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Company and its forms
Definition of a company
According to justice Lindley ³ a company is an association of many persons who contribute money or moneys to a common stock and employ it for a common purpose. The common stock so contributed is denoted in money is the capital of the company. The persons who contribute to it or whom it belongs are its members. The proportion of capital to which member is entitled is his share.
As per chief justice Marshal of U.S.A.
Company is a person, artificial, invisible, intangible, and existing only in the eyes of law. Being a creation of law it possess only those properties which the charter of its creation confers upon it , either expressly or as incidental to its very existence
As per companies Act of 1956
Section 3(1)I of the Act defines the company as A company formed and registered under the companies Act or an existing company , means a company formed and registered under any of the former companies Act.
Unique features of the Company 1. 2. Voluntary Association Independent Legal Entity Oakes v/s Turquarnd and Hording Kondoli Tea co ltd Perpetual existence Common seal Limited Liability Transferability of shares. .
One man companies or Family companies 8. Registered companies a.Kinds of company There are mainly 8 kinds of companies 1. Statutory companies 2.Foreing companies 7. a private limited company deemed to be public co. 4. If 25% or of its paid up share capital is held by one or more bodies corporate If it holds 25% or more the paid up share capital of a public company If it invites deposit from the public.Holding and subsidiary companies 5. private companies b.Government companies 6. public companies 3.Multinational companies . Companies deemed to be public According to section 43A..
Stability 6.Financial Strength 2.Diffused risk 8.Transferability of interest 7.Economies of scale 3.Tax relief 9.Efficient management 5.Advantages and disadvantages of a company Advantages of company 1.limited liability 4.Good will .
Social evils .Legal formalities 2.Excessive statutory control 6.Unhealthy Speculation 9.Lack of personal interest 3.Conflict of interest 8.Disadvantages of company 1.Corrupt mgt 4.Oligarchy 5.Delay in decisions 7.
Commencement of business .promotion 2.Formation of a company Formation of company involves three prime stages they are 1.Incorporation 3.
e. either his own finance or with the help of any institutions. with the help of experts. executed and registered.Promotion Conceiving an idea and its working up either by himself or with the help of others i. It is a term of business not of law. He may be considered as father of the company As per Palmer ³He is a person who originates a scheme for the formation of a company and prepares the MA and AA. The term ³Promoter´ has not been defined in the companies Act. prospectus and makes arrangements for advertising and circulation of the prospectus and placing the capital´ . settles the terms of preliminary contracts. The person who give birth to an idea and starts working on it is called as promoter. finds first directors.
Occasional Promoters Financial Promoters Entrepreneur promoters .Kinds of promoters 1.professional promoters 2.
advertisement.To conceive an idea of starting a business and explore its possibilities 2. 3. underwriters etc. its filling. To decide about the name of the company.e.To prepare prospectus. The help of experts can be taken in this context. and issue of capital 8.Functions of a promoters 1. who can sign the memorandum and articles and also agree to act as the first directors of the company. the amount and form of its capital . To pay preliminary expenses and to make arrangements for the loans and other types of financial assistance. . To collect the requisite number of persons i. 5. two in case of a public company. the legal advisers. location of the registered office of the company. 7. 4. if considered necessary. to make arrangement for bankers.To get the MA and AA and printed 6.To conduct the negotiation for the purchase of the business in case it is intended to purchase an existing business. To enter in to preliminary contracts with vendors. auditors.arrangements for underwriters and brokers for capital.
Disclosure of all material facts 3.Duties and liabilities of promoters 1. Liability for false statements. omission of facts etc . Observance of fiduciary relationship 2.
Some important points Remuneration to the promoters Liability of promoters for preliminary contracts .
The promoters has to take the following preliminary steps in this connection 1. list of directors and their written consent. Auditors. AA. Filing of necessary documents a. Application for license 3. 7. Obtaining the certificate of incorporation . 6. Preparation of company¶s MA and AA 5.Incorporation Incorporation is a process which brings a company in to existence as a separate legal entity or corporate entity. Ascertainment of availability of the proposed name of the company 2. SEBI¶s approval to draft prospectus 4. Payment of necessary fees 8. Solicitors. MA. Brokers. statutory declaration by experts. Fixation of the underwriters. notice of address of the registered office. etc.
These formalities are as follows . but a public company has to fulfill certain formalities before it can commence business or exercise borrowing powers.Commencement of business A private company can commence business immediately after incorporation.
2. Company which do not issue a prospectus must file the following documents with registrar a. statutory declaration verified by the directors or company secretary to the effect that Whether the directors have taken up and paid for the qualification shares. shall be binding on the date of obtaining COB . Any contract made by the company before the date of its commencement. copy of prospectus b. .To get COB 1. Appointment of underwriters or brokers 2. Make application to recognized stock exchange for listing of shares and debentures Issue of prospectus to the general public Registration of following documents 1. statement in lieu of prospectus b. whether the shares have been allotted equalently to the amount of minimum subscription etc.A company which issue a prospectus a. Statutory declaration regarding the qualified shares and on the allotment of shares for minimum subscription.
Basic documents of the company Memorandum of association Articles of association prospectus .
Which defines its constitution and objects and lay down fundamental conditions upon which alone the company is allowed to be formed. . It may also termed as charter or the constitution of the company since it governs the relationship of the company with outside world.Memorandum of association M/A is the main document of the company.
Some important points Any provisions of M/A which is repugnant to the company law is void. After registration of the M/A with the company registrar the provisions of the company law will get the legal effect. It is a public document therefore every person who deal with the company is presumed to have sufficient knowledge of its contents. It is kept open for public inspection. .
Clauses of M/A U/S 13 Name clause Situation clause Object clause Liability clause Capital clause Association clause or subscription clause .
. A company can have any name except A name which is identical or closely similar with the name of other company so as to mislead the prospective customer of that company.Name clause A company is a legal entity therefore it must have a name to establish its identity. Name clause of the M/A confers protection against subsequent company registration in the same or closely similar name.
It is not necessary the word company should be the part of the name. Central government may permit a company to be registered with limited liability with out addition to its name word µlimited¶ or µprivate limited¶ Name of every company together with the address of its of registered office must be painted or affixed out side the premises where ever its business carried on. It need not necessarily be in English language Name of the company and address of its registered office should be mentioned in all official papers and publications . A name which is prohibited by the government. The last word of the name must be µlimited¶ in case of public companies and private limited in case of private limited companies. legible in one of the local languages.
The place where the registered office of the company is situated that is the place of its residence for the purpose of delivering or addressing any communication. Address of the registered office of the company need not be mentioned in the MA .Situation Clause MA should state the name of the state in which the registered office of the company is to be situated. It will fix up the domicile of the company. Further every company must have a registered office either from the day it begin to carry a business or with in 30 days of its incorporation. It is the place where all statutory books and registers of the company shall be maintained. service of any notice or process of court of law for determining the question of jurisdiction in any action against the company.
. It explains the members about the scope of the activity of the company where there capital has been employed.Objects clause It defines and limits the scope and operation of the company. It gives protection to the share holders against unwanted risk.
Sec 13(1) ±MA should contain the following Main objects of the company to be perused and also the objects which are incidental or ancillary to the main object. . Objects of the company should be well defined and lawful.
their liability is unlimited. .Liability clause It should contain each and every details regarding the liability of a particular company If the MA imposed unlimited liability for the directors.
All other relevant information regarding the types of shares. mode of payment.Capital clause Amount of share Capital with which the company should be registered. Division in to shares of a fixed amount. .
MA must be signed by seven or more in case of public ltd co. Full description address. Signatures shall be attested by the witnesses. occupation etc of the subscriber and witness must be written . and two or more in case of private limited co.. There may be one witness for all the signatures but one subscriber can not be a witness to the signature of another.Association clause The persons subscribing their signatures at the end of the memorandum are desirous of forming themselves in to an association in pursuance of the memorandum.
That is to say just addition or deletion of the word ³private´ .Alteration of MA Alteration of name clause A company can change its name at any time by Passing a special resolution By obtaining the approval of the central govet to that effect No such permission is required if the change of name is as a consequence of conversion of the public company in to private company or vice versa.
