Final for Law

8/3/2019 Final for Law

http://slidepdf.com/reader/full/final-for-law 1/95

Definition

Contract can be defined as ³ An Agreement

enforceable by law is a contract´. A contract,

therefore, is an agreement the object is to create

a legal obligation , i.e. a duty enforceable by law.

Essential elements of a valid contract

1. Offer and acceptance ± there must be a lawful

offer and a lawful acceptance.2. Intension to create legal relationship ±there must

be an intension among the parties

Jan, 13, 2011 MMS -SEM II -2 ± LEG & TAX ASP

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Essential elements of a Contract

that the agreement should be attached by legal

consequences and create legal obligations.

3. Lawful consideration ± consideration has beendefined a the price paid by one party for the

promise of the other. An agreement is legally

enforceable only when each of the parties to it

give something and get something.4. Capacity of parties- the parties to an agreement

must be competent to contract, otherwise it


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Essential elements of a Contract(contd..)

cannot be enforced by court of law.

5. Free consent- consent means the parties have

agreed upon the same thing in the same sense.Free consent is absent if there is coercion, undue

influence, fraud, misrepresentation or mistake.

6. Lawful object- the parties to the agreement must

agree for the valid lawful object.7. Writing and Registration- all contracts to be

legally valid, must be in writing and registered.


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Essential elements of a Contract(contd..)

8. Certainty- agreements, the meaning of which is

not certain, or capable of made being certain, are

void.

9. Possibility of performance- the contract must be

capable of performance. An agreement which is

impossible to perform, physically or legally is

void.


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K inds of Contracts

1. Valid contract- it is an agreement enforceable

by law. Here, all the essential elements of a

contract are existing.

2. Voidable contract- an agreement which is

enforceable by law at the option of one or more

of the parties there to, but not at the option of

the other/s, is a voidable contract.3. Void contract- this contract is not binding in

law. The causes can be ±supervening


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K inds of Contracts (contd..)

impossibility or subsequent illegality.

4. Unenforceable contract- this is a contract which

is valid in itself, but is not capable of beingenforced in a court of law because of some

technical defects such as absence of registration,

adequate stamping, or if time barred.

5. Illegal or unlawful contract- this contract iscontrary to the law and hence is void ab-initio.


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K inds of Contracts (contd..)

Contracts can also be expressed ,implied,

constructive/quasi.

³ Quantum Meruit´ means in proportion to thework done. For part performance of the contract,

resulting in a breach, a suit of QM can be brought

by the aggrieved party.


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Discussion on Companies Act, 1956

Most voluminous Legislation in the world;

The Act has 658 Sections, XV Schedules;

The entire Act is split into XIII Parts with eachPart further being split into Chapters;

The Rules and Forms are further stated in the

Guidelines / Rules, 1957;

There are many other Rules / Guidelines for

supporting the provisions of the Sections


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Functional Division of the Act

Part I - Definitions, CLB, National Company Law

Tribunal(NCLT);

Part II ± Incorporation of a Co. & matters incidental thereto;

Part III ± Prospectus & Allotment relating to issue of shares

& Debentures;

Part IV- Share Capital & Debentures;

Part V ± Registration of Charges;

Part VI ± Management & Administration;

Part VII ± Winding Up;

Part VIII ± Companies formed under Previous Co, Law;


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Functional Division of the Act (contd..)

Part IX ± Cos. Authorised to Register under this

Act;

Part X ± Winding up of Unregistered Companies;Part XI- Cos. Incorporated outside India;

Part XII- Registration Offices,& Officers & Fees;

Part XIII- General- collection of Info. & statistics;

The XV SCHEDULES follows thereafter.


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Some Basic facts of the Companies Act, 1956

For the interpretation of each Section, there are

innumerable Case Laws from the various Courts

that have pronounced judgment supporting or

contradicting an earlier decision;

Company Law is the source from which the

subject of Auditing gets its identity, importance

and procedures to initiate Corporate Audit; The Act is heavily based on interpretation and

justification, which decides the case.


