EBL/LFB

Legal Environment ,Contract, Tort,Sale of goods ,NI,Co Law, Partnership,c p ipr,tax,insurance life fire ,marine.

1. Define sale. Distinguish between sale and agreement to sell. o4

International business 1.Contract Act, 2NI 3,C P 4 company 5.Competition law 6.Legal frame work of Ib

Business environment M I
B.E : The sum of all the external forces and conditions that influence the business and potentially affects its performance .These forces include economic factors, socio-cultural factors, politico-legal and materials, labour organisations,customersfactors,suppliers of capital regulating agencies and government technology. Constituents of environment factors: 1.Social: comprising ,customers and employees, social institutions which obtain benefit from business. 2.Economics factors :market, policy of govts, type of eco system rights productions .monetary policies ,banking policies ,price, etc. 3.Politico-legal environment :political and legal institutions. the courts, Political stability ,industrial policy .Liberalization, privatization and nationalization .

4.Technological factors: Know how production and management technology 5.International environment : Membership relation with other countries .WTO.IMF,UNO . Legal environment of Business Law and business is closely related discipline. They are complimentary to each Other. Almost every aspect of business is regulated by law. The legal Environment affects business in the following stages: 1.Instalation of factory /industry. 2.Incorporation /organizational set up 3.Reguation as to business practices. UTP, RTP, Monoply. 4. Labour laws . 5.Consumer protection . 6.Trade specific regulations. Banking business ,insurance. I T,Telecom railway

7. Disputes settlement mechanism. 8.Role of the court. Judicial activism etc. 9.Contitutional framework. List, federal .unitary, democratic, military rule ,governance and values. 10.Taxation. 11.Weight and measures and other standards.

C P M vii/ ib m iii
How to File a Complaint? There is no fee for filing a complaint before any of the aforesaid bodies. The complainant or his authorised agent can present the complaint in person. The complaint can also be sent by post to the appropriate Forum/Commission. The complaint should be addressed to the President of the Forum/Commission.

 Rights of Consumers For the first time in the history of consumer legislation in India, the Consumer Protection Act, 1986 extended a statutory recognition to the rights of consumers. Section 6 of the Act recognises the following six rights of consumers: Right to safety Right to be informed Right to choose Right to be heard Right to seek redressal Right to consumer education

Object and Scope of the Act

The MRTP Act enacted in 1969 gained the status of a specific consumer protection legislation with the amendments brought in it in 1984. Till 1984, there was no concept of unfair trade practice. Other salient features of the Act are: It applies to all goods and services unless specifically exempted by the Central Government. It covers all sectors whether private, public or cooperative. It confers certain rights on consumers. The provisions of this Act are in addition to and not in derogation of the provisions of any other Act. The Consumer Protection Act, 1986 was substantially amended in 1991, 1993 and 2002.

 Where complaint can be filed? 20 lakhs district forum within whose jurisdiction opposite party resides or carries on business. Exceeds 20 lakhs but not 1 cr.state commission. Above one cr.National commission

Objects of the Consumer Protection Act are: To provide for better protection of interests of consumers. In order to meet the aforesaid objective, to provide for the establishment of consumer councils and other authorities. To empower the Consumer Councils and other authorities to settle consumers disputes and matters connected therewith. Applicability. The Act in terms of geographical application extends to the whole of India except the State of Jammu and Kashmir [s.1(2)]. Further, it applies to all goods and services, unless otherwise expressly notified by the Central Government.

Definitions of Certain Terms and Concepts [s.2] Appropriate Laboratory. It means a laboratory or organisation: (i) recognised by the Central Government; (ii) recognised by a State Government or (iii) any such laboratory or organisation established by or under any law for the time being in force. Branch office. Branch office means: (i) any establishment described as a branch by the opposite party; or (ii) any establishment carrying on either the same. Complaint. Complaint means any allegation in writing made by a complainant with a view to obtaining any relief under the Act. Consumer. Consumer means : A person who buys any goods for a consideration which has been paid or promised or partly paid and partly promised or under any system of deferred payment i.e., in respect of hire-purchase transactions.

Consumer dispute [s.2(1) (c)]. It means a dispute where the person against whom a complaint has been made, denies or disputes the allegations contained in the complaint. Defect [s.2(1) (f)]. A defect is defined to mean any fault, imperfection or shortcoming in the quality, quantity, potency, purity or standard. Deficiency. it is defined to mean any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance. District Forum. District Forum means a consumer Dispute Redressal Forum established under clause (a) of s.9. Goods. Goods under this Act shall have the same meaning as assigned to them under the Sale of Goods Act, 1930. Accordingly, Goods means every kind of movable property other than actionable claims and money; and includes stock and shares etc.

`
Manufacturer. The expression Manufacturer A person who does not make or manufacture any goods but assembles parts thereof made or manufactured by others. Member. The expression member has been inserted for the first time into the Act vide the Amendment Act, 1993. National Commission. National Commission means the National Consumer Disputes Redressal Commission established under clause (c) of s.9. Person. The expression person for the purposes of the Act shall include: (i) a firm, whether registered or not; (ii) a Hindu Undivided Family; (iii) a Co-operative Society; Restrictive Trade Practice. A restrictive trade practice means a trade practice which tends to bring about manipulation of price or its conditions of delivery or to affect flow of supplies in the market relating to goods.