In the above said cases the central govet can give directions to the company to change its name in case of any default on the side of company or its officials. the name can be changed. . If the name of the company is too identical or closely resembles with the name of any existing company 1. shall be punished with the fine that may be extended up to 1000 RS per day. with the previous approval from the central govet . by passing a special resolution 2.
. Such changed name shall be notified to the registrar who shall enter the new name in the register in the place of the former name and issue a fresh certificate of incorporation with the necessary alterations embodied there in.
. special resolution of the share holders as well as confirmation by the CLB. The change should also confirmed by the regional director of the CLB. Change of registered office from one state to another state requires . 3. 2.Situation clause Changes in the registered office clause can be cause by 1. To change one city to another city with in the same state requires special resolution of the share holders to that effect. Passing a resolution by the board of directors to change the registered office from the one place to another place with in the same city. town or village.
. Company can not shift its registered office from one state to another state unless the change is for bonafide reason like to attain the economy or for the better administration. The consent of the disagreeing creditors have been obtained or their claims have been paid off or they have been provided security to the satisfaction of the CLB Registrar shall be given reasonable opportunity to appear before the CLB and state his objections and suggestion regarding such alteration. U/S 17(1) the CLB must satisfied that Sufficient notice has been given to every debenture holder and every other person whose interest will be affected.
However alteration can be made for the following purposes To carry on business more economically or more efficiently To attain its main purpose by new or improved means To enlarge or change the location of its operations. notice to registrar. To carry some business which under existing circumstances ma conveniently or advantageously be combined with the business of the company.Alteration of objects clause Change in the object clause is the most complicated affair. By passing a special resolution of share holders. to be heard before the CLB. . To restrict or abandon any of the objects specified in the MA To sell or dispose the whole or any part of the undertaking To amalgamate with an other company or body of persons. Objections from any interested parties to heard and satisfied if possible.
Alteration of Liability Clause Alteration of liability Clause of the MA can not be made so as to impose unlimited liability on the members. However the additional liability can be imposed to buy additional shares of the company can not be made with out the consent of the concerned member in writing. .
Alteration of capital clause Alteration proper Reduction of capital Variation of the rights of the share holders Creation of reserve liability .
any act in contrary to the defined power of the company is ultra vires to the company. It means act Beyond the legal Power and authority of the company. This doctrine tries to protect the interest of the investors and creditors. Such acts are completely void and not binding on the company. .Doctrine of Ultra-Vires MA defines and confines the power of the company.
Ashbury railway carriage co ltd V. Riche German date coffee co. Effects of Ultra vires transactions. Injunction Personal liability of directors Contracts void .
Articles of association AA are the regulations and bye laws for governing the internal affairs of the company. According to the companies Act ³ AA of the company as originally framed or as altered from time to time in pursuance of any previous company law or this Act. They may be described as the internal regulations of the company as well as the powers of the share holders.´ .
Which contains a model set of Articles. AA should be printed and divided in to different paragraphs. In case if a company has not adopted the AA it means that company has adopted table A as its article. each consisting generally of one regulation and should be signed by the subscribers to the MA.Section 26 of the company Act Private limited companies Companies limited by Guarantee Unlimited Companies Companies should prepare and file AA as per the provisions of Table A ±Schedule 1 of companies Act. .
powers and duties. reserves and capitalization of profits. their rotation. Appointments of managerial personal. Accounts and audit Line on shares Remuneration to managerial personnel Issue of redeemable preference shares Paying interest out of capital Winding up of the company .Contents of the Articles Adoption or execution of preliminary contracts Definition of important terms and phrases Share capital and different classes of shares Procedures to make calls and forfeiture of shares. Rules as to Transfer and transmission of shares Issue of share warrants General meetings Common seal of the company Dividend.
Binding effects of MA and AA Binding the company to its members Binding on the members in their relation to the company Binding between members .
Alteration of AA A company has an inherent power to alter its articles any provision making Articles unalterable is regarded as bad in law. Articles can never be altered by an ordinary resolution even if they provide for such a procedure. how ever there are certain limitations these are as follows 1. Articles can be altered only by a special resolution. Conformation of the court is not required. .
2. However Articles may be altered to explain ambiguous portion or to supplement the MA with regard to those things upon which it is silent 3. . Alteration neither be beyond the provisions of companies act nor the M/A. But an article prescribing a special method for passing a special resolution for altering the articles will be valid.Alteration of articles seeking to take away the company's power to alter its articles would be void as being contrary to the provisions of the act.
to take share more than what he has already taken or to pay any more money than what he is liable to pay on his shares shall not be binding upon him unless he agrees in writing to such an alteration except in case where the company is a club or any other association and the alteration of articles provided for increase in the rate of subscription by the members. 4. . Alteration seeking to impose an additional liability on a member of the company after the date on which he became a member.
5. Alteration should not be illegal or against public policy besides not being contrary to any other statute in force. 6. Alteration of the articles shall not be valid if it has been made for the benefit of an aggressive. Articles can not be altered so as to unseat a member . vindictive or fraudulent majority. The power to alter the articles must be exercised by the share holders in good faith for the benefit of the company as a whole. Alteration of the articles for bona fide reason is valid though it is likely to harm the interest of some members of the company.
The provisions of MA should not be contrary to the law. MA can not be altered easily where as AA can be altered with out permission from the govet. Members of the company has full control over the articles by passing a special resolution..Distinction between MA and AA MA is the charter of the company that contains each and every information of the co. Where as the AA contain rules and regulations framed to govern the internal management of the company. or CLB.. Both are public documents and MA defines the relation between the company and outsiders. Where as AA is a subsidiary document which should not go beyond the MA and company law . while the articles regulate the relation between the company and members.
Hence it is the presumption that every one who deals with the company in any respect they should have the knowledge of the contents of the MA and AA and also understood them according to their proper meaning.Constructive notice of the MA and AA Both MA and AA are considered to be the public document hence once they were registered with the company registrar these documents should be kept open for the public inspection in the office of the registrar or on the demand. Therefore every person dealing with the company in any respect should have the constructive notice of the MA and AA and any act in contravention to these provisions are not valid and such acts will be attached with the consequences for the lapse. .
shall deal at his own risk or own cost and shall have to bear the consequences there off However this rule is subject to the doctrine of indoor management which requires the persons in charge of the management of the company to do all the things according to the procedures prescribed by the AA and entitles the outsiders to assume that things have been done in according with the provisions and procedure laid down in the AA . Hence any person (who had the constructive notice of the company documents).Doctrine of Indoor Management With the constructive notice of MA and AA the outsiders can ascertain the powers of the company and the extent to which the powers have been delegated to the directors and any limitations placed upon their powers. deal with the company.
internal regulations and resolutions etc has been imposed upon those who are responsible for the management of the affairs of the company. quorum. The duty of observing internal managerial procedures such as regarding constitution of the board. voting. Hence in all such cases the company shall continue to be liable to the third parties even if the internal formalities are found not to have been completed. .
It means outsiders need not enquire whether the company has fulfilled each and every procedures and regulations of internal mgt. But they are not bound to do any more. According to the doctrine of indoor management ³ Person dealing with the company are bound to read the registered documents and to see that the proposed dealings are apparently regular and consistent with the MA and AA therewith. They need not enquire whether proper authority has been delegated to the person who deal with the outsiders. they need not enquire in to the regularity of the internal affairs of the company. Royal British Bank V/S Turquand .
Enquiry Forgery Lack of knowledge of AA Acts beyond the apparent authority .Exceptions Knowledge of irregularity.
circular. advertisement or other document inviting deposits from the public or inviting offers from the public for the subscription or purchase of any shares in or debentures of a body corporate´ Hence any document which intends to secure required capital from the public at large can be considered with in the meaning of prospectus. .Prospectus According to companies act prospectus means ³ any document described or issued as a prospectus and includes any notice.
Requirement as to prospectus Issued after incorporation SEBI¶s approval to the draft prospectus It must be dated It must be registered with the registrar Experts to be unconnected with the formation or management of the company Experts consent to be obtained Terms of the contract not to be varied Share application form to be a part of memorandum containing salient features of the prospectus .