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The Administrative Machinery to monitor the

affairs is vested with the Ministry of Company

Affairs(MCA), the Company Law Board(CLB);

The routine functions are managed by the

Registrar of Companies(ROC), having Regional

Directors (RD), located in various states, where

the companies are required to file documents andReturns, and the public is authorised to inspect

the same according to the provisions of law.


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The other Regulatory Authority is the Securities

& Exchange Board of India (SEBI). Section 55A

of CA, 1956, gives exclusive powers to SEBI to

administer the issue and transfer of securities and

the non-payment of dividends as is stated in

various Sections of the Act.

In the 2006 Amendment, MCA introduced ³e-Governance´ ( known as MCA-21), u/s 610

B,C,D for filing of Returns & payments.


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A Company, its Nature and K ind

Section 3(1)(i) defines a Company as ³ A

Company formed and registered under the Act or

an existing Company.´ or

³ A company is an incorporated Association,

which is an artificial juridical person, having a

separate legal entity, with a perpetual succession

and a common seal, a common capital comprisedof transferrable shares, and carrying limited

liability.´ ( Saloman vs Saloman & Co. Ltd.)


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A Company, its Nature and K ind( contd.)

Section 11 defines an ³Illegal Association´ which

states that ³ No Company, Association or

Partnership consisting of more than 20 persons

( 10 in the case of Banking Business) be formed

to carry on any business for gain unless it is

registered under the Companies Act or under any

other law´. Here the Liability is unlimited and personal.


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Types of Companies

PRIVATE COMPANY Sec 3(1)(iii):- A company with a minimum

PUC of Rs one lac or more and which by its AOA ±

1) restricts the right of members to transfer shares, if any;

2) Limits the number of members to fifty , excluding members who were

or are in the employment of the company;

3) Prohibits any invitation to the public to subscribe for any shares in, or

debentures of, the company, and

4) Prohibits any invitation or acceptance of deposits from persons other

than members, directors or their relatives.


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Types of Companies (contd.)

PUBLIC COMPANY Sec 3(1)(iv):- It means a

company which :-

1) Which is not a Private Co.;

2) Has a min PUC of Rs. 5 lacs or such higher PUC, as

may be prescribed;

3) Can invite the public to subscribe to its shares & debs;

4) Does not limit the max. number of members;

5) Can invite or accept deposits from the public; and

6) Is a Pvt. Co. but subsidiary of a Public Co.


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STATUTORY CO. :- It is incorporated by a

special Act passed either by the Central or the

State Legislature;

GOVERNMENT CO. :- Section 617 defines a

GC as any Company in which not less than 51%

of the PUC is held by the Central / State Govt.

FOREIGN CO. :- Section 591 to 596 discussesabout such companies.


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Section 25 Co. :- These are Companies having

obtained the prior permission of the CG not to

include the words ³Ltd´ or ³ Pvt. Ltd.´ behind

their names since they have been formed to

promote commerce, art, science, religion or any

other charitable purposes and not to distribute the

profits as dividends but to plough them back for

the aforesaid activities.


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Types of Companies based on Liability of Members:-

Companies limited by shares;

Companies limited by Guarantee ±Sec 12(2)(b); and

Unlimited Companies - Sec 12(2)(c).

Holding and Subsidiary Company ( Sec 4);


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Exemptions & Privileges of Pvt. Co

a) Only 2 Members can start a Co. which is 7 for Pub. Ltd.

Co. ± Sec 12;

b) It can commence business immediately on incorporation

as it need not wait to obtain the Certificate for commencement of business ± Sec 149(7);

c) Can function with 2 Directors while three are required

otherwise ± Sec 252(2);

d) For General Meetings, the Quorum is 2 persons personally present which is five for pub Co ± Sec174(1);


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Formation of a Company

It is a lengthy process involving:

Promotion

Incorporation or Registration;

Capital Subscription; and

Commencement of Business.


