, repairing and maintenance of the leased

property. Ram requested to Shyam for providing maintenance services

for the lease property. On refusal, Ram contended that he is a

consumer, as he is paying rent of the leased property but Shyam has

not provided the aforesaid services, which should be treated as the

deficiency in service under Consumer Protection Act, 1986. Decide,

whether the contention of Ram is tenable?

Answer
The contention of Ram is not tenable.

The present case is similar to the case of Laxmiben Laxmichand Shah v.

Sakerben Kanji Chandan and others 2001 CTJ 401 (Supreme Court) (CP). In this

case the Supreme Court held that the tenant entering into lease agreement with
the landlord cannot be considered as consumer under Section 2(1)(d) of the

Consumer Protection Act, 1986.

Where there was no provision in the lease agreement in respect of cleaning,

repairing and maintaining the building, the rent paid by tenant is not the

consideration for availing these services and therefore, no question of deficiency

in service arises.

(b) When the Board of Approval is empowered to suspend the letter of

approval granted to the developer under Special Economic Zone (SEZ)

Act, 2005. Elaborate.

Answer
Section 10 of the Special Economic Zone (SEZ) Act, 2005 empowers the

Board of Approval to suspend the letter of approval granted to the

Developer for a whole or part of his area established as Special Economic

Zone for a period not exceeding one year. The suspension may be ordered

by the Board, if in its opinion following circumstances exist:

(i) the developer is unable to discharge the functions or perform the

duties imposed on him; or

(ii) the developer has persistently defaulted in complying with the

directions of the Board; or

(iii) the developer has violated the terms and conditions of the letter; or

(iv) the financial position of the developer is such that he is unable to fully

and efficiently discharge the duties and obligations imposed on him

by the letter of approval.

(c) Nothing new should be introduced in a pending litigation”, is a well-

known concept of property law. Critically evaluate this concept.

Answer
Section 52 of the Transfer of Property Act, 1882 incorporates the doctrine

of Lis pendens. It states that during the pendency of a suit in a Court of

Law, property which is subject to a litigation cannot be transferred. When

we say that property cannot be transferred what we mean in this context is

that property may be transferred but this transfer is subject to the rights

that are created by a Court’s decree.

In order to constitute a Lis pendens, the following elements must be

present:

1. There must be a suit or proceeding in a Court of competent

jurisdiction.

2. The suit or proceeding must not be collusive.

3. The litigation must be one in which right to immoveable property is

directly and specifically in question.

4. There must be transfer of or otherwise dealing with the property in

dispute by any party to the litigation.

5. Such transfer must effect the rights of the other party that may

ultimately accrue under the terms of the decree or order.

(d) What are the basic principles of General Agreement on Trade in Services

(GATS)?

Answer
Basic Principles of General Agreement on Trade in Services (GATS) are as

follows:

▪ All services are covered by GATS

 ▪ Most-favoured-nation treatment applies to all services, except the

one-off temporary exemptions

▪ National treatment applies in the areas where commitments are

made

▪ Transparency in regulations, inquiry points

▪ Regulations have to be objective and reasonable

▪ International payments: normally unrestricted

▪ Individual countries’ commitments: negotiated and bound

▪ Progressive liberalization: through further negotiations.

(e) Distinguish between 'English mortgage' and 'mortgage by conditional

sale'.

Answer
• In English mortgage there is a personal liability undertaken by the

mortgagor to pay the debt. In a mortgage by conditional sale there is

no personal covenant agreement for payment of the mortgage

money and mortgagee has his remedy against the mortgaged

property only;

• In English mortgage the ownership in the mortgaged property is

absolutely transferred to the creditor (i.e. mortgagee) which however,

may be divested on repayment of the loan on the fixed day. In a

mortgage by conditional sale, the mortgagee gets only a qualified

ownership which may, however, ripen into an absolute ownership in

default of payment of the mortgage money.