 Who can file complaint?

1.Consumer whom goods sold or services provided. 2.Reconised consumer association. 3.One or more consumers. 4.Central govt ot state govt

Utp /Rtp Complaint: Goods suffers from defect/s Services suffers from deficiency/s Price excess Goods hazardous to life and safety. not in standards

 Procedure on Admission of Complaint [s.13] Procedure in respect of goods where the defect alleged requires no testing or analysis. Procedure in respect of goods where the defect alleged requires analysis or testing. Where the complainant fails to appear on the date of hearing before the District Forum. No proceedings complying with the procedure as aforesaid shall be called in question in any court on the ground that the principles of natural justice have not been complied with. Every complaint shall be heard as expeditiously as possible and endeavour shall be made to decide the complaint within a period of 3 months from the date of receipt of notice by opposite party.

Spurious Goods and Services. It mean such goods and services which are claimed to be genuine but they are actually not so. State Commission. It means a Consumer Disputes Redressal Commission established in a State under clause (b) of s.9. which provides that there shall be established for the purpose of this Act a Consumer Disputes Redressal Commission to be known as the State Commission established by the State Government in by notification in the Official Gazette. Trader. A trader in relation to any goods means a person who sells or distributes any goods for sale and includes the manufacturer thereof. Unfair Trade Practice Misleading Advertisement and False Representation. Bargain sale. Offering gifts, prizes, etc. Not conforming to prescribed standards. Hoarding or Destruction of goods. Manufacture of spurious goods
.

Reliefs can be given by the CDRAsS.14 CDRAs can issue the following orders on being satisfied: 1. to removed the defects 2. Replace the goods. 3. Return the price charged excessively 4. Compensation 5. Remove the defects. 6. Discontinue unfair trade practice. 7. Not to offer hazardous goods 8. Withdraw hazardous goods.

9.Cease the manufacturing of hazardous goods 10 payment of compensation to persons who have suffered injury 11.Issue corrective advertisement. 12.Award cost to the parties. The above powers are given to all CDRCs. But the state Commision and National commission may exercise revisional and appellte powers

M v ib m ii

Law of Negotiable Instruments

Meaning and definition of a Negotiable Instrument Meaning of a Negotiable Instrument. An Instrument as referred to in the Act is a legally recognised written document, whereby rights are created in favour of one and obligations are created on the part of another. The word negotiable means transferable from one person to another either by mere delivery or by endorsement and delivery, to enable the transferee to get a title in the instrument. An instrument is called negotiable if it possesses the following features: Freely transferable Holders title free from defects The holder can sue in his own name A negotiable instrument can be transferred infinitum, i.e. A negotiable instrument is subject to certain presumptions

Negotiable Instruments :
It is written promise or order to pay money which may be transferred from one hand to another as a substitue of money. It is piece of paper which entitles a person to a sum of money mentioned in it and which is freely tranferrable from one person to another. Sec.13 P. note.billof exchange or cheque payable either to to order or to bearer. Characteristics : 1.writing. 2.Singed by the maker,drawer 3.It contains unconditional order or promise to py sum of money. 4. Certain money only. 5.Freely transferable 6 On transfer the transferee

Promissory Note
1.An instrument in writing containing unconditional undertaking singed by maker to pay a certain sum of money only to,or to the order of a certain person, or the bearer of the instrument. e.g.I promise to pay B or order Rs 50000 I acknowledge myself to be indebted to B in Rs 500,to be paid On demand for value received.The following are not p.n 1.I promise to pay B R5000 and other sums which shall be due to him. 2first deducting there out any money which he owes to me . 3.seven days my marriage with c ` 4. After death of c provided c leaves enough. 5and to deliver my black horse.

2.It must contain express promise to pay. Not Acknowledgement. Received Rs 500 which I promise to pay to A is good. 3.Promise must be unconditional .After marriage .After death provided deceased leaves enough. 4.Promise to money only. 5. A definite sum of money. 6.It must contain certain parties. Maker and payee must be certain. 7.It must be signed by the maker. 8 Intention to make p.note and its delivery. 9.RBI P note can not be made payable to bearer. .

Bill of Exchange
In writing containing unconditional order, signed by the maker, directing a certain person to pay certain to, sum of money only to, or to the order of certain pesonor to the bearer of the instrumentss. 1.Writing 2.Express order to pay 3.Unconditional order. 4.Only money only 5.Definite amount . 6.Parties must be certain . 7.Signed by the drawer.

8 Delivery 9 other formalities. Rs 500 Jaipur, date 21.10.10 Three months after date pay to c or order the sum of rupees five hundred for value received. To, B Address

Stamp.