Contents of prospectus Part I of schedule II General Information Capital structure of the company Terms of the present issue Particulars of the issue Company management and project Information regarding company and other listed companies under the same management Information regarding to outstanding litigation Management perception of risk factors .
Part II of schedule II General Information Financial information Statutory and other information .
Effect of omission and mis ±statements in a prospectus Effect of omission Effect of mis-statements Liability of directors. promoters .
Statement in lieu of prospectus In all respect it is similar to the prospectus .
allottee becomes members of the company. On entry being made in the register of members. . Allotment means ³ the appropriation out of the previously unappropriate share capital of the company´.Allotment of shares Prospectus issued by a company is an invitation Application for shares is an offer and allotment order or notice is an acceptance that give rise to a valid contract between both the parties. but until then allotment remains only a contract. Allotment is the acceptance of the offer to take up shares.
. However reissue of forfeited shares is not allotment. it is just resale of existing shares. Allotment of shares is usually done by a resolution of the board of directors.
General principles of allotment Allotment should be made by proper authority It should be made with in reasonable time It must be communicated It should be absolute and unconditional .
Statutory restrictions on allotment of shares Minimum subscription Shall be fixed either by the director or by the subscriber of the MA Application money shall be at least 5% of the nominal value of the share. Money to be deposited in a schedule bank until to obtain the COB or till collect the entire money on shares Statement in lieu of prospectus should be filed at least 3 days before the allotment .
Consequences of irregular allotment Contract voidable Directors liability Fine Allotment void .
Allotment of shares in fictitious name shall be liable for the punishment up to five years . Return of allotment should be filed with in thirty days of such allotment.
Shares and share capital
Share means ³share in the share capital of a company´ however it is not an exhaustive definition. According to J. Farwell a share is ³ the interest of a shareholder in the company measured by a sum of money, for the purpose of liability in the first place and of interest in the second and also consist of a series of mutual covenants entered in to by all the share holders inter se in accordance with the provisions of companies Act and its articles´.
Kinds of shares
Preference shares Equity shares Preference Shares are those which carry the following two preferential rights over other classes of shares 1. Preferential rights over the dividends 2. preferential right as to the repayment of capital in case of winding up of company
Types of preference Shares
Cumulative and non cumulative preference shares Redeemable and irredeemable preference shares Participating and non participating preference shares Convertible and non convertible preference shares
Equity shares are those shares which are not preference shares. There are two types of shares. With voting rights With differential right as to dividends, voting or other wise in accordance with the rules and subject to such conditions as may be prescribed.
Share capital Preference share capital Equity share capital As per schedule VI of the Act share capital of the company should be classified in the balance sheet under 3 heads. Authorized share capital Issued share capital Subscribed share capital .
Transfer of shares Shares are movable property and can be transferred by the share holders in the manner prescribed by the articles. Right to transfer is absolute and inherent to the ownership of the shares. . However for the bonafide reasons few restrictions can be imposed but such restriction should not prohibit the share holder to transfer his shares. Articles can not absolutely take away the rights of members to transfer shares thus making shares non transferable is ultra vires the companies Act.
Procedures for the transfer of shares Transfer ordinarily by a member Transfer should be in the prescribed form Transfer application should be made by the transferor or the transferee Proposed transfer to be placed before the directors meeting Notice in case of refusal to register transfer .
Transmission of shares Transfer of shares on account of operation of law is termed as transmission of shares. administrator. or insolvency of an individual member or if the member is a limited company. lunacy. Transmission of shares occur in case of death. In all such cases the legal representatives. or the official assignee or receiver respectively shall be entitled to the shares. . on its liquidation.
the company may subject to the articles. It should not be implied .Forfeiture of shares If a call remains unpaid and time allowed for its payment has expired. forfeit those shares and the amount received there on The power to forfeit shares must be expressly given in the companies articles.
Procedures to be followed for the forfeiture of shares Default in the payment of a valid call Notice precedent to forfeiture Resolution for forfeiture Bona fide reasons Consequences of forfeiture .
It is voluntary abundance by the share holder of all his shares of a company. . Mere refusal to take up newly issued shares.Surrender of shares It means return of shares by the share holder to the company for cancellation. to which a shareholder is entitled to. is not a surrender of shares. The power to accept surrender of shares can not be exercised unless expressly given in the AA.
Meetings of share holders or general meeting Statutory meeting Annual general meeting Extraordinary general meeting Meeting convened by the CLB Class meeting 2. Other meetings Meetings of the creditors Meetings of the debenture holder Meetings of the directors .Meetings and proceedings Kinds of meeting 1.
changing object as well as name of the company. to wind up the company. including the vote of the chairmen. Special resolution It must be passed by a majority of three fourth of the votes in person or by proxy Notice should contain the intention for passing such special resolution must specifically be mentioned. It is required to alter situation clause in MA. . exceed the votes cast against it. to appoint auditors. to issue shares at discount. alteration of AA. to hold elections of directors. to reduce capital. to declare dividends.Resolutions Ordinary resolution It is passed by a simple majority of votes at a general meeting which needs notice to be given as per sec 171 of the Act. etc. Simple majority means vote casting either by raising their hands or on a poll in favour of particular proposal. It is required to pass the annual accounts.
Directors Meaning of directors The directors are the persons elected by the shareholders to direct. though he may be named differently. manage or supervise the affairs of the company. The companies act does not define the term µdirector¶ however sec 2 (13) simply provides that the term director ³ includes any person occupying the position of a director by what ever name called´ thus a person will be deemed to be a director if he performs the functions of a director. . conduct.
Some important points Sec 303 further provides that ³any person in accordance with whose directions or instructions the board of directors of a company is accustomed to act shall be deemed to be a directors of the company´ The directors of the company collectively referred as a ³Board of Directors´ or ³board´ Only individuals to be a directors .
small shareholders may have a director elected by such small shareholders. The company having share capital of Rs 5cr to 1000cr or more. Other companies must have 2 directors. To increase the number of directors beyond the limits of articles should obtain the permission from the c.govt . . The company can increase or decrease the number director by passing ordinary resolution. but not more than 12.Number of directors Every public company shall have at least 3 directors. This provision does not applicable to the private company.
such power may be delegated to the banking authority.as empowered by the AA.vacancy Appointment of directors by third parties. debenture holders or any other financial institutions By central govt.Appointment of directors Appointment of directors by promoters By members Retirement by rotation.1/3 shall be retire at the I annual general meeting and shall be appointed on the rotation By the board in case of C.-for the period of 3 years. not liable to reappoint on rotation .
The person acts as a director with out qualified shares. required to hold certain qualification shares. shall vacate office at the expery of period of 2 months. otherwise shall be liable for punishment of Rs 500 per day. . if it exceeds Rs 5000. director may purchase such qualified shares with in 2 months of his appointment. but the nominal value of these shares should not exceed Rs 5000.Qualification shares Every director of a company by its articles. Directors appointed by the govet to prevent the oppression and mis mgt need not hold the qualified shares.
or winding up of the company. management . . formation.Disqualifications of director Unsound minded person Insolvent Person convicted by Indian courts or any foreign courts for an offence of mental turpitude and sentenced to 6 months Person who failed to pay on calls If a person committed any fraud played in the promotion.
Removal of directors By the shareholders By the central govet By the court .
AA and other regulations. However there are two limitations on the powers of directors which the Act or MA or AA requires to be exercised by the share holders in the general meeting.Powers of directors As empowered and authorized by the company. Directors are subjected to provisions of the Act. . MA.
Exceptional cases where the share holders can interfere with the powers of directors Where the directors actions are found to be mala fide. Where the board becomes incompetent to act Dead lock in the board .
Power to invest the funds of the company Power to fill c.Power to be exercised only by the board The power to make calls The power to issue debentures Power to borrow money.vacancy in the board. .
Duties of directors (as per common Law) Duty of good faith Duty of reasonable care Duty to attend board meetings Personal attendance Duty to disclose interest .
the person to be appointed as a secretary must have passed the companies secretaries examination of the institute of companies secretaries and also be member of the institute. secretary means ³a company secretary who is a member of the institute of company secretaries of India ( constituted under the companies secretaries Act 1980) and includes any other individual possessing the prescribed qualifications appointed to perform the duties which may be performed by a secretary under this Act or any other ministerial and administrative duties. According to sec 2(45) of the companies Act 1956. . basically concerned with various legislations prevalent in the county as applicable to companies.´ As per the Companies secretaries Act 1980.Secretary Secretary is one of the most important officials of a company.