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Memorandum Of Association (MOA)

MOA can be defined as the Charter which

defines the limitation of the powers of the

company. The MOA contains the fundamental

conditions upon which alone the company is

allowed to be incorporated.

The contents of the MOA ± NAME clause,REGISTERED OFFICE clause, OBJECTS

clause, LIABILITY clause, CAPITAL clause &


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Memorandum Of Association (MOA)

ASSOCIATION/SUBSCRIPTION clause.

Under the Objects Clause, the MAIN and OTHER

objects shall be separately stated.Alteration of the NAME Clause:

A company may, by passing a Special Resolution,

and with the approval of the C/G, in writing,

change its name ( Sec 21). However, no such permission is required for dropping/addition of


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MOA ( contd..)

the words ³Limited´ or ³ Pvt. Ltd.´ to the

Company¶s name.

Spl Res requires 21 days notice and with 75% of

the Members present ( or through Proxy ) and

voting are in favour of the Resolution.


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MOA ( contd..)

The Doctrine of Ultra Vires:-

According to this Doctrine, all such acts or

transactions of a Company which are ultra vires( beyond the powers of) the objects clause of its

MOA, SHALL BE WHOLLY NULL & VOID,

and can never be subsequently ratified and

validated, even though all the shareholdersconsent or purport to ratify such transaction.


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Articles of Association (AOA)

The AOA contains regulations for the internal

administration of the Company¶s Affairs. It

prescribes the Rules and Bye-Laws for the

General Management of the Company and for the

attainment of its objects as given in its MOA.

Being subordinate to the MOA, the AOA cannot

extend the objects as defined in the MOA.


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Contents of the AOA

The extent to which TABLE ± A is applicable;( Table A-Regulations for management of a company limited by shares)

Different classes of shares and their rights;

Borrowing powers of Directors;

Maintainance of Books of Accts and their Audit;

Matters relating to Board Meetings;

Winding Up; and many other Issues.


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ALTERATION OF AOA

I. Sec 31- The alteration must not be inconsistent

with the prov. of the C.A.,1956, MOA or

alterations ordered by the CLB or any other

statute;

II. The alteration must not deprive any person of

his rights under a contract;

III. Approval of the C/G must be obtained incertain cases;


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ALTERATION OF AOA (contd..)

IV. The alteration must not constitute a fraud on the

minority;

V. The alteration must be bonafide for the benefitof the company as a whole.


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Binding force of MOA & AOA

U/s 36, subject to the provisions of the Act, the

MOA and AOA shall, when registered, bind the

company and the members. This includes:-

Company is bound to its Members;

Each member is bound to the Company;

Each member is bound to other members in

exceptional cases only; and Neither the company nor the members are bound

to outsiders.


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The Doctrine of Constructive Notice states that

after the MOA and AOA is registered, it becomes

a Public Document, and a person dealing with the

company in a manner which is inconsistent with

the provisions contained therein, the person shall

be deemed to have dealt with the company at his

own risk and cost, and shall have to bear the

consequences thereof.


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DOCTRINE OF INDOOR MANAGEMENT

In contrast to the earlier Doctrine, this Doctrine

implies that ³ persons dealing with the company

are not bound to enquire into the regularity of the

internal proceedings´.

The exception to the Rule is that when the

outsider had constructive notice of the

irregularity, or where proper enquiry was notdone which could have revealed the anomaly or

the documents dealt with are forged.


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Distinction between MOA and AOA

MOA

States the broad framework

within which the Co.

functions;

The MOA is subordinate to

the Act;

The MOA must be

compulsorily filed with the

ROC;

Cannot be easily altered;

AOA

Mentions about the internal

functioning which is subservient

to the MOA;

It is subordinate to the MOA;

If Table A is adopted, then filing

not required;

Can be altered by specialresolution only;


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Distinction between MOA and AOA

MOA

Acts done ultra vires the

MOA are void and cannot

be ratified;

Outsiders have no remedy

against the co. even it isultra vires the MOA.

