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An Insight on Business


Business Administration Department.

Introduction, Nature of Law, Meaning and
Definition of Business Laws, Scope and
Sources of BusinessLaw, Fundamental
Rights and Directive Principle of State
Policies, Principles having economic
significance, Overview of Business Laws in
Introduction on Law
• The law affects every aspect of our lives; it
governs our conduct from the cradle to the grave
and its influence even extends from before our
birth to after our death. We live in a society which
has developed a complex body of rules to control
the activities of its members. There are laws
which govern working conditions (e.g. by laying
down minimum standards of health and safety),
laws which regulate leisure pursuits (e.g. by
banning alcohol on coaches and trains travelling
to football matches)
Law is a system of rules that are
created and enforced through
social or governmental
institutions to regulate behavior,
which is done in order to
maintain peace & order in the
Definition – A law is a rule of
conduct imposed & enforced by
sovereign (Supreme ruler has
supreme authority)
Nature of Law
• Law is a system of rules usually enforced
through set of institutions.
• Consist of rules enacted by parliament to
Nature of Law
Everyone in the society is subject to a
variety of rules, example may religions set
rules of behavior, violating these rules does
not mean that the person has violated the
law, Example- Football players, these rules
are not laws and cannot be enforced by the
If a person does violate the law, in the event
court finds him or her in violation, the court
will prison or put a penalty.
Nature of Law can be understood with the
help of following diagram.
a) Parliament
b) Courts
C) Prisons
of Law
B)Personal a) Police

b) Legal

C) Judges

C) Legal
Business Law
/Mercantile Law/Commercial Law
• The term mercantile law refers to those legal
rules that govern the business transactions,
the rules & regulations bring seriousness in in
the business dealings.
• It governs Banks & business of all kind.
• It covers Agreements, contracts, copyright,
franchising, insurance, licensing, patents,
shipping, transport & trademark.
Definition of Business Law.
Mercantile law may be defined as that branch of law which
consists of laws relating to trade, industry and commerce.
It is one of the important branches of Civil Law. It is also
called as “Commercial Law”.
Scope of Business Law
• The scope of mercantile law is very wide and
varied. It includes law relating to contracts,
partnership, sale of goods, negotiable
instruments, companies, insolvency, insurance,
carriage of goods, etc.
• Knowledge of mercantile law is essential to
merchants. It helps the merchants to avoid
conflicts with the persons with whom he comes
into business contacts.
Sources of Business Law
• Indian mercantile law is based largely upon the
English mercantile law. Prior to the enactment of
the various Acts constituting mercantile law, the
personal laws of the parties to suit regulated
mercantile transactions. The rights of Hindus
were governed by the Hindu Law and that of
Muslims by the Mohammedan Law.
• In case of persons other than Hindus and
Muslims, the Courts applied the principles of
English Law. Further, where laws and usage of
Hindus or Muslims were silent on any point, the
principles of English Law were applied.
Sources of Business Law
1)English Mercantile Law.
a) Common Law
b) Equity Law
c) Statute Law
d) Case Law
2) Statute of Indian legislature.
3) Judicial Decisions.
4) Customs and Usage.
1)English Mercantile Law.
• The English law is the most important source of Indian
mercantile law. Many rules of English law have been
incorporated into Indian law through statutes and
judicial decisions. The sources of English law are:
A)Common Law - This law is known as judge made law. It
is based upon customs and practices handed down
from generation to generation. It is the oldest unwritten
law. The English Courts developed these over centuries
B) Equity -Equity is also unwritten law. It is based upon
concepts of justice developed by the judges whose
decisions become precedents. It grew as a system of law
supplementary to the common law and covered the
deficiencies of the common law. Its rules were applied in
cases where the rules of common law were considered
harsh and oppressive.
C) Statute Law - Statute law is one, which is laid
down in the Acts of Parliament. Hence, it acts
as the most superior and powerful source of
law. It overrides any rule of common law or
4) Case Law - This is also an important source
of the English mercantile law. It is built upon
the decisions of the Judges. It is based on the
principle that what has been decided in earlier
case is binding in similar future case also
unless that there is a change in the
circumstances of the case.
2) Statute of Indian legislature.
A Bill passed by the parliament and signed by the
President becomes a “Statute” or an Act. Most
of the Indian laws are embodied in the various
Acts passed by the Central as well as State
legislators. The Indian Contract Act, 1872, the
Sale of Goods Act, 1930, the Companies Act,
1956 are some of the examples of the statute
3) Judicial Decisions.
• Judicial decisions are also called as case laws.
They referred to as precedents and are binding
on all Courts having jurisdiction lower to that of
the Court, which gave the judgment. The Courts
in deciding cases involving similar points of law
also follow them.
- The Supreme Court (Highest Power) final court
of appeal.
- The High Court.
- Sub-Ordinate Court.
4) Customs and Usage.
• Customs and usage plays an important role in
regulating business transactions. A well-
recognized custom or usage can even override
the statute law. Most of the business customs
and usage have been already codified and
given legal sanctions in India. Some of them
have been ratified by the decisions of the
competent Courts of law.
• The Constitution of India is the supreme law of India. It lays
down the framework defining fundamental political principles,
establishes the structure, procedures, powers and duties of
government institutions and sets out fundamental
rights, directive principles and the duties of citizens. It is the
longest written constitution of any sovereign country in the
world. The nation is governed by it. B. R. Ambedkar is regarded
as its chief architect.

