Slide 1

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

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6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

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7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

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9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

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10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

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16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
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17

Customary law
• A custom that is observed continously for a
very long period of time.

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18

Our India……..

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19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

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20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

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21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

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22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

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23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

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24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

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25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
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26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
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27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

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29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

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30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

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34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

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35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

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36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
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37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

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38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
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39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

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40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

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41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

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Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

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Direct & Indirect Taxation Laws:

•
•
•
•
•
•
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The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
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44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

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45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

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46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

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Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

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48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

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49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

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50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

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Legislature-makes
laws

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JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
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• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

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52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

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Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

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54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
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55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

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56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

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57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

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58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
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Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

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60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 2

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

santhi narayanan

17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

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19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

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53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

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55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

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59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

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60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 3

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

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10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

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16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

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17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

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19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

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20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

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21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

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22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

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23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

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24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

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25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

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26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

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29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

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30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

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35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

santhi narayanan

59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

santhi narayanan

60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 4

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

santhi narayanan

17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

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59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

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60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 5

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

santhi narayanan

17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

santhi narayanan

59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

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60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 6

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

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10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

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16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

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17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

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21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

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22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

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24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

santhi narayanan

59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

santhi narayanan

60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 7

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

santhi narayanan

17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

santhi narayanan

59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

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60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 8

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

santhi narayanan

17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

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59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

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60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 9

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

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6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

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9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

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10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

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16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

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17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

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18

Our India……..

10/31/2015

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19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

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20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

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21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

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22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

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23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

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24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

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25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

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29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

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30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

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35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

santhi narayanan

59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

santhi narayanan

60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 10

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

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17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

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19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

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23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

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46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

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47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

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48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

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49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

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50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

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53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

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55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

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56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

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59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

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60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 11

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

santhi narayanan

17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

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59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

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60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 12

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

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6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

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10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

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16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

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17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

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18

Our India……..

10/31/2015

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19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

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20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

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21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

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22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

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23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

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24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

santhi narayanan

59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

santhi narayanan

60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 13

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

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17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

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19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

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20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

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21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

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23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

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45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

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46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

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47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

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48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

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49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

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50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

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53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

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54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

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55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

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56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

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58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

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59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

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60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 14

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

santhi narayanan

17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

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59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

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60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 15

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

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9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

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10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

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16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

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17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

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19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

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21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

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24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

santhi narayanan

59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

santhi narayanan

60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 16

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

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17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

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19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

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20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

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21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

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22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

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23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

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45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

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46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

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47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

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48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

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49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

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50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

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53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

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54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

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55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

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56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

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58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

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59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

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60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 17

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

santhi narayanan

17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

santhi narayanan

59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

santhi narayanan

60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 18

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

santhi narayanan

17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

santhi narayanan

59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

santhi narayanan

60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 19

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

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10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

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16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

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17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

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18

Our India……..

10/31/2015

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19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

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20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

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21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

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22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

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23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

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24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

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26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

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27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

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29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

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35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

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36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

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45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

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46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

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47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

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48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

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49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

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50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

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Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

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53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

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54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

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55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

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56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

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58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
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59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

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60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 20

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

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6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

santhi narayanan

17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

santhi narayanan

59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

santhi narayanan

60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 21

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

santhi narayanan

17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

santhi narayanan

59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

santhi narayanan

60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 22

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
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santhi naryanan

8

WHAT IS LAW?

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9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

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10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

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16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
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17

Customary law
• A custom that is observed continously for a
very long period of time.

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18

Our India……..

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19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

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20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

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21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

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22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

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23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

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24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

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25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
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26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

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27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

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29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

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30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

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34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

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35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

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36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

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37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

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41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

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43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

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45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

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46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

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47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

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48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

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49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

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50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

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Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

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53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

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54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
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55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

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56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

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58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
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59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

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60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 23

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

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2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

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4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

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6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

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7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

santhi narayanan

17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

santhi narayanan

59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

santhi narayanan

60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 24

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

santhi narayanan

17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

santhi narayanan

59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

santhi narayanan

60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 25

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

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10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

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16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
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17

Customary law
• A custom that is observed continously for a
very long period of time.