AOA

Acts done by the AOA,

ultra vires the AOA but

intra vires the MOA, aresimply irregular and not

void.

Outsiders can enforce the

contract if ultra vires theAOA.


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COMPANY MEETINGS

Statutory Meetings( Sec 165)- Applicable only

for Public Ltd. Cos.- The issues discussed are:-

1. Total no. of shares allotted and its

characteristics;

2. Total cash received;

3. Abstract of the Receipts & Payments Account;

4. Names,addresses,& occupation of the Directors;

5. Particulars of contracts entered into;


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Statutory Meeting ( contd..)

6. Extent of Underwriting contracts entered into

and the reasons therefor;

7. Arrears of any dues on calls from the directors,

managers and others;

8. Particulars of any commission / brokerage paid

to the Directors.

This Meeting is held once in the lifetime of a PublicLtd. Co.


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Annual General Meeting

U/s 166, every company shall call an AGM every

year and shall notify the members accordingly.

Between two AGMs, there should not be a gap of

more than 15 months. It should be held where the

Registered Office is situated.

The issues generally discussed are- To adopt the

Accounts/ To declare a dividend/To appoint or reappoint Directors and To appoint the Auditors

& fix his Remuneration.


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Convened General Meeting by C/G

U/S 167, the C/Govt. can convene a General

Meeting if default occurs in holding an AGM u/s

166. This generally happens when the Directors

are not ready with the Accounts, or the Auditors

are Qualifying the Statutory Audit Report which

can doubt the integrity of the Directors.


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Extra-Ordinary General Meeting

u/s 169, the Board can, on requisition of the

Members, shall call this meeting to discuss

specific issues.

The Members so requesitioning, should hold at

least 10% of the total voting power.

Section 171 to 186 discusses on Meetings:-

Sec 171- Length of Notice ± 21 days notice inwriting is required.

Sec 173- Explanatory statement attached to the


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Meetings ( contd..)

Notice explaining the facts and reasons for the item

to be discussed.

Sec 174- Quorum ± 5 members in the case of a

Public Company and 2 members in the case of a

Pvt. Co.

Sec 175 ±Appointment of a Chairman.

Sec 176- Proxies ± cannot speak at a meeting andcan vote only if there is a poll.

Sec 189- Ordinary & Special Resolution- It is 49:51


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Meetings (contd..)

for passing an O/R and 75:25 for passing a S/R.

Sec 190 ± Resolutions requiring Special Notice.

Sec 192- Registration of certain resolutions anddocuments;

Sec 205- Dividends to be paid only out of profits;

Sec 205C- Unclaimed dividend to be transferred to

³ Investor Education & Protection Fund´


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Books of Accounts & Audit

Sec 209 ± Books of Accounts to be maintained by

the Company;

Sec 210- At every AGM, the Balance Sheet and the

P&L Account to be placed;

Sec 212- Balance sheet of Holding Co. to include

details of Subsidiaries;

Sec 217- Board¶ Report - the state of company¶saffairs, amounts to be transferred to Reserves,

amount to be recommended as dividend, material


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Board¶s Report

changes that have taken place between the B/S

date and the date of the Report, activities of the

Company and its Subsidiaries, remuneration

received by executives exceeding Rs. 24 lacs per

annum.

Sec 217(2AA) discusses about Directors¶

Responsibility Statement which states that theAccounting Standards have been followed, due

prudence has been applied, proper care has been


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Board¶s Report (contd..)

taken to safe guard the assets and to prevent

frauds and irregularities, and lastly the Accounts

have been prepared on a ³ Going Concern´ basis.