OR (Alternate question to Q.No. 2)

Question 2A
(i) When the instruments may be stamped with adhesive stamps, under

the Indian Stamps Act, 1899? When and by whom such adhesive stamps

may be cancelled?

Answer
Section 11 of the Indian Stamp Act, 1899 provides that the following

instruments may be stamped with adhesive stamps, namely –

(a) instruments chargeable with a duty not exceeding 10 nayae paise

except parts of bills of exchange payable otherwise than on demand

and drawn in sets;

(b) bills of exchange and promissory notes drawn or made out of India;

(c) entry as an advocate, vakil or attorney on the roll of a High Court;

(d) notarial acts; and

(e) transfers by endorsement of shares in any incorporated company or

other body corporate.

Section 12(1)(a) of the Indian Stamp Act, 1899, provides that any the person

affixing any adhesive stamp to any instrument chargeable with duty which

has been executed by another person shall, when affixing such stamp

cancel the same so that it cannot be used again.

Under Section 12(1)(b), an obligation has been imposed on person

executing any instrument on any paper bearing an adhesive stamp, to

cancel the stamp, if such cancellation has not been done, at the time of such

execution.

Under Section 12(2) of the Indian Stamp Act, 1899, any instrument bearing

an adhesive stamp which has not been cancelled, so that it cannot be used

again is deemed to be unstamped.

(ii) Does the Alternate Dispute Resolution (ADR) processes provide

procedural flexibility of a conventional trial? Explain.

Answer
There is a growing awareness that courts will not be in a position to bear

the entire burden of justice system. A very large number of disputes lend

themselves to resolution by alternative modes such as arbitration,

mediation, conciliation, negotiation, etc. The Alternative Dispute Resolution

(ADR) processes provide procedural flexibility save valuable time and

money and avoid the stress of a conventional trial.

There is, therefore, an urgent need to establish and promote ADR services

for resolution of both domestic and international disputes in India.

The ADR is flexible and not governed by the rigours of rules of procedures.

The ADR can be used with or without a lawyer. ADR helps in the reduction

of the work load of the Courts and thereby helps them to focus attention on

other cases. The ADR procedure permits parties to choose neutrals who are

specialists in the subject matter of the dispute.

(iii) Aman hired a room in a hotel and paid a week's rent in advance. After

registering, he went up to occupy the room. Aman found a notice on the

wall that "The proprietor will not be responsible for articles lost or

stolen, unless handed over to the manager of the hotel for safe

custody." Owing to the negligence of the hotel staff, a thief gained

access to the room and stole some goods of Aman. State whether the

proprietor of the hotel is liable for the loss caused to Aman? State also

which type of contract it is?

Answer
In this case the proprietor of the hotel is liable for the loss caused to Aman.

There are certain conditions attached to such contract. Among them one

condition is that notice of the terms must be contemporaneous with the

contract. It should be given before or at the time, the contract is entered

into. A subsequent notification will not bind the other party, unless he has

asserted thereto. It might indeed amount to a modification of the original

contract. Hence, in this case the notice, being not contemporaneous, did not

form part of the contract of hire.

The problem asked in the question is based upon the Standard form

Contract.

A standard form contract prepared by one party to it, otherwise than by the

process of negotiation, drafted by one party, it enables the other party to

sign on dotted lines.

The terms are prepared before hand by the former and the latter party is

made to or deemed to agree to the terms, where under, the latter doesn’t

have much to say.

The term are put in the standardised form such contracts have also been

described as ‘Contract of Adhesion’, in the sense, the individual/consumer

has no choice but to accept, he does not negotiate, but merely adheres.

Question 3
(a) Ms. Neelam, daughter of Ashok, was travelling by train. She fell down

from the running train while she was passing through the inter-

connecting passage between two compartments and died as a result of

crush injuries on her head.

