Business laws

PG-3- 2018
 Inter class Assignment submisssions

• Essay on “How LEGAL is essential part

of my stream of Education”
• Not more than 250 words
• Handwritten

• Last date of submission-

 Flow of presentation
 Sales of Goods Act
 Competition Act
 Negotiable Instruments Act
 Consumer Protection Act
 POSH
 Labour laws

◦ PF
◦ CLRA
◦ Payment of wages
◦ Gratuity
◦ Maternity Benefit
 INTRODUCTION
• Transactions in the nature of sale of
goods form the subject matter of the
Sale of Goods Act, 1930

• The Act came into force on 1 July, 1930

It extends to the whole of India, except
Jammu & Kashmir
DEFINITION OF A CONTRACT OF SALE

Section 4 defines a contract of

sale as “a contract whereby a
seller transfers or agrees to
transfer the property in goods
to the buyer for a price”
ESSENTIALS OF A CONTRACT OF SALE

 Fromthe definition, the following

essentials of the contract emerge:

1) There must be at least two parties: a

sale has to be bilateral because the
property in goods has to pass from one
person to another. The seller and the
buyer must be different persons.
ESSENTIALS OF A CONTRACT OF SALE

 2)Transfer or agreement to transfer the

ownership of goods: In a contract of
sale, it is the ownership that is transferred
(in the case of sale), or agreed to be
transferred (in the case of agreement to
sell), as against transfer of mere
possession.
ESSENTIALS OF A CONTRACT OF SALE

 3)
The subject matter of the contract
must necessarily be goods: the sale of
immovable property is not covered under
Sale of Goods Act.

 4)
Price is the consideration of the
contract of sale: the consideration in a
contract of sale has necessarily to be
‘money’, (i.e. the legal tender money).
 SALE AND AGREEMENT TO SELL
 Sale
 Where under a contract of sale, the
property (ownership) in the goods is
transferred from the seller to the buyer, it
is called a sale.
 Thus, sale takes place when there is a

transfer of ownership in goods from the

seller to the buyer.
 A sale is an executed contract
SALE AND AGREEMENT TO SELL
 Agreement to sell

 Agreement to sell means a contract

of sale under which the transfer of
property in goods is to take place at a
future date or subject to some
conditions thereafter to be fulfilled.
Distinction sale and some other transactions
 Sale and Hire purchase

 Sale of goods and ‘Work and labour’

 Sale and contract for ‘Labour and Materials’

 Sale and barter

 Sale and lease

 Sale and gift

 The Monopolistic and Restrictive
Trade Practices Act, 1969
 Background :
 To ensure that the operation of the economic

system does not result in the concentration

of economic power in hands of few,

 To provide for the control of monopolies, and

 To prohibit monopolistic and restrictive trade

practices.
COMPETITION LAW
ANTI TRUST -
 The Monopolistic and Restrictive
Trade Practices Act, 1969
 Background :
 To ensure that the operation of the economic

system does not result in the concentration

of economic power in hands of few,

 To provide for the control of monopolies, and

 To prohibit monopolistic and restrictive trade

practices.
 Objects of MRTP

 (a) prevention of concentration of

economic power to the common detriment;
 (b) control of monopolies;
 (c) prohibition of monopolistic trade

practices;
 (d) prohibition of restrictive trade practices;
 (e) prohibition of unfair trade practices.
 UNFAIR TRADE PRACTICE
 WHAT IS UNFAIR TRADE PRACTICE ?
 
 Anunfair trade practice means a trade
practice, which, for the purpose of
promoting any sale, use or supply of
any goods or services, adopts unfair
method, or unfair or deceptive practice.
 UNFAIR TRADE PRACTICE

 Unfairtrade practice is the false

representation and misleading
advertisement of goods and services. It
also includes falsely representing second-
hand goods as new and misleading
representation regarding usefulness,
need, quality, standard, style etc of goods
and services.
 UNFAIR TRADE PRACTICES

 (a) misleading advertisement and false

representation;
 (b) bargain sale, bait and switch selling;
 (c) offering of gifts or prizes with the

intention of not providing them and

conducting promotional contests;
 (d) product safety standards;
 (e) hoarding or destruction of goods.
RESTRICTIVE TRADE PRACTICE
 Restrictive Trade Practice is when the
traders, in order to maximize their profits
and to gain power in the market, often
indulge in activities that tend to block the
flow of capital into production. Such
traders also bring in conditions of delivery
to affect the flow of supplies leading to
unjustified costs.”
Restrictive trade practices
◦ (a) Refusal to deal;
◦ (b) Tie-up sales;
◦ (d) Exclusive dealings;
◦ (e) Concert or collusion-cartel;
◦ (f) Price discrimination;
◦ (g) Re-sale price maintenance;
◦ (h) Area restriction;
◦ (i) Predatory pricing.
 Competition
 Competition is a situation in market, in which
sellers independently strive for buyer’s
patronage to achieve business objectives.
Competition and liberalization, together
unleash the entrepreneurial forces in the
economy.
 Competition offers wide array of choices to