• It was adopted by the Constituent Assembly on 26 November

1949, and came into effect on 26 January 1950.With its
adoption, the Union of India became the modern and
contemporary Republic of India replacing the Government of
India Act, 1935 as the country's fundamental governing
• It declares India a sovereign, socialist, secular,
democratic republic, assuring its citizens of justice, equality,
and liberty.
Fundamental Rights.
• The Fundamental Rights is defined as the
basic human rights of all citizens. These
rights, defined in Part III of the
Constitution, apply irrespective of race,
place of birth, religion, caste, creed, or
gender. They are enforceable by the
courts, subject to specific restrictions.
The Directive Principles of State
Policy are guidelines for the framing of
laws by the government.
Fundamental Rights.
1 -Right to Equality
2- Right to Freedom
3- Right against Exploitation
4- Right to Freedom of Religion
5- Cultural and Educational Rights
6- Right to Constitutional Remedies
7- Right to Education.
1 -Right to Equality (It is embodied in
Articles 14–18 of Indian Constitution)
• which collectively encompass the general principles of equality
before law and non-discrimination as well as equal protection of
the law to all persons within the territory of India.
• Prohibition discrimination on the grounds only of religion, race,
caste, sex, place of birth, or any of them
• Equality of opportunity in matters of public employment and
prevents the State from discriminating against anyone in matters
of employment on the grounds only of religion, race, caste, sex,
descent, place of birth, place of residence or any of them.
• The practice of untouchability has been declared an offence
punishable by law under.
• Award any titles other than military or academic distinctions, and
the citizens of India cannot accept titles from a foreign state.
2- Right to Freedom
(It is embodied in Articles 19–22 of Indian Constitution)
• Freedom of speech and expression,
• Freedom of association/assembly, (Union,
• Freedom of movement throughout the territory
of our country.
• Right to practice any profession or occupation.
• Right to Life & Liberty.
• Protection in respect to conviction in offences.
• Protection against arrest & detention in
certain cases.
3- Right against Exploitation.
(It is embodied in Articles 23–24 of Indian Constitution)
• Prevent exploitation of the weaker sections of
the society by individuals or the State.
• Human trafficking.
• Forced labor.
• Prohibits the employment of children below the
age of 14 years in factories, mines and other
hazardous jobs.
4- Right to Freedom of Religion
(It is embodied in Articles 25–28 of Indian Constitution)
• Provides religious freedom to all citizens and
ensures a secular state in India. According to
the Constitution, there is no official State
religion, and the State is required to treat all
religions impartially and neutrally.
• Guarantees all persons the freedom of
principles and the right to preach, practice
and propagate any religion of their choice.
5- Cultural and Educational Rights
(It is embodied in Articles 29–30 of Indian Constitution)

• Protection of all languages, religions & culture

prevailing in the country, All minorities
religious or linguistic can set up their own
educational institutions & develop their own
6- Right to Constitutional Remedies
(It is embodied in Articles 32 of Indian Constitution)
• The Right to Constitutional Remedies
empowers citizens to approach
the Supreme Court of India to seek
enforcement, or protection against
infringement, of their Fundamental
7) Right to Education (RTE)
(Article 21 A (1-April-2010)