³Secretary in whole time practice´ means a secretary who shall be deemed to be in practice as per provision of section 2(2) of the companies secretaries Act. . According to sec 45(a) of companies Act. 1980 and who is not in full time employment.
every companies having share capital of Rs 2cr or more should have a full time secretary Companies having 10 lacs and less than 2cr should obtain compliance certificate from the company secretary who is in whole time practice and such certificate should be attached with the report of directors and submit to the company registrar In case of any default to comply with this rule. shall be punishable with the fine of Rs 500 for each day of default.Appointment of secretary Certain companies have to appoint company secretary Sec 383-A. .
. but such nomination does not give rise to any right to the person nominated as secretary since article bind the company to its members only in their capacity as member and not in any other capacity.Mode of appointment The first secretary may be named in the companies articles.
Misconduct includes wilful disobedience of any lawful order of the company Even in those cases where the engagement is for a fixed term but absolute discretion is given to the company to terminate the employment earlier. . This may be done by the directors under the general powers of management and administration given to them under companies articles. A secretary is also an employee of the company and therefore the general rules of employment of company will also be applicable to him. proper notice of the companies intention to do so is necessary. hence he can not be removed from his office with out being given a proper notice or compensation in lieu thereof unless he has been found guilty of misconduct of the agreement of service.Dismissal of secretary The secretary may be removed from his office by a resolution of the board of directors.
Duties and liabilities of secretary Duties of secretary can be classified in to two categories Statutory duties General duties .
Statutory duties He has to give notice to the registrar. for increase of share capital He has to issue certificate of shares and debentures He has to deliver for registration to the registrar particulars of mortgages and charges He has to assist in the making of the statement of affairs of the company in the winding up for the purpose of submitting it to the liquidator. .
directors and record their proceedings. transfers and forfeitures of shares etc but also with the various departments of the companies activities . To issue the necessary notice for calling of such meetings on the instructions of the board of directors.General duties To attend all meeting of shareholders. To supervise all issue of capital and debentures To conduct corresponds not only with the shareholders regarding calls.
control and manage the internal management of the company To register transfer and transmission of the shares. . To supervise all issues of capital and debentures To act as a medium and link between company and the outsider To keep and maintain statutory and other books To organize.
Default regarding the publication of name by the company . Default regarding the register of members Default in filing of particulars regarding chargesattached with 5000. Default in the preparation on share certificates and debentures certificates. that should be deliver with in 3 months after allotment and 2 months after the application for registration of transfer or fine of Rs 5000 may be imposed.Liabilities of secretary The company secretary is held liable for the following matters 1.
Default in holding annual general meeting Default in holding statutory meeting Default in circulating the member¶s resolution Falsification of books of accounts .
eg depriving of certain members of their membership rights or unnecessary burden on company¶s financial resources on account of holding of separate meeting by two rival board of directors etc . which is likely to result in some type of harsh or tyrannical burden upon the shareholders who have come to the court with a complaint . harsh and wrongful manner.Prevention of oppression and Mismanagement-sec 397-409 Meaning of oppression According to dictionary meaning the term ³oppression´ includes any act exercised in a burdensome. To the context of companies Act ³ It implies unjust or unfair conduct.
Gopal Chetty ³ there must be unfair abuse of powers and impairment of confidence in the probity with which the companies affairs are being conducted as distinguished from mere resentment on the part of the minority at being out voted on some issue of domestic policy It is not lack of confidence between the share holders .Ripon press co ltd v.
be guilty of fraud misfeasance or mis conduct towards the members. Persons concerned with the management of companies affairs must . Oppression involves at least an element of lack of probity or fair dealing to a member in the matter of his proprietary rights as a shareholder. It does not include mere domestic disputes between directors and members or lack of confidence between one section of members and another section in the matter of policy or administration It does not covers mere private enmity between members and directors . in connection there by.
the company law board will interfere only when it is of the opinion that The companies affairs are being conducted in a manner prejudicial to public interest or in a manner oppressive to any member or members Circumstances suggest winding up of company on just and equitable grounds but to order winding up would be prejudicial to the interest of the oppressed members .Conditions for oppression Sec 397(2) provides that on a complaint by members against oppression.
as per CLB 1. When conditions of fair play are violated . When an attempt is made by majority to force new and risky objects on the unwilling minority 2. When an attempt is made to deprive a member of his ordinary membership rights 3.Grounds to determine oppression. When the provision of the Act or articles or MA are flout (disobey) 4.
in its membership and that by reason of change. it is likely that the affairs of the company will be conducted in a manner prejudicial to public interest or the interest of the company .Meaning of mis management-398 If company affairs are being conducted in a manner prejudicial to public interest or the interest of the company or A material change has taken place in the management or control of the company whether by an alteration in its board of directors or manager or the ownership of the companies shares or if it has no share capital.
The central govt can it self make an application .U/S399 and 401 following persons can apply to the company law board for relief against oppression and mismanagement A.not less than 1/5 of total number of its members.Application to the company law board Who can apply. Any lesser number of members. In case of company not having share capital. if so authorized by the central govet if it considers just and equitable. In case of company having share capital ±one hundred fully paid share holders of the company or not less than 1/10 of its member ±which ever is less.
Besides that the right to apply not confined to oppressed minority alone. an oppressed majority can also apply In Sindhri Iron Foundary (p) Ltd ± If the court finds that the companies interest is being seriously prejudiced by the activities of one or other group of shareholders.that two different registered offices at two different addresses have been set up that two rival boards are holding meetings ± that the companies business property and assets have passed to the hands of unauthorized persons who have taken wrongful possession and who claim to be the shareholders and directors.then the court can pass appropriate order to put an end to such matters .Important points Rights to apply is available to equity and preference share holders.
If any member withdraw their consent after the institution of proceedings the validity of the application will be affected there by.s enough. The CLB has to make an application to the central govet before passing final order . Written consent of the of requisite number of members i.
to setting aside or modification of any agreement. 3. .Powers of CLB According to section 402 CLB has the following powers To regulate the company affairs in future To terminate. in opinion of the court. be just and equitable in all the circumstances of the case 1. how so ever arrived at between the company on the one hand and any of the following persons on the other hand viz Managing director Any other director The manager upon such terms and condition as may. 2.
To terminate any contract entered by the company with in three months before the presentation of the application Any matter which the CLB deems necessary and just .
Powers of central govet To appoint directors as per the order of the central govet It also issue such directions to the company as it may consider appropriate It even conferred with the power to change the auditors or order for the alteration of AA. .
Winding up Meaning of winding up Winding up is the process by which a company is dissolved and its properties are administered for the benefit of its creditors and members. . It involves realization of companies assets. payments of its liabilities and return of money back to the members in proportion to the contribution made by them to the capital of the company.
Thus winding means dissolution of the company . collects its assets. who takes control of the company. An administrator called liquidator.According to prof gower The liquidation or winding up of company is the process whereby its life is ended and its property is administered for the benefit of its creditors and members. pays its debts and finally distributes any surplus among the members in accordance with their rights.
Modes of winding up Compulsory winding up under an order of the court Voluntary winding up Winding up under the supervision of the court .
3. 4. 6. 2. 5.Compulsory winding up Winding up of a company by an order of the court is known as compulsory winding up ± the following are the grounds for compulsory winding up of the company Passing special resolution for the winding up Default in holding statutory meeting Failure to commence business Reduction in membership Liability to pay debts Just and equitable 1. .
Who may apply Petition by the company Petition by the creditors Petition by the contributories Petition by the registrar Withdrawal of petition .
Powers of the court on the presentation of the petition 442 and 443 Restrain proceedings against the company Hearing petition .