Bill of Exchange/Promissory note 1 Undertaking/order 2.Two parties /three 3.No acceptance /acceptance 4.Liability of maker is primary/secondary 5.Immediate relationship /immediate relationship with accepter 6.Never payable to bearer/can be 7.Generally written by debtor/creditor to drawee 8.No notice /Required.9. no sets 10.No ptotest. Conditional 11.Conditional acceptance.

Cheque is bill of exchange drawn on specified banker and not expressed to be payable on demand. sec 6 of N I Act. 1 All characteristics of B E.. 2.Drawn on specified banker 3 IT must be payable on demand 4 No acceptance is required Difference BE Cheque

Dishonor of cheque S.138 1.Due to insufficient fund it is offence. 2.Punishment two years or fine double the amount or both 3.Cheque should have given for discharge of legal debt or liability .Consideration is presumed .Meaning thereby that Cheque is given for discharging legal debt or for liability. 4.Presented within period of six months from the date on which it is drawn or within period of its validity. 5.Information to drawer within 30 days from the date of information a to dishonor from bank. 6.If payment is not made within next 30 days from demand notice. Cause of action arises on 31st day.

In case of company any person who is in charge of affairs of company Shall also be liable to be punished. S.141 Director secretary ,manager any other officer of the company shall be liable punished. Company here means any body corporate includes firm , associations,.

Company law m vi/ iv (ib)

Characteristics of company 1 Voluntary association 2.Creation of law 3.Artificial person 4.Really 5 body corporate corporate personality 1.Independent existence. One man company S.34(2) 2 Limited lIability 3 Perpetual succession.

4.Separate property 5.Tranferabity of shares 6 capacity to sue and be sued. 7.Professionally managed. Disadvantaged 1.Lifting the corporate veil Grounds a. Prevention of fraud. Gill ford Motor company v.Horne b. Tax evasion. Re Dinshaw Manekji four companies were floated and agreed to hold investment as an agent. Income of the companies were given to D as loan. Premises were sold to new company

c. Avoidance of welfare legislation .Dock labour welfare scheme was attempted to escaped by forming three dummy companies so that benefit under scheme could not go to the labour because number requirement for giving benefit is not fulfilled. d. Determination of enemy character. Daimler co Ltd. V continental tyre And Rubber co. e. Agency or trust. Statutory Exceptions 1.Members falling below. 2.Fraud by officials of the co. 3.Mis-statement in prospectus. 4.Ultra vires acts . 5.Dishonour of cheque.

Partnership and company

1.Partnership Act 2.Unlimited liability 3 Membership is limited 10/20 4.Death brings dissolution. 5. No separate personality 6. Managed by partners themselves. 7.Agency in it partner is agent. 8.Share can not be transferred easily. 9.No ultra vires. 1.Companies Act 2 Limited liability. 3.Membership unlimited/larger in pvt. 4 Death does not affect continuance. 5.Legal personality. 6.Managers are directors etc. 7.Members are not agent. 8.Tranferablity of shares . 9.Ultravires applicable.

HUF and company

1.Governed by Hindu law 2.Member by birth. 3 karta is manager 4.Not legal person. 5.Joint property . 6.Manager is liable along with other members. 1.Principally co Act 2.Voluntary by subscription 3. Managed by professionals 4 legal person 5.Property belongs to co. 6.Co is person itself is liable.

7.Only amongst Hindus. 8.No registration is required . 9.Dissolution by partition . 10.Shares of members are varies with birth or death 11.Male dominated. 12.No kinds

7. Secular institution for all communities 8.Registration is required. 9.Dissolution vie winding up. 10.Shares are fixed . 11.Not at all. 12 .Kinds

REGISTRATION OF COMPANY
PROCEDURE- S. 33 AN APPLICATION HAS TO BE FILED WITH THE REGISTRAR OF COMPANIES. APPLICATION MUST ACCOMPANY File DOCUMENTS MEMORANDUM OF ASSOCIATION ARTICLES OF ASSOCIATION, IF NECESSARY. THE AGREEMENT, IF ANY, WHICH THE COMPANY PROPOSES TO ENTER INTO WOTH ANY INDIVIDUAL FOR HIS APPOINTMENT AS ITS MANAGING OR WHOLE- TIME DIRECTOR OR MANAGER or Secretary.

S. 12 mode of forming an Incorporated company enables any 7 persons ( 2 for a private company) to associate for any lawful purpose and to get themselves incorporated into a company with or without limited liability. Documents are presented to Registrar, if complete he registers the company and other documents & places the name of company in the Register of Companies. A certificate of Incorporation is then issued. Certificate is conclusive . For any error ,omissions remedy is get the co wound up. Commencement of business : Private co. can start forthwith but public co.has to obtain certificate of commencement of business.

Pre-incorporation of contract Generally it can not sue on behalf of co. Also can not be Sued .However , promoters could be made personally liable for no-existent principal. Acts can not be ratified because principal must be in existence on the day act to be ratified. Co could be principal for that act .However, sec 15 of the SRA co. may adopt it if it is warranted by the terms of incorporation. Similarly, under sec 19 SRA third party can do so against the co.