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Auditors ± Appointment & Remuneration

Sec 224 ± The first Auditors are appointed by the

Board within one month of registration and shall

hold office till the AGM; The subsequent

Auditors are appointed by the Members at the

AGM by ordinary resolution ;

Sec 224A states about Auditors appointed by a

Special Resolution where 25% or more is held by

a FI /CG /SG, either singly or jointly.


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Auditors ± Appointment & Remuneration ( contd..)

u/s 224(1B), The Auditor has to give a written

consent accepting the appointment, since the

restriction on 20 Audits per Partner has to be

adhered to;

The Reappointment of Auditors, u/s 224(2), shall

automatically happen, unless :-

1) He is not qualified for re-appointment;2) He has given notice in writing of his

unwillingness to be re-appointed;


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Auditors ± Re-appointment ( contd..)

3) Resolution has been passed that the existing

auditor shall not be re-appointed;

4) Where notice has been given to reappoint

somebody else other than the retiring auditor,

and the person serving the notice has expired or

is incapacitated.

u/s 224(3), the C/G has the power to appoint anauditor in case a vacancy is not being filled up;


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Special Audit (Sec 233A )

The C/G may, on reports received or in its own

volition, direct a Special Audit, if it is of the

opinion that:-

I. That the affairs of the company are not being

managed in accordance with sound business

principles or prudent commercial practices; or

II. That the company is being managed in amanner likely to cause serious injury or damage

to the interests of the trade, industry or business


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Special Audit (Sec 233A ) ( contd..)

to which it pertains; or

III. That the financial position of the company is

such as to endanger its solvency;

Cost Audit ( Sec 233B)

For a company engaged in production, processing,

manufacturing or mining activities, in

accordance with the orders of the C/G, u/s 209,the Books of Accounts also to include such

particulars as relating to utilisation of material,


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Cost Audit ( Sec 233B) ( contd..)

Labour and other items of cost. The C/G may

order the audit of the Cost Books to be

conducted.

The Cost Auditor shall be appointed by the

Board with the previous approval of the

C/G. The report to be furnished to the C/G

with a copy to the Company. The C/G shall,give instructions regarding the action that

needs to be taken.


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DIRECTORS

Sec 252(3) defines Directors also as the ³Board´

and are those persons, who are responsible for

Directing, Governing or Controlling the Policy or

Management of the Company

Directors are the Trustees, Agents and Managing

Partners of the Company and play a fiduciary

role;

Public companies to have at least 3 Directors and

Private Co. 2 Directors.

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DIRECTORS( contd..)

iv. Has been convicted by a Court to at least

six months imprisonment and five years

have not lapsed thereafter;v. Has failed to pay the calls on the shares;

vi. Has been disqualified for fraudulent

activities;vii.If the Co. has failed to repay the Fixed

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DIRECTORS ( contd..)

Sec 254 stipulates that the First Directors are

appointed by the Subscribers to the

Memorandum.

U/s 255, the subsequent Directors are appointed

by shareholders at the AGM. For a Public Ltd.

Co. at least one ±third of the strength of the

Board must retire by rotation, and can be re-

elected.

FIs and Banks can nominate their Officers on the


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DIRECTORS ( contd..)

Board of companies to whom Term-Loan or W/C

facilities have been granted. These Nominee

Directors are not liable to retire by rotation;

There can also be Additional Directors, Casual

Vacancy and Alternate Directors.


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SALE OF GOODS ACT, 1930

The general provisions of the Indian Contract Act

continue to be applicable to the contract of sale of

goods, so far as they are not inconsistent with the

provisions of the latter.

Section4(1) defines a ³ Contract of Sale´ as a

contract whereby the seller transfers or agrees to

transfer the property in the goods to the Buyer for

a price.

Contract of sale is a generic term and includes a


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( contd..)

sale and an Agreement to sell. In an Agreement

to sell, there is no transfer of property to the

buyer at the time of the contract. The conveyance

of property takes place later so that the seller continues to be the owner until the agreement to

sell becomes a sale.