 Ashok claimed compensation from the Railways for deficiency in

service. The Railways contended that the redressal agencies under the

Consumer Protection Act, 1986 had no jurisdiction to consider a

complaint of this nature. They also contended that all the coaches of the

train had been thoroughly checked at the starting point of the train and

no defect was reported.

Will Ashok succeed in getting compensation? Give reasons and refer to

decided case law, if any.

Answer
Yes, Ashok will succeed. In Union of India v. Nathmal Hansaria [First

Appeal No. 692 of 1993 decided on 24.1.1997 (NCDRC)] the National

Commission held that the death of the passenger could not be described as

resulting from railway accident but an accidental death caused by the

absence of safety devices in the vestibule passage way.

The deceased passenger was a consumer and awarded compensation to

the parents of deceased.

(b) Discuss briefly the ‘doctrine of part-performance’, which is embodied in

Section 53A of the Transfer of Property Act, 1882

Answer
Followings are the essential conditions for the operation of the doctrine of

part performance according to Section 53A of the Transfer of Property Act,

1882.

1. There must be a contract to transfer immoveable property.

2. It must be for consideration.

3. The contract should be in writing and signed by the transferor himself

or on his behalf.

4. The terms necessary to constitute the transfer must be ascertainable

with

5. reasonable certainty from the contract itself.

6. The transferee should have taken the possession of the property in

part

7. performance of the contract. In case he is already in possession, he

must have continued in possession in part performance of the

contract and must have done something in furtherance of the

contract.

8. The transferee must have fulfilled or ready to fulfill his part of the

obligation under the contract.

(c)

(i) What is meant by contravention under the Foreign Exchange

Management Act (FEMA), 1999?

Answer
Contravention is a breach of the provisions of the Foreign Exchange

Management Act (FEMA), 1999 and rules / regulations / notification / orders

/ directions / circulars issued there under.

(ii) Which kind of approval is essential for the following transactions, under

the FEMA, 1999:

a) Arjun, wants foreign exchange facility to visit England, for which he

requires USD 3,50,000.

b) Mathew, a non-resident Indian wants to transfer his shares of a

company to non-resident.

c) Nidhi, wants to get USD 2,50,000 for brain tumour surgery at London.

Answer
a) According to Rule 5 of the Foreign Exchange Management (Current

Account Transactions) Amendment Rules, 2015 read with Schedule III,

Individuals can avail of foreign exchange facility for Private visits to any

country (except Nepal and Bhutan) within the limit of USD 2,50,000 only.

Any additional remittance in excess of the said limit shall require prior

approval of the Reserve Bank of India.

In the present case, Arjun has to take the prior approval of Reserve Bank

of India because foreign exchange facility exceeds USD 2,50,000/-.

b) As per FEMA, 1999 Transfer of shares from a Non-Resident Indian to

another Non- Resident requires prior approval of Reserve Bank of India.

In the present case, Mathew has to take the prior approval of Reserve

Bank of India.
c) According to Rule 5 of the Foreign Exchange Management (Current

Account Transactions) Amendment Rules, 2015 read with Schedule III,

Individuals can avail of foreign exchange facility for the expenses in

connection with medical treatment abroad within the limit of USD

2,50,000 only. Any additional remittance in excess of the said limit shall

require prior approval of the Reserve Bank of India.

In the present case, Nidhi is not required to take the prior approval of

Reserve Bank of India because foreign exchange facility does not exceed

USD 2,50,000/-.

Question 4
(a) What is meant by ‘Arbitral Award’? State the ingredients of an arbitral

award under the Arbitration and Conciliation Act, 1996.

Answer
As per Section 2(1) (c) of the Arbitration & Conciliation Act, 1996, "arbitral

award" includes an interim award.

The ingredients of an arbitral award are as follows:

1. The arbitral award is required to be made on stamp paper of

prescribed value (as applicable at the place of making the award) and

in writing.

2. The award is to be signed by the members of the arbitral tribunal.

3. The making of an award is a rational process which is accentuated by

recording the reasons.