• The right to education also includes a

responsibility to provide basic education for
individuals who have not completed primary
education. In addition to these access to
education provisions, the right to education
encompasses the obligation to
avoid discrimination at all levels of the
educational system, to set minimum standards
and to improve the quality of education.
Fundamental Duties in Indian Constitution
(Art. 51A, Part IVA)
• to abide by the constitution and respect its ideal and institutions;
• to cherish and follow the noble ideals which inspired our national struggle for
• to uphold and protect the sovereignty, unity and integrity of India;
• to defend the country and render national service when called upon to do so;
• to promote harmony and the spirit of common brotherhood amongst all the
people of India transcending religious, linguistic and regional diversities, to
renounce practices derogatory to the dignity of women;
• to value and preserve the rich heritage of our composite culture;
• to protect and improve the natural environment including forests, lakes, rivers,
and wild-life and to have compassion for living creatures;
• to develop the scientific temper, humanism and the spirit of inquiry and reform;
• to safeguard public property and to abjure violence;
• to strive towards excellence in all spheres of individual and collective activity, so
that the nation constantly rises to higher levels of endeavor and
• who is a parent or guardian , to provide opportunities for education to his child,
or as the case may be, ward between the age of six and fourteen years.
The Directive Principles
• Part IV, Articles 36-51 of the Indian constitution
constitutes the Directive Principles of State Policy
which contain the broad directives or guidelines
to be followed by the State while establishing
policies and laws. The legislative and executive
powers of the state are to be exercised under the
purview of the Directive Principles of the Indian
• It focuses on overall development of the nation
through guidelines related to social justice,
economic welfare, foreign policy, and legal and
administrative matters.
1) (Article 38) State shall strive to promote the
welfare of the people by security & protecting
justice, social, economic & political
2) (Article 39) Strive to minimize the inequality in
income status, provide facilities & opportunities
for individual groups (Men & women have equal
right in livelihood) (Equal pay equal work for
men & women)
3) (Article 39A) Equal Justice & free Legal aid –
Secure operation of legal system, promote
justice on the basis of equal opportunity &
provide for legal aid.
4) (Article 40) Organization of Village Panchayat – Take
steps to organize village panchayat & endow with such
power & authority which will enable them to function as
a unit of self government,
5) (Article 41) Right to work, to education, to pubic
assistances in certain cases – Within the limit of
economic capacity & development make effective
provision for security, the right of work, to education, to
public assistance in case of unemployment / old
6) (Article 42) Provision for Just & Human conditions of
work & for maternity relief.
7) (Article 43) Living wage etc for workers – Secure by
suitable legislation or economic organization of all
workers, agriculture, Industries or other wise living wage
conditions of work ensure decent standard of life & full
8) (Article 43A) Participation of workers in
Manage Industries
9) (Article 44) Uniform Civil code from citizen
throughout the territory of India.
10) (Article 45) Provision for compulsory education
for children
11) (Article 46) Promotion of educational &
economic interests of scheduled caste, scheduled
tribes & other weaker section
12) (Article 47) Duty of the state to raise the level
of Nutrition & the standard of leaving & to
improve public health
13) (Article 48) Organization of Agricultural & Animal husbandry
– Use scientific lines, Improve breeds, Prohibition of
14) (Article 48A) Protection & Improvement of environment &
safeguarding forest & wild life
15) (Article 49) Protection of Monuments & places & objects of
national importance
16) (Article 50) Separation of judiciary from executive The State
shall take steps to separate the judiciary from the executive in
the public services of the State.
• 17) (Article 51) Promotion of international peace and security
The State shall Endeavour to
• (a) promote international peace and security;
• (b) maintain just and honorable relations between nations;
• (c) foster respect for international law and treaty obligations in
the dealings of organized peoples with one another; and
encourage settlement of international disputes by negotiation
Directive Principles Having Economic
• Fundamental Rights & Directive Principles are
complementary as well ass supplementary to each other,
1) They Lay emphasis on promoting welfare of the people
through social, economic & political justice.
2) They make state to strive to minimize the inequalities' in
Income status, facilitates & provide opportunities for the
3) They require the state to ensure that the economic system
does not result in concentration of wealth & means of
production to common determinant.
4) They require the state to ensure participation of workers in
management of Industry.
Articles (16,19,21A,23 & 24 relating to fundamental rights &
articles (38,39,41,43 & 43 A) relating to directive
principles are some of the prominent articles which are of
economic significance for the citizen of country.
Conflict Between Fundamental Rights & State
Directive Principles.
• Champakan Doriarajan case (1952). State of Madras
v. Champakam Dorairajan (AIR 1951 SC 226) is
a landmark decision of the Supreme Court of India.
This verdict led to the First Amendment of