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18

Our India……..

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19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

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20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

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21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

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22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

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23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

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24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

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25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

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26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

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27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

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29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

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30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

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34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

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35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

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36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

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37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

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38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

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40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

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41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

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45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

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46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

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47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

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48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

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49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

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50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

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Legislature-makes
laws

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JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

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52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

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53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

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54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
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55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

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56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

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57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

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58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
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59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

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60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 26

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

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2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

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4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

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6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

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7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

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8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

santhi narayanan

17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

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47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

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59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

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60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 27

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

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10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

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16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
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17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

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18

Our India……..

10/31/2015

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19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

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20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

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21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

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22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

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23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

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24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

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25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

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26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

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29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

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30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

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34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

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35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

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36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

santhi narayanan

59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

santhi narayanan

60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 28

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

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10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

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16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

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17

Customary law
• A custom that is observed continously for a
very long period of time.

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18

Our India……..

10/31/2015

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19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

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20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

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21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

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22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

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23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

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24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

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27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

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29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

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35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

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36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

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45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

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46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

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47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

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48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

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49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

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50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

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Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

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53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

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54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
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55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

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56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

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58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
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59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

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60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 29

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

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2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

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4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

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6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

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7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

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8

WHAT IS LAW?

10/31/2015

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9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

santhi narayanan

17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

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59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

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60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 30

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

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16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

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17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

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19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

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21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

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22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

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23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

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24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

santhi narayanan

59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

santhi narayanan

60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 31

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

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16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
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17

Customary law
• A custom that is observed continously for a
very long period of time.

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18

Our India……..

10/31/2015

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19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

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20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

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21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

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22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

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23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

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24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

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27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

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29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

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35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

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36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

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45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

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46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

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47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

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48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

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49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

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50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

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Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

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53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

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54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
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55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

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56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

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58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
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59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

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60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 32

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

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2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

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4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

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6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

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7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

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9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

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10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

santhi narayanan

17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

santhi narayanan

59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

santhi narayanan

60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 33

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

santhi narayanan

17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

santhi narayanan

59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

santhi narayanan

60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 34

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

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16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

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17

Customary law
• A custom that is observed continously for a
very long period of time.

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18

Our India……..

10/31/2015

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19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

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20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

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21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

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22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

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23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

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24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

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27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

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29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

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35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

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36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

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45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

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46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

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47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

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48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

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49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

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50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

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Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

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53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

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54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
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55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

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56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

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58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
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59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

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60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 35

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

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2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

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4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

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6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

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7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

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9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

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10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

santhi narayanan

17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

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59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

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60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 36

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

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17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

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19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

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20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

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21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

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22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

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23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

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24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

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25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

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29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

santhi narayanan

59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

santhi narayanan

60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 37

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

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16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

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17

Customary law
• A custom that is observed continously for a
very long period of time.

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18

Our India……..

10/31/2015

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19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

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20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

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21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

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22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

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23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

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24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

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25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

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26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

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27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

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29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

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30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

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35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

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36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

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41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

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45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

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46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

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47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

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48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

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49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

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50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

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Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

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53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

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54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
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55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

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56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

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58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
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59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

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60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 38

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

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2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

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4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

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6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

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7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

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8

WHAT IS LAW?

10/31/2015

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9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

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10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

santhi narayanan

17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

santhi narayanan

59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

santhi narayanan

60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 39

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

santhi narayanan

17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

santhi narayanan

59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

santhi narayanan

60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 40

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
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17

Customary law
• A custom that is observed continously for a
very long period of time.

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18

Our India……..

10/31/2015

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19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

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20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

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21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

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22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

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23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

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24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

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27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

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29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

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30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

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35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

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45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

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47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

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48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

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49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

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50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

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Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

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53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

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54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

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55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

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56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

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57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

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58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
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59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

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60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 41

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

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2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

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4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

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6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

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7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

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8

WHAT IS LAW?