2. has expired or When the event on the happening of which depended the termination of the existence of the company has happened By passing special resolution to wind up voluntarily for any reason what so ever With in 14 days of passing of resolution the company shall give notice of the resolution by advertisement in the official gazette and also in some news paper circulating in the district of the registered office of the company Office responsible for the default of publication shall be punishable for fine of Rs 500 for every day of default .Voluntary winding up 1. Winding up by the creditors or members with out any intervention of the court is termed as voluntary winding up According to sec 484 a company may be wound up voluntarily by passing an ordinary resolution in the general meeting When the period. for the duration of which the company was constituted.
In such a case declaration of solvency shall not be made and filed with the registrar.Types of voluntary winding up Members voluntary winding up Creditors voluntary winding up Member¶s voluntary winding up requires the filing of a statutory declaration of solvency by the majority of the directors of the company with registrar. . The question of creditors voluntary winding up will arise in a case where the company is not in a position to pay off its liabilities in full.
6. 4. 3. 5. Appointment of liquidators Managerial persons powers to cease on the appointment of liquidator Power to fill up vacancy in the office of the liquidator Notice of appointment of liquidator to be given to the registrar Power of the liquidator to accept shares Duty of liquidator to call creditors meeting in the case of insolvency Duty of liquidator to call general meeting at the end of the each year Final meeting and dissolution . 7. 2. 8.Provisions applicable to Members voluntary winding up 1.
4. 8. 7. Meeting of the creditors Notice of resolution of registrar Appointment of liquidator Appointment of committee of inspection Fixing of liquidators remuneration Board¶s powers to cease on the appointment of the liquidator Power to fill vacancy in the office of liquidator Duty of liquidator to call meeting of company and creditors at the end of each year Final meeting and dissolution . 5. 3. 6.Provisions applicable to the creditors voluntary winding up 1. 9. 2.
1.Winding up subject to the supervision of the court At any time after a company had passed a resolution for voluntary winding up the court may make an order that the voluntary winding shall continue subject to the supervision of the court under following circumstances The liquidator under the voluntary winding up is prejudiced or is negligent in collecting the assets or The resolution for winding up was obtained by fraud The application for the courts supervision may be made by any creditor/liquidator/by company itself. The court has the full discretion to grant or refuse a supervision order. . 2.
Dissolution of company or conduct of winding up The object of winding up is to realize assets. payment of liabilities. these rules are more or less uniform irrespective of the mode of winding up for e. In many respects. discharge liabilities and then to distribute any surplus among the share holders according to their respective rights. overriding preferential payments.g. All this work is conducted according to certain prescribed rules. All wages and salary due to the company employees Assured holiday remuneration Sum due to the employee in the form of PF/pension fund/gratuity etc ********************************** . like all revenue/taxes due from the company to the state govet or central govet.
Intellectual Property Law .
Definition of intellectual property .
Nature of intellectual property Intangible incorporate property It consists of bundle of rights in relation to certain material object created by the owner Rights are created by the statutes. The invention may relate to a new product or an improvement of an existing product or a new process of manufacturing an existing or new product. .
. After the expiry of the duration of patent any body can make use of the invention. It consists of an exclusive right to make use of invention for a limited period.What is a patent A patent is an exclusive right granted to a person who has invented a new and useful article or an improvement of an existing article or a new process of making an article.
The objects of patent law To encourage the research and invention and develop new technology and industry Induces an inventor to disclose the invention To reward the inventor To provide protection to the inventions .
Patentable invention2(1) (j). . An invention is defined as ³ a new product or process involving an inventive step and capable of industrial application´ Such invention should result in the production of some vendible product Improves or restores to its former condition of a vendible product Has the effect of preserving from deterioration some vendible product to which it is applied.
An invention the primary or intended use of which would be contrary to law or morality or injurious to public health The mere discovery of a scientific principle or the formulation of the abstract theory or discovery of any living or non living substances occurring in nature. 4. 5. Method of agriculture or horticulture. An invention which is frivolous or which claims any thing obviously or contrary to well established natural laws. 2. law of trade marks. A mathematical or business method or computer programe .Inventions not patentable 3-4 1. 6. .algorithms The works which can be covered under copy right law. 3.
Who may apply -6 1. Actual inventor 2. Assignee of the right to make an application 3. Legal representative .
A mere financial partner.Who is eligible for the grant 1. a firm or a corporation can not be a sole applicant for the grant of patent . Who applies first 2. A person who has merely communicated an idea is not an inventor but the person who really gave a shape to such an idea is eligible for the grant 4. Subsequent applicant will not get the patent 3.
Whether a particular invention conducted during the course of employment is belongs to the employer or not.Nature of right to apply Right to apply for patent is assignable and should be in writing On the death of the inventor the right to apply rest with the legal rep. . depends on the terms of contract to that context.
Procedure An application with the prescribed fees should be filed in the appropriate office The application should be accompanied by provisional or complete specification .Term of patent The term of patent after the commencement of patents amendment Act 2002 shall be 20 years.
Where the provisional specification is filed the complete specification should be filed with in 12 months. Thereafter the application will be published . An application of patent will not be open for public till 18 months from the date of application. in case of failure the application will be deemed to be abandoned.
the application will be examined by the examiners of patents to see whether such application complies with all the requirements of the Act. Whether is there any Lawful grounds for objection to the grant of patent or the said invention is already claimed or published by any other person . After publication of the application. in case of failure the application will be deemed to be withdrawn. with in the prescribed period a request for examination of application should be made by the applicant. After such request .
to the grant of patent. After examination of the application. Any person interested may give notice of opposition with in three months from the date of advertisement in the official gazette. Where the applicant has satisfactorily removed the official objections. the patent office will communicate to the applicant. the controller will accept the complete specification and advertise it in the official gazette. . the objections if any .
A patent specification is a technical as well as a legal document. The object of the provisional specification is to fix the priority date of the patent . its field of application and anticipated result. complete specification Provisional specification need not be full and specific. Two types of specification 1. provisional specification 2. Once the provisional specification was filed the applicant gets 12 months to file complete specification. It is sufficient if it contains a general description of the invention. .Specification A description of the invention is called as specification.
The specification should be accompanied by the abstract to provide technical information of the invention. 3. Complete specification A complete specification should contain the following 1. A full and particular description of the invention and its operation or use and the method by which it is to be performed 2. 4. A disclosure of the best method of performing the invention which is known to the applicant and for which he is entitled to claim protection. specification should contain the detail description of one invention. If the invention contains any biological material which is not available to the public such materials shall be deposited to an international depository .2. Whether product or process.
Opposition to grant of patent.
The acceptance of the complete specification will be advertised in the official gazette. Any person interested may, with in one year from the date of publication of grant of patent, give notice of opposition in the prescribed form. based on such opposition the applicant for patent will be given an opportunity to replay to the grounds of opposition and both parties will be enabled to support to their respective cases by evidence.
Register of patents and patent office
Section 67-72 ±for the registration of the patent the following particulars should be entered in the register kept in the office of the patents The name and full address of the grantee, the title of the invention , the date of the patent, the date of sealing and the official number of the patent. Notification of assignments, transmissions, licenses, amendments, extensions and revocation of patents Particulars of such other matters affecting the validity or proprietor of patents
Powers of central government-sec 99 -103.
Notification of invention relevant for the defense purposes and their periodical review. Petitioning for revocation of patent under any ground specified in the act. Giving directions to the controller in respect of inventions relating to atomic energy. Declaring a patent as deemed to be revoked in public interest. Applying to the controller for revocation on the ground of non working in India.
Notifying any patent for grant of compulsory license.
Use of inventions or patent for the purpose of government without paying royalty. Acquisition of a patent by notification for public purpose.
Rights and obligations of patentee
Right to exploit patent Right to assign and license Right to surrender
Infringement of patents.
The patents Act has not defined the term infringement of patents in exact terms but obviously it means violation of the monopoly rights conferred by the grant. The determination of infringement of patent Involves the following questions. 1. The extent of the monopoly rights granted 2. Whether the alleged acts amount to making , using exercising ,or distributing a product or using exercising a method or process, patented.
Copyright means the exclusive right to do or authorize others to do certain acts in relation to 1.literary, dramatic, musical and artistic works, 2.Cinimatograph film 3.sound recordings etc. Basically CR is the right to copy or reproduce the work in which CR subsists.