consumers at reasonable prices, stimulates

innovation and productivity, and leads to
optimum allocation of resources.
 COMPETITION
 In line with the international trend and
to cope up with the changing realities
India, consequently, enacted the
Competition Act, 2002 (hereinafter
referred to as "the Act"). Designed as
an omnibus code to deal with matters
relating to the existence and regulation
of competition and monopolies, the
Act is intended to supersede and
replace the MRTP Act.

 COMPETITION ACT

 Itis procedure intensive and is

structured in an uncomplicated
manner that renders it more flexible
and compliance-oriented.

 Though the Act is not exclusivist and

operates in tandem with other laws,
the provisions shall have effect
notwithstanding anything inconsistent
therewith contained in any other law.
 COMPETITION ACT
 ANTI-COMPETITIVE AGREEMENTS

 The departure is reflected in section 3 of the Act,

which states that enterprises, persons or
associations of enterprises or persons, including
cartels, shall not enter into agreements in respect
of production, supply, distribution, storage,
acquisition or control of goods or provision of
services, which cause or are likely to cause an
"appreciable adverse impact" on competition in
India. Such agreements would consequently be
considered void.
 COMPETITION ACT
 ANTI-COMPETITIVE AGREEMENTS

◦ 1. EXCLUSIVE DEALING- SUPPLY /

DISTRIBUTION

◦ 2. TIE-IN ARRANGEMENTS

◦ 3. REFUSAL TO DEAL

◦ 4. RESALE PRICE MAINTAINENCE

 COMPETITION ACT
 DOMINANT POSITION
 Section 4 of the Act enjoins, "no
enterprise shall abuse its dominant
position". Dominant position is the
position of strength enjoyed by an
enterprise in the relevant market, which
enables it to operate independently of
competitive forces prevailing market, or
affect it’s competitors or consumers or the
relevant market in it’s favour.
 COMPETITION ACT
 COMBINATIONS/ACQUISITIONS
 Section 5- The Act is designed to regulate the

operation and activities of "combinations", a

term, which contemplates acquisition, mergers
or amalgamations. Combination that exceeds
the threshold limits specified in the Act in terms
of assets or turnover, which causes or is likely to
cause an appreciable adverse impact on
competition within the relevant market in India,
can be scrutinized by the Commission.
 Powers of CCI
 Directing the persons or entities ruled against to desist from
abusing a dominant position or discontinuing acting upon anti-
competitive agreements
 Imposing penalty to the maximum extent of ten percent of

the average turnover for the last preceding three financial

years upon each person or entity party to the abuse
 Award compensation
 Modify agreements
 Recommend the division of the dominant enterprise to the

Centre, which has the ultimate authority to decide the fate of a

dominant enterprise
 Recovery of compensation from any enterprise for any loss or

damage shown to have suffered by the other party.

 Add. PENATIES
 Incase of failure to comply with
the directions of CCI and Director
General or false representation of
facts by parties, penalties ranging
from Rs. 1 lac to Rs. 1 crore may
be imposed as the case may be.
Active Competition watchdog in India
Recent penalties by fair trade watchdog CCI

CCI Automobile 14 major car 2,545Violating trade norms in

manufacturin spare parts and after
g cos services market
CCI Construction DLF 630Misuse of dominant
position, one sided
contract clauses and
unilaterally increasing
number of floors in
project