10/31/2015

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9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

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10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

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16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

santhi narayanan

17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

santhi narayanan

59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

santhi narayanan

60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 42

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

santhi narayanan

17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

santhi narayanan

59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

santhi narayanan

60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 43

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

santhi narayanan

17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

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19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

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20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

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21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

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22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

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23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

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24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

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25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

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26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

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27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

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29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

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30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

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34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

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35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

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36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

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45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

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46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

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47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

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48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

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49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

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50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

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Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

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52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

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53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

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54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
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55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

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56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

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57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

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58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
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59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

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60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 44

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

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2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

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4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

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6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

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7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

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8

WHAT IS LAW?

10/31/2015

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9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

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10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

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16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

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17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

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18

Our India……..

10/31/2015

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19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

santhi narayanan

59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

santhi narayanan

60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 45

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

santhi narayanan

17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

santhi narayanan

59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

santhi narayanan

60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 46

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

santhi narayanan

17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

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20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

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21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

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22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

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23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

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24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

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25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
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26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

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27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

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29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

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30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

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34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

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35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

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36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

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37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

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45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

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46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

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47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

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48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

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49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

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50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

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Legislature-makes
laws

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JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

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52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

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53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

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54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
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55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

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56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

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57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

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58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
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59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

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60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 47

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

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2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

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4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

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6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

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7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

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8

WHAT IS LAW?

10/31/2015

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9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

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10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

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16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

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17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

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18

Our India……..

10/31/2015

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19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

santhi narayanan

59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

santhi narayanan

60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 48

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

santhi narayanan

17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

santhi narayanan

59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

santhi narayanan

60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 49

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

santhi narayanan

17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

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22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

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23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

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24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

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25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

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26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

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27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

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29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

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30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

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35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

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36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

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41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

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45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

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46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

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47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

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48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

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49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

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50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

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Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

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52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

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53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

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54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
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55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

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56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

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57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

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58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
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59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

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60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 50

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

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2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

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4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

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6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

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7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

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8

WHAT IS LAW?

10/31/2015

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9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

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10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

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16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

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17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

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18

Our India……..

10/31/2015

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19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

santhi narayanan

59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

santhi narayanan

60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 51

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

santhi narayanan

17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

santhi narayanan

59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

santhi narayanan

60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 52

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

santhi narayanan

17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

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23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

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27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

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29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

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47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

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53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

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54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
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55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

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56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

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58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
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59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

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60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 53

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

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2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

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6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

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10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

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16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

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17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

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21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

santhi narayanan

59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

santhi narayanan

60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 54

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

santhi narayanan

17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

santhi narayanan

59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

santhi narayanan

60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 55

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

santhi narayanan

17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

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24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

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25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

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27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

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29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

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30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

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45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

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46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

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47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

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48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

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50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

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53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

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54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
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55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

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56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

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58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
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59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

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60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 56

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

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2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

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4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

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6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

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7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

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8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

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10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

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16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

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17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

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18

Our India……..

10/31/2015

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19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

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20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

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21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

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22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

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23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

santhi narayanan

59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

santhi narayanan

60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 57

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

santhi narayanan

17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

santhi narayanan

59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

santhi narayanan

60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 58

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

santhi narayanan

17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

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27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

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29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

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45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

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47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

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53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

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54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

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55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

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56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

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58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
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59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

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60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 59

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

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10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

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16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

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17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

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21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

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59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

santhi narayanan

60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 60

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

santhi narayanan

17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

santhi narayanan

59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

santhi narayanan

60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 61

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

santhi narayanan

17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
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26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

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27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

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29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

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30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

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45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

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46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

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47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

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48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

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53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

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54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

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55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

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56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

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58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
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59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

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60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 62

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

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6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

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10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

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16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

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17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

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18

Our India……..

10/31/2015

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19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

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20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

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21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

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22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

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23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

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24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

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59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

santhi narayanan

60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 63

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

santhi narayanan

17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

santhi narayanan

59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

santhi narayanan

60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 64

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

santhi narayanan

17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

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29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

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30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

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45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

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46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

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47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

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53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

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54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

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55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

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56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

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58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
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59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

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60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 65

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

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2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

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6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

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10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

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16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

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17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

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18

Our India……..