Nature of CR
CR is a multiple right consisting of a bundle of different rights in the same work. These rights can be assigned or licensed either as a whole or separately e.g. In literary work there is a right of reproduction in hard back and paper back editions , the right of paper publication in magazines, the right or of dramatic and cinematographic version the right of translations, adaptation, the right of public performance.
seditious. No formal registration is required. illegal.Ideas are not the subject matter of CR CR subsists only in the original work Original does not mean that should be a new invention but thought should be original and should not copied from any other work. No license is required to transmit programmes of supporting events and news events The grossly immoral. Live events are not the subject matter of CR. defamatory. irreligious or contrary to the public policy or intended to deceive the public . CR subsists in a work automatically once it has been published and came in to existence.
it is 60 years from the date of death of the original author.Term of CR Section 22 to 29 of the act deals with the term of the CR protection The term of the CR varies according to the nature of the work and whether the author is a natural person or a legal person or a government. . If the work involves two or more authors then the 60 year time starts from the date of death of the author who dies last. If the work belongs to any govt or public under taking then time starts from the date of its publication. But in common.
.Infringement of copy right Section 51 defined the term CR infringement CR is deemed to be infringed when any person involved in an unauthorized use of the CR conferred on the original owner.
Essential ingredients of the infringement Reproduction of the work in a material form Publication of the work Communication of the work to the public Performance of the work in the public Making of adaptations and translations of the work and doing any of the above acts in relation to a substantial part of the work .
manner in which defendant has taken advantage of plaintiffs work etc. character of defendants and plaintiffs work.Factors to be considered to determine the infringement of CR Coping ±casual connection-sub conscious copying-indirect copying Substantial taking-un altered copyingextent of defendant¶s alteration. . nature and extent of plaintiffs work.
.Definition of the designs Section 2 (d) of the designs Act 2000. pattern. ornament or composition of lines or colour applied to any article whether in two dimensional or three dimensional or in both forms by any industrial process or means whether manual . mechanical or chemical separate or combined which in the finished article are judged solely by the eye It excludes the subject matter of trade mark. Design means only the features of shape configuration.
Similarly if the drawing is that article like bottle . original . A peace of paper on which a pattern is drawn can not be a subject matter of the design but if such pattern has drawn to present any article then it can be the matter of protection. appeal to the eye means judged solely by eye not by the functional characteristics and the eye must be the eye of the customer.new . unique . 2. chair.Basic elements of designs 1. Novelty and originality. . design must be applied to articles ±design is one which is applied to the article but not the article it self. vase.not published prior to making application for the grant of the design protection. 3. table etc can be register able as a design.
a design which have significant similarities 4. 1. which contain scandalous or obscene matter. design which is not new and original 2. 3. . 5.Designs prohibited from registration The following designs are prohibited from the registration. a design which is contrary to the public order or morality. design which has been disclosed to the public anywhere in the world prior to the filing date or the priority date of application.
signature. 3. ticket. Section 2(1)(zb) of the 1999 Act. Must be capable of distinguishing the goods or services of on person to another person. letter.Trade marks Definition of trade mark. label. . name. shape of goods. heading. their packaging and combination of colours. numeral. packaging or combination of colours or any combination thereof. 4. TM must be capable of being represented graphically. It may include shape of goods. 2. word. It must be used or proposed to be used in relation to goods or services. Trade mark must be a mark which includes a device. 5. brand.
8. .The use must be for the purpose of indicating the connection 7. A registered trade mark can be protected by an action of infringement which is statutory remedy and unregistered TM can be protected by taking an action for passing off which is a common law remedy. 6. It is a statutory right which requires no actual user but only an intention to use the mark is essential.
It creates an image for the product. It identifies the product and its origin.Functions of TM 1. It advertises the product 4. It guarantees its un changed quality 3. . 2.
. if the mark is word. It should be easy to pronounce and remember. It should not be descriptive but may be suggestive of the quality of the goods. It should be easy to spell correctly and write legibly. It should be short It should be appeal to the eye as well as to the ear. It should not belong the class of marks that has been prohibited for registration.What is good Trade Mark.
Which have become customary in the current language or in the bona fide or established practice of the trade. .Grounds of the refusal for registration Deceptive similarity.
purpose of the goods of the rival traders. character. The nature of the goods in respect of which they are used or likely to be used as a trade mark. The similarity in the nature.What is deceptive similarity The degree of resemblance between the marks phonetic. The class of purchasers who are likely to buy the goods bearing the marks. there level of education and intelligence. visual as well as similarity in idea. Mode of purchase of goods or of placing orders for the goods. . The degree of care that they are likely to exercise in purchasing.
The mark identical and goods and services are similar. . Marks similar and goods or services are similar or identical. Marks identical and goods or services identical.Infringement of TM Sec 29 The uses of the registered TM which are likely to cause confusion or likely to have an association with the registered mark constitute infringement of the registered TM.
Term Term of TM protection is unlimited but subjected to periodical review .
The general rule of business do not disclose the confidential information that effects their business should be confidential. where one business holder looking for confidential information of their rivals similarly all will strive to protect confidential information and it is based on ³let others to know little about us´ .Confidential information. It is obvious.
Nature of confidential information Information may be trade secret ± method of production not protected by the patent Business secret like financial arrangements of undertaking or information like salary of clerk etc Confidence may be implied in contract Since it is based on equitable obligation of confidence which may be implied from the circumstances of the case .
Identification of confidential information 4 elements to be identified 1. 4. 2. . The information must be judged in the light of the usage and practices of the particular industry or trade concerned. Such believe must be reasonable. Information must be information the release of which the owner believes would be injurious to him or of advantage to his rivals or others. 3. The owner must believe the information as confidential and secret which is not already in public domine.
Essentials of breach of confidence The information itself must have the necessary quality of confidence about it That information must have been imparted in circumstances importing an obligation of confidence There must be an un authorized use of that information to the determent of the party communicating it. .
Exceptions to breach of confidence To protect the public interest For the national security .
Semiconductor Integrated circuits Layout Design Act 2000 . In India.Lay out designs of integrated circuits Article 35 to 38 of the TRIPS agreement deal with the protection of new form of intellectual property that is a result of the technological advancement in Electricity and Electronics.
Semiconductor integrated circuit means a product having transistors or other circuitry elements which are inseparably formed on a semiconductor material or an insulating material or inside the semi conductor material and designed to perform an electronic circuitry function. and other circuitry element and includes lead wires connecting such elements and expressed in any manner in a semiconductor integrated circuit. .Definition Lay out designs means a lay out of transistors.
. That are inherently distinctive That are inherently capable of being distinguishable from any other registered layout designs.Essential criteria's for registration Should be original That have not been commercially exploited any where in India or in a country who is member to the convention. The term of protection is 10 years.
Certain geographical names have acquired a lot of importance in the commercial market , particularly with regard to the goods uniquely associated with such names. Here the protection is for indication of source and appellations of origin Indication of source is merely a geographic designation indicating where the goods came from e.g.. Paris perfume, Appellation of origin means the geographical name of the country, region or locality which serves to designate a product originating there in, the quality and characteristics of which are due exclusively or essentially to the geographical environment, including natural and human factors.
Prohibition on the assignment
Notwithstanding any thing contained in law that is in force for the time being- any right to registered geographical indication shall not be assigned, transferred, and shall not be pledged, mortgaged. It will pass to the legal successor.