4. The award should be dated i.e. the date of making of the award should

be mentioned in the award.

 5. Place of arbitration is important for the determination of rules

applicable to substance of dispute, and recourse against the award.

6. The arbitral tribunal may include in the sum for which award is made,

interest upto the date of award and also a direction regarding future

interest.

7. The award may also include decisions and directions of the arbitrator

regarding the cost of the arbitration.

8. After the award is made, a signed copy should be delivered to each

party for appropriate action like implementation or recourse against

arbitral award.

(b) “The Competition Act, 2002 does not prohibit dominance but the abuse

of dominant position.” Discuss.

Answer
Dominance refers to a position of strength which enables an enterprise to

operate independently of competitive forces or to affect its competitors or

consumers or the market in its favour.

Dominance is not considered bad per se but its abuse is. Abuse is stated to

occur when an enterprise or a group of enterprises uses its dominant

position in the relevant market in an exclusionary or/ and an exploitative

manner.

Competition Act, 2002 gives an exhaustive list of practices that shall

constitute abuse of dominant position and, therefore, are prohibited. Such

practices shall constitute abuse only when adopted by an enterprise

enjoying dominant position in the relevant market in India.

Abuse of dominance is judged in terms of the specified types of acts

committed by a dominant enterprise. Such acts are prohibited under the

law. Section 4 of the Competition Act, 2002 expressly prohibits any

enterprise or group from abusing its dominant position, meaning thereby a

position of strength, enjoyed by an enterprise or group, in the relevant

market, in India, which enables it to–

(i) operate independently of competitive forces prevailing in the

relevant market; or

(ii) affect its competitors or consumers or the relevant market in its

favour”.

Part B

Question 5
(a) What is the object and scope of the Essential Commodities Act, 1955?

Discuss briefly.

Answer
The Preamble to the Essential Commodities Act, 1955 says that it is an Act

to provide in the interest of the general public for the control of the

production, supply and distribution of, and trade and commerce in, certain

commodities. The dominant object and intendment of the Act is to secure

equitable distribution and availability at fair prices of essential commodities

in the interest of the general public. The interest of the general public

necessarily connotes the interest of the consuming public and not the

interest of the dealer. Essential Commodities Act, 1955 extends to the whole

of India.

(b) Explain the objectives behind the establishment of the Water

(Prevention and Control of Pollution) Cess Act, 1977.

Answer
With a view to augment the resources of the Central Board and the State

Boards for the prevention and control of water pollution, the Water

(Prevention and Control of Pollution) Cess Act, 1977 has been brought on

the statute book. This Act authorises the levy and collection of a cess on

water consumed by person carrying on certain industries and by local

authorities.

The object of the Cess Act is to ensure that the State or Central Boards are

able to raise sufficient finance other than the funds that are being

contributed by the Central Government and States and also by way of gifts

and donations, in the effective discharge of functions contemplated under

the Pollution Control Laws.

(c) Under what circumstances a Sub-Registrar can refuse to register a

document under the Registration Act, 1908?

Answer
Circumstances in which Sub-Registrar may refuse to register a document

under the Registration Act, 1908 are:-

1) Every Sub-Registrar refusing to register a document, except on the

ground that the property to which it relates is not situate within his

sub-district, shall make an order of refusal and record his reasons for

such order in his Book No. 2 and endorse the words “Registration

refused” on the document; and, on application made by any person

executing or claiming under the document, shall without payment and

unnecessary delay, give him a copy of the reasons so recorded.

 2) No registering officer shall accept for registration a document so

endorsed unless and until, under the provisions hereinafter contained,

the document is directed to be registered.

(d) X a trustee of Y, wrongfully disposes the property of the trust and

acquired another property in his own name, partly with his own money

and partly with the money received from the disposal of the trust

property. What remedy is available to Y against X under the Indian Trust

Act, 1882?