10/31/2015

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19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

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20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

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21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

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22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

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23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

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24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

santhi narayanan

59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

santhi narayanan

60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 66

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

santhi narayanan

17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

10/31/2015

santhi narayanan

29

Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

10/31/2015

santhi narayanan

30

Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

10/31/2015

santhi narayanan

34

Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

10/31/2015

santhi narayanan

35

Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

10/31/2015

santhi narayanan

36

Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
10/31/2015

santhi narayanan

37

Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

10/31/2015

santhi narayanan

38

General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
10/31/2015

santhi narayanan

39

Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

10/31/2015

santhi narayanan

40

Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

10/31/2015

santhi narayanan

41

Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

10/31/2015

santhi narayanan

42

Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

10/31/2015

santhi narayanan

43

Direct & Indirect Taxation Laws:

•
•
•
•
•
•
10/31/2015

The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
santhi narayanan

44

• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

10/31/2015

santhi narayanan

45

Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

10/31/2015

santhi narayanan

46

The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

10/31/2015

santhi narayanan

47

Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

10/31/2015

santhi narayanan

48

Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

10/31/2015

santhi narayanan

49

Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

10/31/2015

santhi narayanan

50

Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

10/31/2015

Legislature-makes
laws

santhi narayanan

JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
10/31/2015

• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

santhi narayanan

52

Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

10/31/2015

santhi narayanan

53

Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

10/31/2015

santhi narayanan

54

Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
10/31/2015

santhi narayanan

55

Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

10/31/2015

santhi narayanan

56

Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

10/31/2015

Baldeo

Parties

santhi narayanan

57

Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

10/31/2015

santhi narayanan

58

Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
10/31/2015

santhi narayanan

59

Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

10/31/2015

santhi narayanan

60

Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter


Slide 67

Introduction

Why should a management student
study Business Law?
Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their
employees
• act in a particular way when marketing their products
or services.
To become aware of the legal ramifications that can follow
from their decisions in the day-to-day happenings of the
business world

Help formulate policies of risk management.

To help in conducting business in such a way to
avoid legal challenges.

10/31/2015

santhi naryanan

2

INTRODUCTION

What is business?

10/31/2015

What is the relation
between business
and law?

santhi naryanan

3

What is business??????
• When civilization began……. business
began……
• Development in the world is directly linked to
business in turn linked to the wealth of the
country
• Enriches life of people by enhancing the
functional capacity of the available resources

10/31/2015

santhi naryanan

4

Business and it environment
Social Environment
National and
International
Environment

Business
Legal
Environment

10/31/2015

Economic
Environment

Technological
environments

santhi naryanan

5

Interest groups
Consumers/
government

Suppliers/distri
butors/dealers

Business

Employers/em
ployees

Competitor
s/owners

10/31/2015

santhi naryanan

6

Law and business
 Law-A universal human need.
 No society can exist without a legal order
 Society closely interlinked to business
 This in turn makes law and business closely
interlinked disciplines- Complimentary to each
other
 A major factor in decision making
 Law is the foundation for the regulation and
business conduct and decisions
10/31/2015

santhi naryanan

7

Why business law??
Extensive economic liberlisation and
globalisation creating new realms of business
Legal impact of business decisions vs costs of
litigation
Having legal awareness will help in making
better and accurate decisions in business
transactions
Timely compliances of law leads to harmony in
business, better productivity
10/31/2015

santhi naryanan

8

WHAT IS LAW?

10/31/2015

santhi narayanan

9

LAW
• Since time immemorial every society has its own
law.
• Law is a social science – grows with society.
• Law means different things in different times –
highly dynamic concept with core values
• Dharma (Hindu), Hukum (Islamic), Jus (Roman),
Droit (French), Richt (German)

10/31/2015

santhi narayanan

10

Law is -----• A mechanism of regulating human conduct in
society - harmonious co-operation of
members increases leading to a peaceful coexistence
• an instrument of social justice of the
state that seeks to provide justice,
stability & security in the society

Main Characterisitics

Mandatory

LAW
Permissive

Prohibitive

Effectiveness of Law
Damages for
injury

Completing
an obligation
after failure
to perform

Preventing
disobedience

Administering
some form of
punishment

Limitations

Unique Features
Everybody enjoys
equal protection
under
laws(Equality
before Law)

No man is above the
law

Law of the land is
important

‘IGNORANCIA JURIS NON
EXQUISITE’ – ignorance of
law is no excuse

10/31/2015

santhi narayanan

16

Sources of law
Legislation

Precedent

Custom

Opinions
of experts

Morals
and equity
10/31/2015

santhi narayanan

17

Customary law
• A custom that is observed continously for a
very long period of time.