CCI Pharmaceutic GlaxoSmithKli 64Collusive bidding for

al ne and Sanofi vaccine to Haj pilgrims
CCI Hotel / Thomas Cook 1Non declaration of full
Tourism and Sterling information for M&A
Holiday
Resorts
 DLF CASE
 The Belaire Owners' Association (BOA),
representing the apartment buyers of The
Belaire Housing Complex, filed a case against
DLF (builder of the complex), before the
Competition Commission of India (CCI) on May
5, 2010. The BOA alleged that DLF had imposed
one-sided conditions in the sale agreement and
that it had failed to complete the project within
the promised time.
 DLF CASE
 On investigating, the DG found that DLF had the
highest market share among all companies in
the relevant market and for 2007-08 and 2008-
09, it was 70% and 65% respectively. DLF
enjoyed about 50% of share in the relevant
market in the year 2009-10. Along with highest
market share, DLF also enjoyed a clear
advantage over other players in terms of size,
resources, and economic power
 DLF CASE
 The CCI, after considering the agreement and findings of
the DG, concluded that DLF had abused its dominant
position by incorporating clauses in the agreement, which
put the allottees at a distinct disadvantage. In its verdict,
the CCI stated, "It is noted that the Competition Act only
requires this Commission to ascertain if some conduct is
"unfair" in terms of Section 4 of the Act and is being
carried on by a dominant enterprise. This Commission
has no doubt that the nature of clauses and conduct as
indicated in earlier paragraphs are blatantly unfair, even
exploitative. The dominant position of DLF Ltd. already
been established.
 DLF CASE
 The CCI after investigating,
concluded that DLF was guilty and
imposed Rs. 6300 million (equivalent
to 77% average turnover of the
company for years of 2008-09, 2009-
10, 2010-11) as penalty. DLF
contested the CCI's order in the
Appellate Tribunal.
 AUTOMOBILE MFRS CASE
 Shamsher Kataria (“Informant”) filed the
information under Section 19(1)(a)4 of the Act
in January, 2011 against Honda Siel Cars India
Ltd, Volkswagen India Pvt. Ltd. and Fiat India
Automobiles Pvt. Ltd. alleging anti-competitive
practices in respect of sale of spare parts of
these companies. Relying on practices in
European Union (“EU”) and the United States
of America (“United States”),
 AUTOMOBILE MFRS CASE
 Informant contended that car

manufacturers in India were charging

higher prices for spare parts and
maintenance services than their
counterparts abroad. Further, there was
complete restriction on availability of
technological information, diagnostic tools
and software programs required for
servicing and repairing the automobiles to
independent repair shops.
 AUTOMOBILE MFRS CASE
 CCI approved the DG’s request to
investigate all car manufacturers in
India as per the list maintained by the
Society of Indian Automobile
Manufacturers (“SIAM”), bringing in
fourteen other OEMs in the scope of
investigation by the DG. DG
concluded that activities of OEMs
were in violation of sections 3 and 4
of the Act.5
 AUTOMOBILE MFRS CASE
 Technical difference between various primary market
products (i.e., differences within individual brands of a
car manufacturer such as Maruti Alto, Maruti Ertiga,
Maruti Dzire etc.) restricted consumers’ choice in
complimentary products/services. Hence, consumers
were ‘locked into’ aftermarket suppliers of the car
purchased.

 Each OEM was in a dominant position in the supply of

its spare parts for its brand of cars as the OEMs
through restrictions limited the OESs from selling
these spare parts in the open market. DG also found
that even if there was no restrictive clause, OESs did
not sell in the open market.
 TEMASEK FINED
 On August 1, 2013, CCI passed an order against
Temasek Holdings Private Ltd (‘Temasek’)and its
subsidiaries Zulia Investments (‘Zulia’) and Kinder
Investments (‘Kinder’), imposing a penalty of INR$ 5
million (approximately US$74,000) for delayed filing
of the pre-merger notifications required under
Section 6(2) of the Act. On June 6, 2013, Zulia and
Kinder, both indirect wholly owned subsidiaries of
Temasek, filed a notice under Section 6(2) of the Act
(Zulia, Kinder and Temasek are together referred to
as the ‘Acquirers’). The proposed transaction
pertained to an acquisition of 439 million new
ordinary shares in DBS Group Holdings Limited
(‘DBSH’).
 Culture of Dawn Raid evolving in India

1. JCB alleged Bull Machines for

stealing their designs and got ex-
parte injunction from Delhi HC for
not to release the product of Bull
Machines
2. Bull Machines complained about
JCB to CCI for abusing the dominant
position
3. After finding prima facie evidence,
CCI initiated detailed probe and
raided the premises of JCB
4. Delhi HC questions CCI about their
jurisdiction of the matter as the same
is sub-judiced. Further, CCI did not
get Chief Metropolitan Magistrates
permission for such raid.
Negotiable
Instruments
Act, 1881
 Negotiable
 Transferring an instrument from
one person to another in such a
manner to convey title and to
constitute the transferee the holder
thereof.
 Bearer Instruments
 Order Instruments
Negotiable Instruments
 Promissory Note- Drawer &
Payee

 Bills
of Exchange- Drawer,
Drawee & Payee

 Cheque
Section 138- Negotiable Instruments

 Cheque issued for consideration

 Dishonoured by Bank for Funds

insufficient reason
 Criminal Offence
 All the persons who were

responsible Including Directors

 Fine & Imprisonment
 Consumer
Protection Act
 Consumer Protection Act
 Consumer means any person who buys
any goods or services for a consideration
either partly or fully paid or partly or fully
promised or both includes any
beneficiary of goods or services other
than the person who paid consideration
but does not include a person who avails
such services for a commercial purposes.
 MONTETARY LIMITS –