Hire Purchase as distinguished from Sale is

that in HP, there is no agreement to buy, but there

is only an agr. to hire, with an option to purchase.


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( contd..)

Goods u/s 2(7), can be Existing goods or Future

goods or Contingent goods.

In a contract for sale of goods, the major terms

are called ³ CONDITIONS´ and the minor terms

are called ³ WARRANTIES´

A Condition is a stipulation essential to the main

purpose of the contract, the breach of which givesthe aggrieved party a right to repudiate the

contract.


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( contd..)

A Warranty is a stipulation collateral to the

main purpose of the contract, the breach of which

gives the aggrieved the right to sue for damages

only, and not to avoid the contract itself.

Conditions and Warranties may be either express

or implied. ³ What is expressly done puts an end

to what is tacit or implied, and custom and

agreement over-rule implied conditions and

warranties.


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( contd..)

In every contract of sale, the Buyer shall have

and enjoy quiet possession of goods.

Doctrine of Caveat Emptor ± This mean that

³ let the Buyer Beware´. This means that it is the

duty of the Buyer to be careful while purchasing

goods of his requirement and, in the absence of

any enquiry from the buyer, the seller is not bound to disclose every defect in the goods of

which he may be cognisant.


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( contd..)

Exceptions to the Doctrine of Caveat Emptor:

1. Where the Seller makes a mis-representation

and the buyer relies on it, such a contract can be

voidable at the option of the Buyer;

2. Where the Seller makes a mis-representation,

amounting to fraud, or conceals a defect which

could not be discovered on reasonableexamination, the buyer can rescind the contract

as well as claim damages;


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( contd..)

3. Where the goods are purchased by description

and they do not correspond to the description;

4. Where the goods are bought by sample and the

bulk does not match with the sample;

5. Where the buyer makes known to the Seller the

purpose for which the goods are required and

depends upon the skills and judgment of theseller, and the purpose is not served;


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( contd..)

Transfer of Property, can be for :-

Specific or ascertained goods; or

Unascertained and future goods.Transfer of title by Estoppel arises when you are

precluded from denying the truth of anything,

which you have represented as a fact, although it

is not a fact; The Buyer in such a case gets a better title than the Seller.


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( contd..)

Under Performance of Contract of Sale, u/s 31, it

is the duty of the Seller to deliver the goods and

of the Buyer to accept and pay for them, in

accordance with the terms of the contract for sale.

R ights of the Unpaid Seller can be against the

goods or against the Buyer personally; as regards

the goods, the Seller has :-

Right of Lien / Right of stoppage of goods in

transit / and Right of Resale.


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( contd..)

Lien is the right to retain possession of goods

and refuse to deliver them to the buyer, until the

price due in respect of them is paid or tendered.

Auction Sale is a process in which the

Auctioneer invites bids from prospective

purchasers and sells the goods to the highest

bidder ( u/s 64).


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NEGOTIABLE INSTR UMENTSACT, 1881

Negotiable Instrument(NI) means a ³Promissory

note, Bill of exchange or Cheque payable either

to order or to bearer´.

Only RBI can issue a P/N, ³ payable to Bearer´.

Alternatively, ³a NI is one which is, by a legally

recognised custom of trade or by law,

transferable by delivery or endorsement anddelivery, in such circumstances that- a) the

holder of it for the time being may sue on it in his

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NEG. INSTR M. ACT, 1881(contd..)

own name and- b) the property in it passes, free

from equities to a bonafide transferee for value,

notwithstanding any defect in the title of the

transferor´.

The presumptions o a NI are :- there should be

consideration/ it has to be dated/ that it is

accepted within a reasonable time after its date

but before its maturity/ should be duly

stamped/must be a Holder in due course.


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A P/Note is an instrument in writing ( not being a

bank note or a currency note) containing an

unconditional undertaking signed by the Maker,

to pay a certain sum of money only to, or to theorder of, a certain person, or to the bearer of the

instrument.