Answer
According to Chapter VI of the Indian Trust Act, 1882 a beneficiary has a right

to follow the trust property in the hands of a third person. Even where a

trustee disposes of the trust property and acquires some other property

with the help of the disposal money, the beneficiary is entitled to have the

latter property, the same rights or as nearly as possible the same rights, he

had over the trust property.

X, a trustee for Y wrongfully dispose of the property of trust and acquired

another property in his own name, partly with his own money, partly with

money subject to a trust for Y.

In the given problem Y is entitled to a charge on the property for the amount

of the trust money so misemployed.

(e) Define the term ‘Manufacturer’ as used in Legal Meteorology Act, 2009.

Answer
As per section 2(i) of the Legal Metrology Act, 2009, "Manufacturer" in

relation to any weight or measure, means a person who -

(i) manufactures weight or measure,

(ii) manufactures one or more parts, and acquires other parts, of such

weight or measure and, after assembling those parts, claims the end

product to be a weight or measure manufactured by himself or itself, as the

case may be,

(iii) does not manufacture any part of such weight or measure but

assembles parts thereof manufactured by others and claims the end

product to be a weight or measure manufactured by himself or itself, as the

case may be,

(iv) puts, or causes to be put, his own mark on any complete weight or

measure made or manufactured by any other person and claims such

product to be a weight or measure made or manufactured by himself or

itself, as the case may be.

Attempt all parts of either Q. No. 6 or Q. No. 6A

Question 6
(a) Discuss the criteria of classification of enterprises into micro, small and

medium enterprises under the Micro, Small and Medium Enterprises

Development Act, 2006.

Answer
Section 7 of the Micro, Small and Medium Enterprises Development Act,

2006 empowers the Central Government to classify any class or classes of

enterprises, whether proprietorship, Hindu undivided family, association of

persons, co-operative society, partnership firm, company or undertaking, by

whatever name called,—

(a) In the case of the enterprises engaged in the manufacture or

production of goods pertaining to any industry specified in the First

Schedule to the IDRA as—

 (i) a micro enterprise, where the investment in plant and machinery

does not exceed twenty-five lakh rupees;

(ii) a small enterprise, where the investment in plant and machinery is

more than twenty-five lakh rupees but does not exceed five crore

rupees; or

(iii) a medium enterprise, where the investment in plant and machinery

is more than five crore rupees but does not exceed ten crore rupees;

(b) In the case of the enterprises engaged in providing or rendering of

services, as—

(i) a micro enterprise, where the investment in equipment does not

exceed ten lakh rupees;

(ii) a small enterprise, where the investment in equipment is more than

ten lakh rupees but does not exceed two crore rupees; or

(iii) a medium enterprise, where the investment in equipment is more

than two crore rupees but does not exceed five crore rupees.

It has been clarified that the cost of pollution control, research and

development, industrial safety devices and such other items as may be

specified shall not be included in calculating the investment in plant and

machinery.

(b) Prateek failed to comply with the order of National Green Tribunal.

Advise to Prateek the consequences thereof.

Answer
Mr. Prateek has to face the following consequences if he is not complying

with the order of National Green Tribunal:

According to Section 26 of the National Green Tribunal Act, 2010 whoever,

fails to comply with any order or award or decision of the National Green

Tribunal, shall be punishable with imprisonment for a term which may

extend to three years, or with fine which may extend to ten crore rupees, or

with both and in case the failure or contravention continues, with additional

fine which may extend to twenty-five thousand rupees for every day during

which such failure or contravention continues after conviction for the first

such failure or contravention.

In case a company fails to comply with any order or award or a decision of

the National Green Tribunal, such company shall be punishable with fine

which may extend to twenty-five crore rupees, and in case the failure or

contravention continues, with additional fine which may extend to one lakh

rupees for every day during which such failure or contravention continues

after conviction for the first such failure or contravention.