Registration must be supported by a declaration stating all requirements of the Act relating to registration have been complied with. S .33(2)- Declaration must be signed by an Advocate of Supreme Court or of a High Court or an Attorney or a Pleader entitled to appear before High Court or a Secretary or a Chartered Accountant, in whole time practice in India who is engaged in the formation of a company or a person named in the articles as a director, manager or secretary of the company.

Memorandum of Association ( M.A)& ultra vires ( U V) Articles of association ( A.A.) binding force/Indoor management ( I D M)
Fundamental document and it contains conditions of incorporation 1 .Name clause 2.Rgd office clause 3.Objects clause 4.laibility clause. 5.subscription clause. 1.It adopt any name but should not be in violation of Names(Prevention of improper Use) 1993. Act. Not be Undesirable in opinion of C G. not resemble with name of existing co. Prior approval system is available .Ltd must affixed if it is so. 2. State in which Rgd office is situated must be stated. Within 30 days of incorporation exact city and place must be given to Registrar. 3.Most important is O C. Main objects ,to be pursued immediately and others not included in above. Protection to S.H,/creditors/discipline on mgt. Ultravires Vires (beyond the powers )

Ashbury Rly Carriage co v white :objects was related to rly engine Wagon plants .Riche was to be financed by the co. G Mtg O.Keyed it. Co. repudiated contract. Enforcement was not allowed by H.Lords. London county council v Attorney General. tramways not allowed to run omnibus. A. Laxmanswamy Mudalaier .Vs L I C.charity etc not allowed to run technical knowledge. Consequences of U.V 1.Injunction against co. 2.Personal liability of directors. 3.Breach of warranty against directors. 4.U V property goes to co. 5.U V contract is void ab initio.6. U V torts co. can be made liable.

4.Liability ltd by shares or guarantee. 5 .capital nominal capital no. and nominal value of shares. 6.Subscription clause: desirous to form co. and agreed to take shares set opposite to their names. Articles of association of co (bye laws for gen adm) The following COs must have A A. i.Unltd ii.ltd by guarantee iii.ltd by shares. Model form is also given in Sch I

Difference between M A / A A
1.Supreme 2.Co, have different 3 Ultra vires 4 .Change is difficult 5.Objects 1.Subordinate 2.May be similar 3 Intra vires 4 Amendment is easier 5 Rules and regulations for internal mgt of co.

Binding Force Of M A .A A
Sec 36 .Bind members and co in same manner as if they were signed by members and co. 1. On members: BordLandTrustee V. steel brothers In case of bankruptcy of members of members has to transfer shares to a person on price decided by the Drs. Trustee of bankrupt member said no .held he is bound. 2. On company : wood V. Odessa waterworks co. Dividend will be given in cash. Co. proposed to issue debenture instead dividend .Held can not do so. 3. Between members :Rayfields V Hands. Members intending to transfer shares must inform directors .the directors must take at fair value. Yes .Binding inter se 4. .Outsider : Not binding. Eley v .Positive securities life Assu co.Solicitor of co for 5 yrs. Eley was asked to leave before time. He can not no. AA is not for outsider.

Alteration in Memorandum
1. 2. 3. 4. 5. Name Rgd Office Object clause Liability clause Capital clause
1 Spl resolution+ C G But if undesirable O + C G 2 .One to another ordi R the same state spl.Intra state shifting spl+CLB 3. Substantive limits: more economically, new purpose, area, with existing convenient, restrict, sell dispose off undertaking, Amalgamate. Procedural:spl res 4&5 change in capital s 94

Prospectus
Prospectus: An invitation issued to public to take shares or debentures of the co to deposit money with co. No ad unless abridged form of prospectus is attached.\ Contents :1. Dated S.55, 2 registered s.60,( expert opinion+ remuneration+ material contract+ consent of auditor, solicitors bank etc Issued within 90 days from registration. Fine if unregistered Issued. 3.Expert consent s.58 4.Disclosures of s 56.part I capital structure, part II financial information profits, five years dividend part III explanations about I &II 4a.deemed prospectus. within six months from allotment to them or date of offer consideration to be received by the co has not received.

Misrepresentation
1.Damages for deceit : a tort. Derry v Peek (1889) By Act Tramway co was formed allowed o run trams by animal power but may run steam power. but consent of BOT. Prospectus stated they had right to run by steam. Reference to BOT was missing. directors honestly believed consent is formal. Knowingly, without belief in its truth, recklessly, carelessly whether it be false or true. only to direct allot tees .Buyers in secondary market not protected unless there is something to connect them. 2.Compensation U/ S.62 : corresponding s. 43 E C Act

Directors and named directors, promoters who prepared Prospectus liable to compensate to investor who has suffered loss by reason of untrue statement. Defenses: withdrawal of consent, Issue without his knowledge, ignorance of untrue statement & reasonable ground of belief, relied on expert. 3.Rescission :u/ Sec 75 of contract Act. false statement +of facts not of law+ reliance and inducement by or on behalf of co. Limits of rescission: affirmation, , commencement of w.up unreasonable delay .