A Bill of Exchange is an instrument in writing

containing an unconditional order, signed by the

maker, directing a certain person to pay a certain


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sum of money only to, or to the order of, a

certain person or to the bearer of the

instrument. There are three parties ± Drawer,

Drawee and Payee.Accommodation Bill is not supported by

any consideration or a trading transaction.

The Drawer does not give any consideration

to the drawee but is drawn to providefinancial help.


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A Cheque is a B/E drawn on a specialised

banker and not expressed to be payable otherwise

than on demand and it includes the electronic

image of a truncated cheque and a cheque in theelectronic form.

An Inchoate Instrument is an incomplete or

blank N/I, properly stamped and signed.

Maturity of a N/I falls due three days after the

date stated in the Instrument.


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Holder of a N/I means any person entitled to the

possession of the instrument in his own name

and to receive or recover the amount thereon

from the parties thereto.

Holder in due course means any person who for

consideration became the possessor of a N/I, if

payable to bearer, or the payee or the indorsee

thereof if payable to order, before the amount

mentioned therein became payable, and without


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sufficient cause to believe that any defect existed

in the title of the person from whom he derived

his title.

A N/I may be dishonoured by ± Non-acceptance

or non-payment.


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The Actual Reality

Facts, as such, never settled anything.

They are working tools only. It is the

implications that can be drawn from factsthat count, and to evaluate these requires

wisdom and judgment that are unrelated

to the computer approach to life.

CLARENCE B. RANDALL


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COMPETITION ACT, 2002

(The PREAMBLE)

An Act to provide, keeping in view the economic

development of the country for the establishment

of a Commission to prevent practices having an

adverse effect on competition, to promote andsustain competition in the markets, to protect the

interests of the consumers and to ensure freedom

of trade carried on by other participants in

markets, in India, and for matters connectedtherewith or incidental thereto.

Sept 7, 2010 PGDM -SEM I -5 ± LEG & TAX

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COMPETITION ACT, 2002 (contd..)

Sec 2 defines some important terms like :-

a) Acquisition, Agreement, Cartel,

ba) Appellate Tribunal means the Tribunal

established u/s 53A of the Act;

f) Consumer means a person who buys any goods

or hires any service ..

h) Enterprise means any person or a Dept. of theGovt. engaged in the activity of production,

storage, supply, distribution, acquisition or


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control of articles or goods, including dealings in

shares and debentures.

Sec 3 ± Anti Competitive Agreements:

No enterprise or AOP shall enter into any

agreement in respect of production, supply,

distribution, storage, acquisition or control which

causes or is likely to cause an appreciableadverse effect on competition in India. This

includes a Cartel.


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S 3 A ti C titi A t



Sec 3 ± Anti Competitive Agreements

( contd..)

This section does not apply to JVs provided it

increases the efficiency in production, supply,

distribution, storage, acquisition or control of

goods or provision of services.

Under this provision, the following activities are

contraventions :- Tie-in arrangement

b) exclusive supply agreement c) exclusivedistribution agreement d) refusal to deal &

e) resale price maintenance.


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Sec 4 ± Abuse of Dominant position

The above practice includes ± unfair or

discriminatory action, limiting or restricting

production or services, obstructing or denying

market practices, entering into contracts withsupplementary tags, and to spread its dominant

status into another market.


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Sec 5 - COMBINATION

This section discusses about Mergers and

Amalgamations of two or more units and the

adverse impact that may arise on fair competition

due to this combination.

The Commission shall, on a written application

to it, examine the impact of this combination and

grant its approval.

Sec 7 mentions about the setting up of a

COMPETITION COMMISSION of INDIA.


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Sec 53A discusses abut establishing an

APPELLATE TRIBUNAL.