Notwithstanding anything contained in the Code of Criminal Procedure,

1973, every offence under the National Green Tribunal Act, 2010 shall be

deemed to be non-cognizable within the meaning of the said Code.

(c) Discuss the procedure of amendment or alteration of the objects of

society under Societies Registration Act, 1860.

Answer
The objects of a society are its constitution and the society has to act within

the framework of its objects. Any act done by the society beyond the objects

clause shall be ultra vires. Under Section 12 of the Societies Registration Act,

1860, the following steps are required for alteration, extension or

abridgment of the objects of a society –

 1. Submission of the proposal by the governing body to the members of

the society;

2. Ten days’ notice to members about holding of a special general

meeting;

3. Convening a special meeting for consideration and passing of the

proposal by 3/5th of the members;

4. Convening second special general meeting after a month; and

5. Confirmation to the proposal by 3/5th of the members present at the

second special meeting.

OR (Alternate question to Q. No. 6)

Question 6A
(a) “Is it necessary that registration of documents should be done only

where the property is situated”? Discuss the provision of the of

Registration Act, 1908 dealing with the matter.

Answer
According to Section 28 of the Registration Act, 1908, documents affecting

immovable property mentioned in Sections 17(1) and (2) and Sections

17(1)(a)(b)(c) and (cc)(d) and (e), Section 17(2), etc. shall be presented for

registration in the office of a Sub-Registrar within whose sub-district the

whole or some portion of the relevant property is situated and any other

document may be presented for registration either in the office of the Sub-

Registrar in whose sub-district the document was executed or in the office

of any other Sub-Registrar under the State Government at which all the

persons executing desire the document to be registered.

(b) “An enterprise which is engaged in hazardous or inherently dangerous

activity and an industry which poses a potential threat to the health and

safety of the persons working in the factory and of those residing in the

surrounding areas owes an absolute and non-delegatable duty to the

community.” Comment

Answer
Supreme Court in the case of M.C. Mehta and Another v. Union of India and

others [(1987) 1 Comp. LJ 99 (SC)] ruled that an application for compensation in a

pollution case can be maintained under Article 32 of the Constitution, for, such

application is for the protection of the fundamental rights of the people and the

Court has all incidental and ancillary powers including the power to forge new

remedies and fashion new strategies designed to enforce fundamental rights. On

the question of liability of an enterprise engaged in hazardous activities, the

Supreme Court laid down for the first time a far-reaching ruling, that an enterprise

which is engaged in hazardous or inherently dangerous activity and an industry

which poses a potential threat to the health and safety of the persons working in

the factory and of those residing in the surrounding area owes an absolute and

non-delegatable duty to the community to ensure that no harm results to any one

on account of an hazardous or inherently dangerous nature of the activity which

it has undertaken. The Court further reiterated that the rule in Rylands v.

Fletcher [(1861-73) All.E.R. 146 HL] of strict liability would apply in India but

without any exceptions whatsoever recognised in England. The Court also ruled

that the measure of compensation must be correlated to the magnitude and

capacity of the enterprise because such compensation must have a deterrent

effect.
(c) Discuss 'essential commodities' under the Essential Commodities Act,

1955.

Answer
Section 2A of the Essential Commodities Act, 1955 dealing with Essential

commodities declaration, etc. defines the "essential commodity" as to mean

a commodity specified in the Schedule.

Schedule to the Act lists out following commodities:

1. Drugs: The explanation clarifies that for the purposes of this Schedule,

"drugs" has the meaning assigned to it in clause (b) of Section 3 of the

Drugs and Cosmetics Act, 1940;

2. fertilizer, whether inorganic, organic or mixed;

3. foodstuffs, including edible oilseeds and oils;

4. hank yarn made wholly from cotton;

5. petroleum and petroleum products;

6. raw jute and jute textiles;

7.

(a) seeds of food-crops and seeds of fruits and vegetables;

(b) seeds of cattle fodder; and

(c) jute seeds.