10/31/2015

santhi narayanan

18

Our India……..

10/31/2015

santhi narayanan

19

Legislation
• Promulgation of legal rules by an authority which
has the power to do so.
(Parliament,
Legislatures, President, Governor, King/Queen
etc.). Also known as Supreme Legislation. It is
also known as statutes.

10/31/2015

santhi narayanan

20

Draft Bill to Act
• Every Act is a piece of legislation made into
law after passing the process of enactment.

10/31/2015

santhi narayanan

21

Procedure
A Bill (draft form of the law)is introduced say in the lok sabha
by a member of parliament

Lok Sabha takes it for discussion

A Bill can be accepted, rejected or referred to a select committee for
necessary revision

10/31/2015

santhi narayanan

22

Making of an Act
If it is accepted or passed, it is sent to the
other house of the Parliament

The Rajya Sabha can accept it or reject it with
modifications

The bill is sent to President for giving his assent

10/31/2015

santhi narayanan

23

ContdThereafter the Bill becomes an Act

After publishing in the Official Gazette, the Act comes into operation either from the date of
publication or on a date as may be specified in the Act

Thus, a new law come into being by Parliament Activity

10/31/2015

santhi narayanan

24

Contd--• Acts provide overall framework and delegates
the function of providing details to the
executive.
• Executive provide the details for the working
of an Act by making rules, notifications
regulations and government orders

10/31/2015

santhi narayanan

25

Case Law
• Acts are written in a given context within
certain horizons.
• Over period of time Act remains the same but
the contexts differ
• Hence, reading the text becomes crucial to
decide the working of law
• Courts create law by giving new meaning to
the legal provisions.
10/31/2015

santhi narayanan

26

Case Law
Judicial decisions or judgments are
writings giving the decisions of a case

Created by judges
Interpertations of law

Judgments collectively form the case law
10/31/2015

santhi narayanan

27

Res
judicata

Precedent

Case
Law

Ratio
decidendi

10/31/2015

Stare
decisi

Obiter
dicta

santhi narayanan

28

Precedent
• According to Oxford Dictionary, Precedent is a
previous instance or case which is, or may be taken
as an example of rule for subsequent cases, or by
which some similar act or circumstances may be
supported or justified.

• Precedents are the results of creative role of
the judges while dealing cases.

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Contd--• Res judicata- A matter already settled in court;
cannot be raised again- is an instance of precedent.
• Stare-decisi- stand by decided cases
• Ratio decidendi - law declared or law laid down
• Obiter dicta- “said by the way” cannot be considered
as a precedent

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Sources of Business Law
Lex
Mercatoria

Statute
Law

Common
Law

Principles
of equity

Sources…….

The differences in the Law of India and England are primary on
account of their different business environment, customs and
trade practices.

•

a.
b.
-

c.
d.
-

English common Law :
It is unwritten or the non- statutory Law.
These are found in the reported decisions of the courts of Law.
Equity :
It refers to that branch of the English Law which develops
separately from the common Law.
It is based on the principle of the fairness.
Law Merchants :
It refer to the usages of customs of merchants and traders that
have been ratified by the courts of Law.
Statute Law :
This Law refers to the Law laid down in the act of Parliament. It is
superior to and overrides any rules of common Law, Equity or Law
Merchants.

Sources of Indian Business Law

General Classification of Law
• Public Law – Law that determines and regulates
the organization and functioning of states + Relation
of the state with its subjects
– Constitutional Law
– Administrative law
– Criminal law
• Private Law – Regulates the relations of citizens
with each other ex: law of contract, property

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Classification of law
• Criminal law: Certain offences are considered as
wrong doings against the state and are punishable by
the state. Ex: Murder, Acts of terrorism
• Civil Law: Concerned with the rights and duties
of individuals towards each other ex: Law of Tort –
monetary damage are sought for the damage or
injury caused.