4. Liability under Sec 56 : S.56 co ,prospectus must contain particulars stated in 56 (1) if not penalty u/s 56( 3) No remedy to subscriber. However allot tee can recover damages from responsible directors. 5 Criminal liability for misrepresentation s.63: Every person who is authorized to issue prospectus shall be punishable with imprisonment for a term which may extend to two years ,or fine which may extend to five thousand rupees

Shares-Allotment
1. 2. 3. 4. 5. Allotment: acceptance of offer to take shares. Rules of allotment: Min.Subscription: Has to be stated and co can not allot unless minimum subscription has been received in cash. If not received 120 days has to be refunded .If not paid 130 days drs are liable to pay interest. Statement in lieu of prospectus: s.70 Prospectus is not issued SLP with Registrar. Avoidable within two months Opening subscription:s.72. not before 5th day from the date of issue of prospectus . Dealt in on S. E. S.73 : If permission is not granted before expiry of ten weeks from date of the closing of the subscription. Over subscription money has to be retuned. General principles a. Proper authority

b. reasonable time c. communicated

Issue of shares at discount

Discount means at price less than their face value. 1.First time it can not be issued. 2.Already once shares of that class has been issued at face value 3.Can not issue before expiry of one year from commencement of business. 4.Resolution must have been passed authorizing such issue. 5. Rate of discount must be given in resolution. 6.Should not exceed 10% except with the permission of CLB 7.Sanction from CLB within two months of the board s sanction.

At Premium
Price higher than its face value. SEBI regulates the same. Amount received must be deposited in securities premium account the fund so collected can be utilized for following purposes: 1.Bonus 2.Write off preliminary expenses. 3.Wrte off commission or discount account. 4.In paying redemption amount for debenture. Underwriting commission sec 76 Co wants success of issue. It enters in contract with financial institution To subscribe shares which remain unsubscribed. The institutions charge commission for this assurance.Now underwriting is compulsory.

Share capital
Not necessary to have it .But if it thought to have it ,it must be stated in Memorandum. Authorized capital : amount stated called as A C Issued capital : Out of AC issued is called I C Subscribed capital : Taken by the public is called S C Called up capital. The amount called is called C C Uncalled capital: Not called capital may be called in future.

Kinds of capital
Ordinary share ( Equity ) and preference shares. Preference share: S.85 Assured preferential dividend and prior repayment at winding up. P S Further divided in cumulative ( dividend cf paid out of profit of subsequent years ) and non-cumulative ( no cf )

Participating and Non participating ( p s & non-ps)

After payment of dividend to both ordinary and preference sh.holder if any surplus is paid to p s ( P S) and not so ( N P S). Presumption as to non-participating unless there is clear provision to that effect. Redeemable preference shares (Sec 80) Paying back. Restrictions are a. Fully paid b. redeemed only out of profits c. sum equivalent to the amount paid on redemption must be transferred to capital redemption reserve account. Irredeemable ps can not be issued Maximum period is 20 years. Co can not issue shares not redeemable within 20 yrs. Alteration of capital :a. increase. b. consolidate the whole or part. C. convert in stock or vice versa d .sub-divide in smaller e.cancel.

Reduction of share capital

Sec 100 unlawful unless sanctioned by the court.

It may reduce in

following ways :
1.Exinguish or reduce liability of s.h. 2.Cancel paid up capital which is lost or is unrepesented by available assets. 3. pay-off any paid up capital. Authority must be in A A + special resolution +court permission. Court before granting reduction must take care of interest of creditors, Shareholders After reduction liability of members explained in sec 104.

Further issue sec 81

After expiry of two yrs from incorporation or one yr from the first allotment. Must be issued to existing shareholder. This section does not apply special resolution has been passed or ordinary resolution + permission of central government. And also does not apply in case of exercise of an option attached to debentures or loans raised by the co. Central government has power to convert into shares or debentures issued to or loan taken from public financial institution. Purchase of own shares ( S.77 ) Not allowed to do so unless reduction is sanctioned by the Court. Exceptions. 1.Lending of money by banking co 2.Purchase of fully paid up shares in the co by trustees for or on behalf of the companys employees.

Buy Back of shares S 77-A

After 99 it is possible if the following conditions are satisfied. 1.Payment of buy back should be made free reserve, premium account. 2.Provision in A A + special resolution + amount involved in payment shall be less than 25%of total paid up capital. 3. After buying back the debts owned by the co. should not be more than twice the capital and free reserve 4.Buy back shares should be fully paid up. 5.Declaration of solvency has to be filed with registrar co before implementation. 6.Physical destruction of securities which has been brought back. 7.No further issue no bought back shares. 8.Register.return.

Directors
Directors as agents: co. acts through directors .Relations are of that principal and agent . As trustees: properly speaking not exactly trustee. But for the money that comes to their hands if misapplied they will be held liable as trustees of co. Directors are organs :Bd of directors are the brain of the co which is the body and co can and does act only through them.