HISTORY After second world war, the scarcity in the foreign exchange resources and reserves exposed the need for conservation and control over the foreign exchange. Hence FERA 1947 has been enacted for the period of 10 years later in 1957 the same has been regularized Again the FERA 1947 has been repealed by the FERA 1973 to consolidate and amend the law relating to certain payments , dealing with foreign exchange and securities
The FERA1973 has been reviewed in 1993 and thought several amendments as a part of on going process of economic liberalization relating to foreign investments and foreign trade. The Reserve Bank of India has also suggested for the establishment of new Act. A task force was constituted to this context that submitted its report in 1994 and suggested many changes to the existing Act. Significant developments has been took place in 1993 ,such as substantial increase in foreign exchange reserves, growth in foreign trade, rationalization of tariff, current account convertibility, liberalization of Indian investments abroad, participation of foreign investors in abroad. But the FERA was widely described as a draconian and obnoxious law Again due to economic liberalization, and to fill the loop holes that exist in FERA the FEMA 1999 has been enacted, in order to strengthen the exchange policies
travelers cheques. and balances payable in any foreign currency. Letter of credits. promissory notes. letter of credit. postal orders. drafts. credits. letter of credit or bill of exchange. but payable in Indian currency. postal notes. bill of exchange. money orders cheques. Drafts. drawn by banks institutions or persons out side India. . Foreign currency means and includes Deposits. ATM cards. bills of exchange.Important definitions Currency sec 2(h) includes all currency notes. Credit cards or such other similar instruments as may be notified by the Reserve Bank. travelers cheques. Drafts travelers cheques. expressed or drawn in Indian currency but payable in any foreign currency.
Objectives of FEMA To facilitate External Trade and Payments To promote the orderly development and maintenance of foreign exchange market .
. hold.Salient features of FEMA 1999.shall not make payment to or for the credit of any person resident out side India in any manner. Section 3 deals with the regulation and management of foreign exchange and sec 5 current account transactions.No person other than the authorized person shall deal with foreign exchange or with foreign currency. any asset outside India by any person Unless other wise provided in the Act. foreign security or any immovable property situated out side India .No person shall enter in to any financial transaction in India as a consideration for or in association with acquisition or creation or transfer of a right to acquire. or transfer any foreign exchange. own posses. No person resident in India shall acquire. Such as.
The Act requires the exporters to furnish to reserve bank or to such other authority certain details regarding the exports. Reserve Bank can impose any restrictions as it deems fit. However to ensure the export value of the goods received with out any delay. .
But in FEMA the Actual period of stay. Arrest shall be resorted to only if the defaulter has transferred the property or part of that property dishonestly. ******************************************************************* . In FERA to determine the residential status of a person the actual intention was an essential condition.Comparison between the FERA and FEMA FEMA is a smaller enactment consist with 49 sections ± where as FERA contained 81. Contraventions in FERA was a criminal offence but in FEMA civil and compoundable offences and confined only to compensation.
. To protect the rights of the consumers against marketing goods which are hazardous to life and property. 5. To provide protection to the right to information regarding the quality. purity. 4. To establish councils for the settlement of consumers disputes and for the matters connected there with. To provide better protection to the consumers 2.Consumer protection Act 1986 amended in 1993. quantity. To provide protection against the unfair trade practices. standard and price of goods. 3. Objectives 1.
uses the goods with the approval of the person who has bought the goods for consideration 4. Is beneficiary of services with the consent of the person who has hired the services for consideration. buys any goods for a consideration 2. .Who is a consumer A consumer is a person who 1. hires or avails of any services for a consideration 3.
He should have paid the consideration for hiring the services. . Buying of goods and services for consideration is essential. 2. The services should have been rendered to him.Three essential criteria's to be a consumer 1. 3. The services should be hired by him. The consideration may have been paid or promised or partly paid or partly promised.
Every other association of persons whether registered under the SRAct1860 or not.Who is a person A firm whether registered or not. A co operative society. A Hindu undivided family. .
who obtains the goods for resale or any commercial purpose. 5. Who obtains the service under a contract of personal service. Hires or avails of any services without consideration. 4. . 2. Who buys goods with out consideration. Uses the goods with out the approval of the person who has bought the goods for consideration or Who is beneficiary of services with out consent of the person who has hired the services for the consideration.Who is not a consumer 1. 3. 6.
What is goods Goods has been defined as Every kind of movable property other than actionable claims and money. . grass and things attached to or forming part of the land which are agreed to be served before sale or under the contract of sale. growing crops. Goods includes stock and shares.
supply of electrical or other energy.What is service Service of any description which is made available to potential users. transport. finance. processing. It includes the provisions of facilities in connection with banking. insurance. .
. A passenger traveling by train.Who are held as consumers Bank customers Telephone subscribers Consumer of electricity. A patient receiving medical treatment A depositor of money Nominee of a insurance policy.
. Purchaser of a shares or debentures for resale etc.Who are held not to be consumers A patient receiving medical treatment in a government hospital Client hiring services of an advocate A student of a private tutor.
allegations or accusation stated in the complaint. Compliant is any allegation in writing made by a complainant .Consumer dispute Complaint. in a prescribed form but not accepted by the other party is called as consumer dispute.
.Consumerism Philip kotler defines consumerism as ³a social movement seeking to augment the rights and powers of the buyers in relation to sellers´ Boyed and Allen state that ³dedication of those activities of both public and private organizations which are designed to protect individuals from practices that impinge their rights as consumers´.
grade. usefulness. False statement regarding the warranty . composition. model. and price of the goods or services. quality. style.Points against the interest of the consumer Making false statements or making publications regarding the standard. Falsely representing the rebuilt and second hand product.
nature and manner of performance which is required to be maintained under the law. . Defects in the goods Excessive price Hazardous goods while dealing with such goods the manufacturer should display the contents and its harm full effects on the life and health. imperfection. short coming or inadequacy in the quality. Deficiency means any fault.
Consumer protection councils Central consumer protection council State consumer protection council Central consumer protection council The minister in charge of the consumer affairs in the central government as a chairmen As per the consumer protection rules 1987the number of members of consumer protection council should not exceed 150. they include the following .
3from Rajyasabha Secretary or the national commissioner for S. 8 members from parliament. industries not exceeding 20. .T Representatives of the consumer organizationsnot less then 35 Representatives from farmers.C and S. 5 from Loksabha. Minister of state or dy minister of central govet who shall in charge of the consumer affairs shall be the wise chairmen of the central council. traders.
Consumer protection councils Central consumer protection council State consumer protection council Central consumer protection council The minister in charge of the consumer affairs in the central government as a chairmen As per the consumer protection rules 1987the number of members of consumer protection council should not exceed 150. they include the following .
T Representatives of the consumer organizationsnot less then 35 Representatives from farmers. 3from Rajyasabha Secretary or the national commissioner for S. Minister of state or dy minister of central govet who shall in charge of the consumer affairs shall be the wise chairmen of the central council. industries not exceeding 20. 8 members from parliament. 5 from Loksabha.C and S. traders. .
purity. standard and price of goods and services .Objectives of the central council The right to be protected against the marketing of goods and services which are hazardous to life and property The right to be informed about the quality and quantity.
The right to be assured verity of goods and services at competitive price the right to consumer education .
the minister in charge of consumer affairs Such other members having interest in the consumers affairs and as prescribed by the state govet .State consumer protection council Members 1.
Consumer dispute redressal agencies Section 9 District forum State forum National commission .
Composition of Agencies District forum President ±the person who possess the qualification to become a district court judge Two other members ±one should be women Every member will hold the office till the completion of 65 years or 5 years which ever is earlier and not eligible for reappointment .
standard and price of goods and services . purity.Objectives of the central council The right to be protected against the marketing of goods and services which are hazardous to life and property The right to be informed about the quality and quantity.
Procedure on receipt of complaint Same as the civil court .
277. where section 268.Environmental protection Act 1986 INDIAN LEGISLATIONS TO GOVERN THE ENVIRONMENT In India there are enormous laws which directly or indirectly deal with hazardous waste. 278 and 284 enumerated that the acts and omissions that affecting the public health. toxic substances and other waste which are in solid form. 269. But these sections are not directly addressed the discharge and disposal of most of the modern hazardous wastes. because this law is more than a century old and at that time the framers of the code has not visualized the problems . The Indian Penal Code 1860. These legislations are. safety and convenience are considered as penal offences.
Being a participant to the Stock Holm Conference in 1972. . regulatory and legal measures to control the hazardous and all other kinds of waste that are in solid form. India has taken a lead among all other developing countries to have different administrative. The Stock Holm Conference 1972 can be termed as step stone in the evolution of the environmental jurisprudence in India.
After the Stockholm Conference in 1972. therefore many more laws were enacted to address the said problem. India has enacted many Acts. industries etc. They are. the Water (prevention and control of pollution) Act 1974. Further it was realized that most of the hazardous wastes are generated by factories. . and The Environmental Protection Act 1986 etc.