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Contd…….
• Substantive law: law on a specific subject:
Deals with the Legal rights, obligations and
relationships of people versus people or between
them and the state.
• Procedural law: It lays down methods by which
substantive Law is made and administered.

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Classification of Law
• International Law; It is a set of generally
accepted rules and regulations controlling the
conduct of nations, international organizations
and individuals.
• International Court of Justice
• World Trade Organization (Governing
International Business transactions)
• GATT
• Accepted rule of territorial limit: 12 nautical
miles from the coast
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Different Laws that you as manager will
come across……….. {Indian context}
•
•
•
•
•
•

General Laws,
Procedural Laws
Commercial & Corporate Laws
Environmental Laws
Labor and Industrial Laws
Taxation Laws

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General Laws
• The Constitution of India [395 Articles divided
into 22 Parts and 12 Schedules – fundamental
rights, directive principles,)
• The Indian Penal Code, 1860 [ General Penal
code contained in 511 sections divided into 23
chapters)
• Family Laws /Personal laws (Hindu, Muslim &
Christian – governing majority, adoption,
inheritance of
property, marriage, divorce,
guardianship etc. in different Acts)
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Procedural codes
• The Code of Civil Procedure, 1908 [158 sections
and 51 Orders ] (Amendments made)
• How feasible is to have a Common Civil
Code?.....Ponder Over
• The Code of Criminal Procedure, 1973 [484
sections divided into 38 chapters with 2
schedules – 1st schedule about classification of
offences and 2nd schedule contains various
forms used in following the procedure.]

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Contd • The Indian Evidence Act, 1872 [167 sections
divided into 11 parts)
• Facts are the basis on which the rights and
liabilities are ascertained to determine the case
before hand.
• Deals with proving facts by evidence–oral or
written or circumstantial.
• All types of evidence is neither relevant nor
admissible in courts.

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Commercial & Corporate Laws
•
•
•
•
•
•
•
•

The Indian Contract Act, 1872
The Indian Partnership Act 1932
The Negotiable Instruments Act, 1881
The Companies Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Securities Exchange Board of India Act, 1992
The Consumer Protection Act, 1986

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Environmental Laws:

•
•
•

The Water (Prevention and Control of
Pollution) Act, 1973
The Air (Prevention and Control of
Pollution) Act, 1981
The Environment (Protection) Act, 1986

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Direct & Indirect Taxation Laws:

•
•
•
•
•
•
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The Income Tax Act, 1961
The Customs Act, 1962
The Central Excise Act. 1944
The Central Sales Tax Act, 1956 &
concerned State General Sales Tax
Acts.
Host of State Acts & Rules relating to
sales, excise etc.
NOW GST…………
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• Each Act is identified with a Title such as “The
Indian Contract Act, 1872”, “The Companies Act,
1956” etc.
• The year at the end of the name of the Act signifies
the year in which it is enacted as law.
• Below the Title of Act, a preamble will be there which
gives the purpose or object for which that Act is
enacted.

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Layout
• The entire text of the Act is divided into various Sections
and some Acts may also have Schedules with cross
reference to a particular Section of the Act

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The 1st Section of any Act contains three subsections, namely:
(i) Short Title (This Act may be called …”The Indian
Contract Act, 1872”)
(ii) Extent (it extends to the whole of India or to
any part of the country or a State)
(iii) Commencement (it gives the date from which
the Act commences its operation or a power is
given to the Government to declare any date in
future to give effect to the provisions of the Act).

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Contd• Section 2: Interpretation or Definitions (of certain
terms and words used in the text of the Act are
interpreted or defined and that definition should be
relevant for interpretation of any matter dealt in the
Act).

• Subsequent Sections sometimes create certain
authorities to enforce the provisions of the subject
matter of that Act (Income Tax Officers, Company
Law Board, Enforcement Directorate, etc.)

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Contd• Appellate Authorities are created within the
Act to provide a chance to appeal against the
actions or orders of the Enforcement
Authorities of the Act.
• When no Enforcement Authorities or
Appellate Authorities are stated in the Act,
then normal Civil Courts of the country deal
with such cases. (As in the case of Contract
Act, Sale of Goods Act, Partnership Act etc.)