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MONOPOLIES & RESTRICTIVE



MONOPOLIES & RESTRICTIVE

TRADE PRACTICES ACT, 1969

The Preamble An Act to provide that the operation of the

economic system does not result in the

concentration of economic power to the common

detriment, for the control of monopolies, for the prohibition of monopolistic and restrictive trade

practices and for matters connected therewith or

incidental thereto.


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MRTPA, 1969 (contd..)

Section 2 defines some important terms like the

MRTP Commission, Director General of

Investigation and Registration, Undertaking

( which by itself or jointly with inter-connected

u/ts produces, supplies, distributes or controls not

less than one-fourth of the total goods that are

produced or supplied in India, or services

rendered.)

Sec 3 states that the Act is not applicable to:


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Govt Controlled company, Financial

Institutions, Co-operative Societies, or Trade

Unions.

Secs 5 to 19 discusses about the appointment,

powers, functions of the MRTPC and DGIR

and the ways for implementing the Act.

S

ec 27

± D

ivision of anU

ndertaking: TheMRTPC, on receiving a complaint from a Trade

Association, or Customer, or from the State/


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C Govt. or upon its own knowledge or

information, is of the opinion that that the

working of the U/t is prejudicial to the public

interest, or has led, or is leading, or is likely tolead, to the adoption of any MTP or R TP,

inquire, as to whether it is expedient in the public

interest to make an order-

For the division of any trade of the u/t by the sale

of any part of the u/t or assets thereof, or


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for the division of any u/t or interconnected u/t

into such number of u/ts as the circumstances of

the case may justify. The C/G to be informed of

the decision by the MRTPC.

Sec 27A empowers the C/G to direct severance

of inter-connection between U/ts.

Sec 31states about Investigation by Commission

of MTPs ± If the C/G feels that MTP is

prevailing, then it can order the Commission to


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inquire and to report the findings.

u/s 32, all MTPs are prejudicial to public interest

except when the C/G is a Party or if it is for

Defence related needs or for Internal Security.


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Sec 33- R egn of Agreements relating to R TPs

Certain activities/agreements as mentioned

below, needs to be registered :-

Which restricts the buying or selling of goods;

For purchase of goods to also agree to purchase

some other goods;

Restricting a person to trade only in the goods of

the Seller;To buy or sell at pre-determined prices;


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Sec 33- R egn of Agreements relating to R TPs

To force discounts, rebates or credit;

Restricting the re-sale prices as fixed by the

Seller;

To restrict the supply of goods or to earmark the

market area for business;

Sec 35 states about Registration of Agreements

as ordered by the C/G.


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UNFAIR TRADE PRACTICES ± Sec 36A

UTP is a trade practice, which, for the purpose of

promoting the sale, use or supply of any goods,

or for the provision of any services, adopts any

unfair method or unfair or deceptive practice,including the undermentioned practices:-

Falsely represents that the goods are of a

particular standard quality, grade, composition,

model etc.

Falsely represents that the services are of a


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UNFAIR TRADE PRACTICES ± Sec 36A

( contd..)

particular standard, quality or grade;

Falsely represents second-hand goods as new

goods;

Makes a false or misleading representation

concerning the need for, or the usefulness of any

goods or services; etc.

Sec 37 ± Investigation into R TPs by MR TPC :Whether a RTP has been registered or not, the


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RTP ( contd..)

Commission ( C ) can conduct an enquiry and if

it is of the opinion that the practice is prejudicial

to public interest, the C can order for the

discontinuance of the practice or shall bemodified as the C directs.

Sec 38 discusses about Presumption as to

public interest. Any RTP is prejudicial to public

interest unless the MRTPC is convinced that the

RTP is for the public good.


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Common Sense above all

Facts, as such, never settled anything.

They are working tools only. It is the

implications that can be drawn from facts

that count, and to evaluate these requires

wisdom and judgment that are unrelated

to the computer approach to life.

CLARENCE B. RANDALL

S t 7 2010 PGDM SEM I 5 LEG & TAX 95

Documents

Final for Law