. Similarly the Environment Protection Act 1986 (EPA 1986) was enacted that comprehensively deal with all aspects of environmental problems. Sec 3 of the Environmental Protection Act empowered the central government to take all measures as it deems necessary or expedient for the purpose of protection and preservation of environment.
The Chemical Accidents (emergency. storage and import of Hazardous chemical Rules 1989. 8 the EPA has passed the following laws A. and response) Rules 1996. The central government in exercise of the powers conferred under section 3. Bio-Medical Waste (Management and Handle) Rules 1998 . Hazardous Micro-Organisms Rules (1989) D. 6. Manufacture. E. C. Hazardous waste (Management and Handling) Rules 1989 B. preparedness. planning.
These are the important rules and notifications enacted by the central government to For the protection and preservation of environment. The Ozone Depleting Substances (Regulation and Control) Rules 2000. K. J. H. The Batteries (Management and Handling) Rules 2001. L. I. . Public Hearing Notifications. Municipal Solid Waste (Management and Handling) Rules 2000. Environment (siting for industrial projects) Rules 1999. Environmental Impact Assessment Notifications. Recycled Plastic Manufacture and uses Rules 1999. G. F.
or to domestic. agricultural or other legitimate uses . gaseous or solid substance in to water ( whether directly or indirectly) as may or is likely to. WATER (PREVENTION AND CONTROL OF POLLUTION) ACT 1974 Water (Prevention and Control of Pollution) Act 1974 has forwarded elaborate definition for water pollution which means ³ such contamination of water or such alteration of the physical chemical or biological properties of water or such discharge of any sewage or trade effluent or of any other liquid. commercial. industrial.or to the life and health of animals or plants or of aquatic organism´ . create a nuisance or render such water harmful or injurious to public health or safety.V.
water ways. rivers. estuaries and floods etc. because huge quantum of land based waste enter the marine through these path ways. Pollutants enter the marine through numerous pathways most important of them are. Therefore the protection and preservation of the rivers and estuaries plays a significant role in the protection and preservation of the marine environment. .
The Water (Prevention and Control of Pollution ) Act 1974 has been designed with the help of 64 sections divided in to 8 chapters . The Act has established the pollution control boards and conferred the powers and imposed obligations for the protection and preservation of the water. Presently these pollution control boards are acting as a watch dog for the protection and preservation of internal water. Hence the µWater (Prevention and Control of pollution) Act 1974¶ mainly designed to prevent and control the water pollution and to maintain or restore the wholesomeness of the water.
The boards are entrusted with certain duties such as to advice the central government in the matters relating to the protection and preservation of the wholesomeness of the water. Central Pollution Control Board and also Joint Pollution Control Board. The Act has established State Pollution Control Board. .
The boards have to co-ordinate with the activities of the state pollution control board and resolve dispute among them . Further these boards have to plan and organize the nation wide plan and coordinate with each other to execute such action plans. .
statistical data regarding the water pollution and publish such information. These boards are under the obligation to collect the information. Hence these boards are performing significant role in the protection and preservation of the internal and marine water. In addition power to establish the environmental laboratories are also vests with these boards. .
functions and powers of the pollution control boards in order to make them stronger to face the new environmental problems . However the constitutional structure of these boards is not sufficient to regulate the environmental challenges. Hence soon steps should be taken to revive the structure.
-to protect the ultimate interest of the consumers. .Competition Act 2002 The prime object is to prevent the un fair practices of trade that affects the competition. -to protect the interest of the co participants in the market. There by -to promote and sustain fair competitions in the market.
Section 2 deals with the definition part Sec-2(a). .ACQUISITION . which means directly or indirectly acquiring or agreeing to acquire (i) shares. or assets of any enterprise. The Act has been enacted to establish a commission to prevent the practices having adverse effect on the competition. voting rights.
distributors. sale. control or attempt to control the production. distribution. limit. or price or trade in goods or provision of services. . sellers. traders or service providers who by agreement amongst them selves.Section 2( c ) -CARTEL Includes an association of producers.
investment or provision of services.technical development.abuse of dominant position Section 3 prohibits anti competitive agreements Anti competitive agreements are those agreements which intend to determine purchase or sales price or to limits or control the production . by way of allocation of geographical area of market or type of goods or services or number of customers in the market or any other similar way. . market .Chapter 2 ±prohibition of certain agreements .supply.
Only exception The above provision is not applicable to the agreements which are made to increase the efficacy of the production . or any other similar purposes.distribution. . supply. storage.
. Re-sale price maintenance. Exclusive distribution agreement.arrangement. Refusal to deal .The following agreements are considered as anti competitive agreements Tie.in. Exclusive supply agreement .
as a condition of such purchase. to acquire or to deal with any goods other than those of the seller or any other person. EXCLUSIVE SUPPLY AGREEMENT. Includes any agreement requiring a purchaser of goods .IN. Includes the agreements restricting the purchaser . to purchase some other goods . TIE.ARRANGEMENTS.during the course of his trade. .
) REFUSAL TO DEAL. Includes any agreement to limit .restrict or with hold the out put or supply of any goods or allocate any area or market for disposal or sale of the goods. includes any agreements which restrict or likely to restrict. the persons or classes of persons to whom goods are sold or from goods are bought. (in the particular market only. . EXCLUSIVE DISTRIBUTION AGREEMENT. by any method.
. RE-SALE PRICE MAINTENANCE. Includes any agreement to sell goods on condition that the price to be charged on the resale by the purchaser.
Abuse of dominant position Section 4 has described that no enterprise is permitted to abuse its dominant position Abuse of dominant position means and includes. . If an enterprise has imposed unfair or discriminatory conditions on the purchase or sale of goods and services or on its price. 1.
limits or restricts the scientific and technical development of the goods or services so as to prejudice the ultimate consumer. Denial of market access . Limits or restricts the production of goods and provisions of services 3. 2. 4.
which enable it to operate independently of competitive forces in India.What is the meaning of dominant position? The position or strength enjoined by an enterprise in a relevant market. . in India .
Exception The provision is not applicable if such agreements intend to. . To increase the capacity of supply and storage. Increase the quality or quantity of production. To protect the interest of consumers.
with a common object. It can hold. as directed by the Act. acquire.Section 7-Competition commission of India It is a commission established by the central govt It is a body corporate. deal with the moveable and immovable property. having perpetual succession. common seal. .
Section 8-Composition of the Commission During the first year of establishment of commission the central govt has to appoint one chairmen and other ten members but not less then two. Min -2.Max-10. 1-chairmen-to be appointed by the central govt .
in the field of law. . commerce. International trade.Section 8(2). or he should be a person having special knowledge or professional experience of 15 years. accountancy . economics.(3)-Qualification of members of the commission He shall be an out standing candidate having the ability and qualification to become a judge of the high court. They are the full time members.
or death then appointment should be made as per the provisions of sec-8. govt Duration of the chairmen is 5 years and can be re appointed. If any vacancy occurred due to the resignation. The retirement age of the chairmen is till he attain the 67 years and for members it is 65 years.9. .Selection of should be made as per the rules prescribed by the c. removal.
AND FUNCTIONS OF THE COMMISSION 1. POWERS. the commission can enter in to an arrangement or memorandum with the agency of foreign countries.for the purpose of discharging its duties and functions . . Eliminate practices that have an adverse effects on the competition 2.with the permission of the central govt.DUTIES.
. with the prescribed fee made by the person.investigation on the anti competitive agreements and dominance of power On the application. trade association or group the commission can conduct inquiry in to adverse trade practices However while doing so commission has to kept certain points in the mind. 3. Section 19. .
or controlling the business of buying. regulating. whether incorporated or not. According to the securities contracts (Regulation) Act 1956 stock exchange means any body of individuals.Stock exchange and its regulation Stock exchange is a market in which securities are brought and sold and it is an essential component of a developed capital market. constituted for the purpose of assisting. . selling or dealing in securities.
stocks. debentures. Government securities such other instruments as may be declared by the central govet to be securities. Shares. Right or interest in the securities. securities include 1. 2. stocks other marketable securities of a like nature in or any incorporated company or body corporate. bonds. . According to this Act. 3.
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