Appointment

Only individual can act as directors. S 253 First Directors : Subscribers to the M A are the first drs. Hold up to first the date of the first G M .S.255 AGM : Public co or its subsidiary private ,of the total only one third can be given permanent appointment. Rest are liable to retire by rotation. Other director of public co or private co, non-subsidiary private co may Be appointed at general meeting of co and subject to A A and regulations .In case of rotational drs their term can not be prolonged by non- holding of A G M.

Reappointment:
Vacancies are to be filled in same AGM or may decide not to fill up ,in such case adjourned for week. If on adjourned no one is appointed retiring will deemed to have continued but re appointment is not possible a. if earlier put to vote but ,lost. b. Retired is not wiling c. Incurred disqualification d. Spl or ordi,res is required. Fresh appointment S.257 Can be made. Notice of 14 days by dr or any other member .Co must inform seven before the meeting.

Appointment by nomination S.255(2)

Every holder of 10% shares can nominate if A A provides so.

Appointment by voting S.263

En block not possible .Has to be voted individually. Unanimous election is possible. Appointment by proportional representation .Sec.265. Minority can bring their dr. by this method. also known as cumulative voting. Casual vacancies S 262 Vacated before expiry of his term .according to A A. If no procedure by the bd. so appointed will enjoy only unexpired term.

Additional directors
A A so provides. Number should not exceed maximum by the Bd. Appointment by the Bd a. Additional directors b. casual vacancies may be filled up. b. Central govt. or the CLB can do so. Qualifications of directors Share qualification can be prescribed by A A. Value should not exceed five thousand . Disqualifications :Unsound mind. insolvent, six months imprisonment and five years and five tears of gap has not expired.

Vacation of office by director

The office of drs is vacant if he incurs above disqualifications. And also On following grounds : 1.Absents from three consecutive meeting of bd or all within 3 months Without leave of absence. 2.Takes loans in contravention of s.275 3.Contracts co without disclosing his interest. 4.Does not take qualification shares. 5.Disqualified by court. 6.He is removed 284. 7.Ex officio goes with office. Insolvent or conviction but if appeal is preferred within 30 days not be removed until the expiry of 7 days from disposal of appeal.ame if second appeal is filed.

Removable of directors
By shareholders: co may remove ,by ordinary resolution
remove a dr before expiration of his term. Exceptions : a. Appointed by central govt .b Life time dr of pvt co before april1,1952 c. Appointed through principle of proportionate reorientation system. Notice be given 14 days Opportunity of being heard be given .Next appointment in the same meeting if spl notice is given.

By Central Govt:
Guilty of fraud. business not conducted in accordance with sound business principles, injury to trade or to defraud creditors. CLB and after that he is removed.

By C L B :On application for prevention & mismanagement CLB can set aside
appointment.

By resignation:

Powers of the directors

Gen. powers vested in Board. Sec 291:
Bd shall be entitled to exercise all such powers and to do all such acts and things as the co is authorized to do. In following Circumstances G Meeting is competent to act even it is delegated to Bd: 1.malafides: They themselves are wrongdoers or malafide G M is entitled to do it. 2.Bd is incompetent. 3.Dead lock. 4.Residuary powers. Statutory provisions : such functions can be exercised by Board only by passing resolutions.

a. Make calls b. .issue debentures c. Borrow money d. Invest funds of co e. To make loans. The following can be exercised with the general meeting approval S. 293:public co or subsidiary for public co: a. Sale or lease of undertaking . b. Extension of tome for payment of debt due by dr. c. Investment of compensation received on compulsory acquisition of securities. d. Borrowing beyond paid-up e. contribution to charity beyond 50,000/-.dealing with dr can not be done alone bd sanction is must.s

Duties of directors
Fiduciary obligations 1.Liability for breach of trust. Must act for the benefit of the co 2.Directorspersonal profit .personal property sold to co made profit must be retuned to co. 3.Business opportunities . Must use these opportunities for the benefit of co. Directors duty of care and skill 1.liability for negligence: Reasonable care is required. 2.Exclusionof liability clause is bad. S 201 3.Duty to attend the Bd meetings. 4.Duty not to delegate. 5.Duty to disclose interest.

Meetings
Types of meetings Statutory meeting :The first meeting of shareholders of pub.co .Within
six months from date of commencement of business. If not held w.up All imp facts are to be placed with it. Statutory report is to be sent to the Members before 21 days the day on which it is to be held. Important financial particulars.S.165. Annual General Meeting:S.166 Meeting of shareholders at least one in year. First within18 months from the date of its incorporation. Gap between two meetings should not be more than 15 months. If co fails to hold meeting members may CLB which give direction or may hold .And fine be imposed . Important business annual report ,appointment of directors, auditors ,dividend

Called ordinary business transacted. Other matters are called spl business. Extraordinary General Meeting. S.169 All meetings other than AGM is called EGM. Board or may call it on requisitions . Holders of one tenth of paid up capital or voting power. Only the matter stated in requisition is be taken up .No new item. It should be deposited within 21days to call meeting .It must be held within 25 days. If directors fail ,requisitionists may call it. CLB S .186 can call AGM if for any reasons become impractical to call It. CLB of its own or on application of members or directors call it. Essentials of valid meeting 1.By proper authority; Bd, Requisitionists or CLB as the case may be.