 District Forum upto 20 lacs

 State Commission- upto 1 cr

 National Con. Forum more than 1 cr

 Final appeal – Supreme court

 POSH-
The Sexual Harassment of Women
at Workplace(Prevention,
Prohibition and Redressal) Act,
2013
 Vishakha Judgement
 Supreme Court acknowledged that:

 Sexual harassment is a human rights violation

 Sexual harassment is a violation of the constitutionally

guaranteed fundamental rights:

 Articles 14 and 15: Right to equality

 Article 21: Right to life - to live with dignity
 Article 19(1)(g) - Right to practice any
profession/trade/occupation/business, i.e., a right to
a safe environment free from harassment
 Vishakha Judgement
 Employer’s duty to

 Prevent and prohibit acts of sexual harassment Article

21: Right to life - to live with dignity

 Redress and resolve grievances pertaining to sexual

harassment

 The Guidelines = Law, until such time a legislative frame

work on the subject is enacted
 Vishakha Judgement
 Employer’s duty to

 Prevent and prohibit acts of sexual harassment Article

21: Right to life - to live with dignity

 Redress and resolve grievances pertaining to sexual

harassment

 The Guidelines = Law, until such time a legislative frame

work on the subject is enacted
 Who is an “Employee”?
Talent

Regular, temporary, ad hoc

employees
EMPLOYEE

Directly/through an
agent/contractor
With or without
remuneration/voluntary
Express/implied terms of
employment
Probationer/apprentice…

7
 Who is the “Employer”?
Employer

Management Supervision Control

Person discharging contractual

obligations
with respect to the employees
Person /board /committee responsible
for formulation of policies

8
 The “workplace”
Private Government
sector owned/controlled
organisation establishments
s
Hospitals/
Sports Nursing
institutes, homes
stadiums, Workplace
training
institutions
Dwelling Vocational
place in case /
of a domestic
worker AND Education
… al
Institution
9
s
 “Sexual Harassment” under POSH

A demand or
request for sexual
favors

Making sexually Showing

colored remarks pornograph
y
Sexual
Harassment
Unwelcome physical,
Physical contact verbal or non-verbal
and advances
conduct of sexual
nature

11
Amendment to the Indian Penal Code Provision
Section 354 A: Sexual harassment and punishment for sexual
harassment

Offence:
 physical contact and advances involving unwelcome
and explicit sexual overtures; or
 a demand or request for sexual favours; or
 showing pornography against the will of a woman; or
 making sexually coloured remarks

Punishment: Commission of an offence under (i), (ii) or (iii)

punishable with rigorous imprisonment for a term of up to 3
years and/or fine; commission of offence under (iv)
punishable with imprisonment for a term up to one year
and/or fine
Nature of offence: Cognizable

23
Labour / Welfare
Laws
The Employee's Provident
Fund Act, 1952

Social Security to Employees

 EMPLOYEE PF ACT
1. Any company / organization with 20 or more employees
2. Salary consists of two parts i.e. earnings & deductions
3. Provident Fund is one of the statutory deduction done
by the employer at the time of salary payment
4. Monthly deduction of 12% basic pay + employer has to
contribute equal amount.

5. Any violation imprisonment

Contract Labour (Regulation
& Abolition) Act, 1970
The main objective of this act is to regulate the
contract Labour and abolish it in certain cases.
 Applicability
 Every industry engaging 20 or
more workers on contract
basis.
 ( In Maharashtra 50)
 Every contractor engaging 20

or more workers.
 CLRA
1. Principal Employer & Contractor &
employees
2. Regular monthly pays / filings with the
Regulators

3. Any violation imprisonment

4. Finally principal employer liable for

violations.
5. Valid Agreement
 MINIMUM WAGES ACT,1948

 Pay as per the prescribed rates

 Any less payment or violation

will result in possibility of
Imprisonment
PAYMENT OF GRATUITY ACT 1972

 Applicable to all establishments

 Voluntary
 15 days salary for every year
after five year of completion of
service
 Tax free upto Rs.20 lacs
 PAYMENT OF BONUS ACT 1965

 Applicable
to all establishments
where more than 20 employees

 One month salary or 8.33%

 Subject to profitability
 The Maternity Benefit Act, 1961
 Applicability to every factory or establishment in
which 10 or more persons are or were employed on
any day of the preceding twelve months.

 Maternity benefit is paid at the rate of the average

daily wage for the period of her actual absence. The
average daily wage means the average of the
woman’s wages payable to her for the days on which
she has worked during the period of three calendar
months immediately preceding the date from which
she absents herself.

 No legal action will lie during maternity benefit

Questions / Queries ?

Thank you