the Constitution of India. It was the first major verdict
regarding reservations in Republic of India. In its
ruling the Supreme Court upheld the Madras High
Court verdict, which in turn had struck down the
Communal Government Order (G.O) passed in 1927 in
the Madras Presidency. The Communal G.O had
provided caste based reservation in government jobs
and college seats. The Supreme Court's verdict held
that providing such reservations was in violation of
Article 16 (2) of the Indian Constitution.
Article 16(2) in The Constitution Of India 1949
(2) No citizen shall, on grounds only of religion,
race, caste, sex, descent, place of birth,
residence or any of them, be ineligible for, or
discriminated against in respect or, any
employment or office under the State
I.C. Golaknath and Ors. vs State of Punjab and Anrs.
• Golaknath case, was a 1967 Indian Supreme Court case, in which
the Court ruled that Parliament could not curtail any of the
Fundamental Rights in the Constitution,
• The judgment reversed the Supreme Court's earlier decision which
had upheld Parliament's power to amend all parts of the
Constitution, including Part III related to Fundamental Rights. The
judgement left Parliament with no power to curtail Fundamental
• The Supreme Court, by thin majority of 6:5, held that a
constitutional amendment under Article 368 of the Constitution was
an ordinary 'law' within the meaning of Article 13(2) of the
Constitution. The majority did not believe there was any difference
between ordinary legislative power of the parliament and the
inherent constituent power of parliament to amend the Constitution.
The majority did not agree with the view that Article 368 of the
Constitution contained "power and procedure" to amend, but
instead believed that the text of Article 368 only explained the
procedure to amend the constitution, the power being derived from
entry 97 of the List I of the VII Schedule to the Constitution.
Overview of Business Laws in India
• Many business laws in India precede the country’s independence in 1947.
For example, the Indian Contract Act of 1872 is still in force, although
specific contracts such as partnerships and the sale of goods are now
covered by newer laws. The Partnership Act of 1932 covers partnership
firms in India. Business laws regulating chartered accountants and cost
accountants were passed in 1949 and 1959, respectively. The Banking
Regulation Act of 1949continues to regulate private banking companies
and manage banks in India. In 2012, it was amended by the Banking Law
(Amendments) Act. Under these amendments, the Reserve Bank of India
(RBI) was given power to restrict voting rights and shares acquisition in a
bank. The RBI established the Depositor Education and Awareness Fund.
Banks are now able to issue both equity and preference shares under RBI
• While India is often criticized for complex regulations, it is important to
keep in mind that that in some cases, these laws are simpler than those of
the U.S. Furthermore, most regulations are consistent across the country,
and attorneys in India can practice in any state. Filing lawsuits is seldom
productive in most commercial disputes since court cases can drag on for
decades and collection can take even longer. For large deals, binding third-
country arbitration can be the best way to resolve disputes.
• Business laws in India include consumer protection. The Consumer
Protection Act, 1986 mandates Consumer Dispute Redressal Forums at
local and national levels. Older laws, such as the Standards of Weights &
Measures Act of 1956, ensure fair competition in the market and free flow
of correct information from providers of goods and services to consumers.
• Due to the growth of trade, the Indian government passed the Foreign
Trade (Development and Regulation) Act of 1992 to facilitate imports and
augment exports. The latest EXIM Policy, known as the Foreign Trade
Policy, was issued for April 2015 to March 2020. The Service Exports
from India Scheme (SEIS) replaced the Served from India Scheme. The
SEIS extends the duty-exempted scrip to Indian service providers and
provides notified services in a specified mode outside the country. Under
the Export Promotion Capital Goods Scheme, the export obligation
requires six times the duty saved on imported capital goods; in the case of
local sourcing of capital goods, the export obligation is reduced by 25%.
Beyond goods and services, the Foreign Exchange Management Act of
1999 regulates foreign exchange transactions including investments
• As a founding member of the World Trade Organization in 1995,
India has updated business laws regarding copyrights, patents,
and trademarks to meet the Agreement on Trade Related Aspects
of Intellectual Property Rights. Indian companies and the federal
government honor global IP rights. However, because music
copyrights are different in India, both Indian and Western IP
owners in the entertainment industry have suffered due to digital
piracy. Even so, there are few IP-related disputes outside of
several celebrated pharmaceutical industry cases. In 2013,
India’s Supreme Court denied Novartis an extension to update its
cancer drug Glivec due to “evergreening” charges
• E-commerce and online expansion of companies prompted India
to create regulations to cover cyber law and security
compliances, such as the techno legal regulatory provisions in
the Companies Act of 2013. The Information Technology Act of
2000 is the primary law for e-commerce regulation in India. In
2008, the IT Act was amended to provide explicit legal
recognition of electronic transactions.
• Business Law
• Sources of Business Law
• The Constitution of India
• Judicial Decisions
• Cultural and Educational Rights
• What do you mean by Directive Principles &
name few Directive Principles.
• Directive Principles Having Economic