2.Notice S171-172 Proper notice should be given to the members. Deliberate omission to a single member invalidates meeting. Accidental omission is not fatal. Writing and clear 21 days before date of meeting.21 days are counted from receipt of notice. Deemed to have received on expiry of 48 hrs. Pvt co may have spl provision for notice. Contents of notice : a. Place day and hours. b. Ordinary business and spl business. All other spl and business at EGM spl .Spl business require explanatory note. 3.Quoram S 174. Unless otherwise provided 5 in public and 2 pvt min are required. Requisition meeting if not present within half hr.meeting stands dissolved.

In other cases automatically adjourned to re-assemble on the same day next week same day same time .If members do not present within half an hr. member actually present are enough to constitute quorum. 4.Chairperson; A A regulates this matter .If nothing in A a members present may elect. Court may appoint independent chairperson. 5.Voting : Business of meeting is done inform of resolutions passed at meeting. After resolution is discussed it is put to vote. Show of hands .if not satisfied by it poll can be demanded. Taking poll means recording the number of votes cast for or against the motion. Voting by proxy: A A must provide proxy voting .Writing deposited before 24 Hrs.

Resolutions: Two kinds of resolutions. Ordinary and special resolutions . Resolutions passed by simple majority is ordinary resolution. Special Resolution is one where votes cast for the resolution is three forth majority. Resolutions must be registered with Registrar companies. Minutes : Records of all the meetings have to be kept. Fair and correct summary has to be recorded. It must be kept at registrar office and be made available for inspection by every members during business hours and without any charge. Denial is punishable.

Winding up of co
Winding is a process where life of co is ended and property is administered between creditors and debtors. Types of winding up 1.Compulsory winding up 2.Voluntary winding up creditors and members. 3.Voluntary winding up u/supervision of court. Compulsory winding up / by court. Grounds : s.433 Who can apply?> 1.Special resolution. 1.co itself. 2.Default in holding statutory meeting. 2.creditor /contributories. 3.Failure to commence business. 3 do. 4.Reduction in membership. 4. do

5.Inability to pay debts. Creditors 6.Just and equitable : a. Dead lock b. Loss of substratum c. Fraudulent purpose. d. Incorporated or quasi-partnership. Registrar except on spl resolution Procedure 1.Liquidator is to take charge of co/ provisional liquidator 2.21 days of his appointment directors will prepare statement of affairs. 3.Report by Official liquidator. capital, causes of failure. 4.L will take custody of property of co.

Powers of L with the sanction of the court. 1.Institute or defend suit. 2.Carry on business pending winding up. 3.Sell the immovable property. 4.Raise securities 5 to do all necessary acts. Powers of L no sanction is required. 1.Execute deeds issue receipts use seal. 2.Inpect the records of co. 3.Prove insolvency of any contributories. 4.N Is 5.Appoint agent 6.Carry on business

Committee of inspection
The court may order appointment of committee of inspection with L. Not more than 12.The L shall form it within 2 months. It may inspect account prepared by the L. General powers of court 1.Stay winding up 2 settlement the list of contributories. 3 .adjustments of rights of contributories. 4.Arrest absconding contributories 5.Order the right of set off the claim of contributories. 6.Order the delivery of property to L 7.Public examination of promoters, officers etc. 8.Dissolution of co.

Voluntary winding up
By two ways
1.Passing ordinary resolution: Fixed duration and has expired. 2.By spl resolution Members voluntary w.up : declaration of solvency by majority of directors and has to be verified at Bd meeting.s 488 If not possible it will be creditors voluntary winding up. Declaration is made but co is not able pay debts forthwith meeting of creditors be called and proceed as if creditors w.up Procedure : L appointed in GM and remuneration is fixed. Notice to Reg .Bd powers ends L takes over. Final meeting to put account of w.up.

Creditors winding up

Meeting of creditors be called. Bd is to lay a full statement of position of the co affairs .L is appointed in this meeting. Both members and creditors nominate L. If name is different creditors nominee shall be L Member may to court for appointing some different person. Committee of inspection is by creditors. 5 are nominated by creditors and five by co. creditors do not agree application may made to settle this. L takes charge .Powers of Bd come to an end . Provisions applicable to all voluntary w.up : 1 Co has to submit statement of affairs to L. 2.Assets of co, cash in hand 3 debts and liability of co. 4.Names of creditors 5. Debt due to co.