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Indian Context
• India adopted the Constitution on 26
January 1950
• Highest law of the land
• Constitution providing the governing
mechanism of the country

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Constitution of India
• Fundamental Law of the Land
• Preamble – Socialist, Secular, Democratic,
Republic
• Constitution provides for separation of powers
Executive- Applies
law

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Legislature-makes
laws

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JudiciaryInterprets law

51

Constitution of India
• Fundamental rights
– Right to equality
– Right to freedom of
speech
– Right to life and
personal Liberty
– Right against
exploitation
– Right to freedom of
religion
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• Directive Principles
of State policy
– Equal justice and free
legal aid
– Organisation of
village Panchayats
– Protection and
improvement of the
environment

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Fundamental duties
• Respect the National Flag, National anthem
• Value and preserve the rich cultural heritage
• Safeguard public property

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Validity of Law
• The validity of law passed by the legislature can be
questioned in any court of law
– whenever the law has violated any provisions of
the Constitution
– violation of fundamental right
• The courts can declare a law to be unconstitutional
(concept of ultra vires)

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Indian Judiciary
Supreme
Court

High Courts

Subordinate
courts
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Subordinate courts
Civil CourtsDistrict judge

Criminal Courtssessions judge

Civil judge

Assistant sessions
judge

Munsif

Chief judicial
magistrate
Magistrate

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Civil Case/Suit
• Plaintiff vs. Defendant

Ramprasad

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Baldeo

Parties

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Criminal Case
• State vs Accused
Charles Shobraj
Country

Parties

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Commonly Used terms…….
• FIR- First Information Report
• Accused – A person who has committed a
crime
• State- Country (protector of your rights)
• Investigation-looking into the matter
• Dying declaration – Last statement of the
victim before death. To be recorded in the
presence of a magistrate
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Commonly used terms…..
• Trial – Examination of the case
• Judgment- Judge giving decision after hearing
of the matter
• Conviction – An accused is awarded
punishment
• Acquittal – A person is freed from the charge
• Appeal- Approaching a higher court

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Basic Legal Concepts
• Concept of Legal Entity. Law applies only to persons.
Thus, persons are the subjects of law. A person is an
entity which is clothed with rights and duties. There

are two kinds of persons. A person may be a natural
or an artificial person. On the other hand, an artificial
person is a metaphysical body, intangible and

invisible.

Contd• Concept of Legal Rights. Some of these are: (i) A right is always
vested in a person but not in an inanimate being or animal or
even a dead person. (ii) A right is generally correlative of a
duty in relation to the fulfillment of a right. (iii) The right must
relate to a subject matter, namely the objects. (iv) The nature
of a right may be to get something done from another or to
refrain him to do something. (v) Every right can be traced to a
source which may be a contract, a custom, a natural law, etc.

Contd• Different types of rights. Rights may be (i) Personal or
proprietary; (ii) in personam or in rem.
• Concept of Property. There could be no such thing as business
law, or even business, if there were no such thing as property.
Thus the concept of property is very important in business
law.
• Different types of property. Property may be classified as (i)
Tangible or intangible; (ii) Real or personal; and (iii) Public or
private.

Contd• Concept of Ownership
i. Ownership is an intimate relationship between a person and
object.
ii. Law does not permit any vacuum in ownership.
iii. There are certain rights which are generally included in
ownership.
iv. Ownership cannot exist without law.
v. The ownership of property is exclusive.
• Concept of Possession. It is said that law attaches great
importance to mere possession even without ownership. Even
a wrongful possession is protected.

Case law and citations
• The judgments of court - important source of
law.
• Large number of judgments are pronounced
daily
• Law journals print these judgments
• All judgments are not printed. Only those
judgments that have a wider interest are
reported.

Contd-• Lawyers and judges while referring to a prior
judgment have to refer to the volume and
page number of the journal where the
judgment of a particular case has been
printed.
• Referencing to a case in a journal is called
citation

Citation
• United Breweries Ltd vs State of Andhra
Pradesh AIR 1997 SC 1316
Journal

Year

Parties to the matter

Court

Page Number Parties to the
matter