Powers of L

Sale :76 to 123 contract Act.1930 shifted to new SGA Contract of sale of goods (c s g) is a contract whereby the seller transfers or agrees to transfer property in goods. Sec 4. Includes both sale and a/s (agreement to sale). Sale :Property in goods is transferred from seller to buyer. 4(3) A/S: Property in goods is to take place at future time or subject to some conditions thereafter to be fulfilled. Distinction : 1.Ownership is transferred and yet to be transferred in a/s. 2.Executed in a/s executory. 3.Respective parties to bear the losses

Sale and agreement to sell

Specific: specified ring ,or a watch or a horse. Unascertained : Not identified Ascertained: when goods are identified they became ascertained. Future goods: not in existence at the time of contract of sale. Sale and Hire-purchase: HPA under which goods are let on hire and which the hirer has an option to purchase them as perm terms agreed. 1.Poossession is delivered by owner to hirer on condition that he will, pay price in installments. 2. Property therein will pass on the payment of last installment. 3.It must be writing. 4 Buyer has option to terminate the contract. 5.Hirer does not became owner till last installment is paid. 6.Price is paid .whereas in HPA installment is paid in name of price.

4.Seller refuses to deliver goods .buyer can recover the goods but in a/s only of damages and not the goods. 5.Reuses price seller can recover the goods in case of a/s damages only. 6.Law of insolvency. Sale buyer insolvent Official liquidator could recover the property .In case of a/s can not recover property. vice versa. 7.Slae creates jus in rem whereas in a/s personnam. Essentials of contract of sale : 1.All requirement of contract be fulfilled. 2.Two parties 3.Goods is the subject matter of sale. Electricity, water ,gas and steam are intangible but has other attributes such as transmission transferred, delivered, stored ,possessed etc same as Human organs ,hair ,blood ,urine, ova, sperm, and embryos are movable property, therefore goods.

7.Sale of goods Act whereas HP Act.

s ) In sale transfer of ownership and Possession of the goods as they are .But c w s main object is to exercise skill and labour upon goods before transferring the ownership and possession. S G A does not apply thereon. Barter: Goods are transferred for goods. Money for money. land for land .Element of price is missing. Pledge and sale 1.Goods are given as security. Ownership is not transferred.
Contract for work and skill :( c w

2.Not full price is given. 3.Govern by Contract Act whereas sale is governed by the SGA 4.Pledged goods can be sold if money is not paidn after giving notice to the pawner. 5.Ownership and possession is bifurcated in pledge not in sale. Mortgage and pledge :Both are connected with loan advanced and Property is given as security. Mortgage Pledge 1.Immovable property. Movable property (Goods 2.Tranfer of property Act Contract Act 3.Six kinds single No kinds 4.Possession may or may not must be given to pawnee To mortgagee

Passing the property Means when ownership is transferred to buyer. The exact time of transfer is important since following issues are related to it: 1.Risk passes with property. 2.Incidence of tax is determined. 3.Insolvency property of owner insolvent goes to receiver /liquidator. 4.Rights of unpaid seller are depending on ownership. Rights starts after transfer. 1.Specific Goods : A. At such time as the parties to the contract intend to transfer it. By post subject to acceptance of Bill. not pass until acceptaed. S19. 2. Specific Goods in deliverable State: when the contract is made price may be cash or deferred. S 20.Stack of hay sold on 6th Jan.Price was on2 Feb.Buyer did not remove. due to accident fire broke out.

Specific goods are in d/s but to be weighed o tested not until it is done. even buyer has to do for his own satisfaction .Rods were in d/s sold some of them lifted and some could not.RLY seller wanted to sell reamining unlifted Rly could not. 3 Specific goods not in d/s: do not pass until seller does all things to put it in d/s and buyer has notice of it.E.g to put in bags.Gift item to be packed . Unascertained Goods Goods which are not specifically identified at the time of making the contract of sale. Property will pass as soon as identified and set apart for the pupose of delivering to buyer. Sec 10 and 23 Two conditions : when ascertained and goods are appropriated to the contract.

1.Ascertainment of goods : Means process by which the goods to be delivered under contract are identified and set apart .It is unilateral act on the part of seller. 2.Appropriation of goods to contract :Identified and set apart with the mutual consent of seller and buyer. It may take place in the following ways; a Separating from other with the consent of the buyer. b. putting contracted quantity in the receptacles boxes, gunny bags and in bottles. c. delivering to the carrier or other bailee for the purpose of transmission to buyer, Setting apart the goods is ascertainment and if same has consent of buyer it becomes appropriation. e.G oil to be filled in bottles. Sugar in bags .Half were ready delivered.

Remaining were made ready. informed to the buyer and buyer said later on .Meanwhile destroyed loss of buyer not of seller. sale on approval Section24: 1 when buyer accepts the goods . 2.when he adopts the goods . 3.When he fails to return the goods. Time fixed or reasonable time expired. C I F cost insurance freight. Price includes all three and buyer is to pay. Property in goods transferred when documents are delivered and accepted. If not accepted it is breach of contract and damages not the price.

Free on Board: Seller has following duties: 1.To load the goods safely on ship named by buyer. 2.To pay expenses of loading. 3 To deliver bill of lading to the buyer. 4.To give notice of shipment so that buyer may obtain insurance. Transfer of ownership As soon goods are loaded on the board of the ship. Ex Ship contracts :Seller has to deliver the goods at the port of destination .During the voyage it is sellers risk. It is for seller to get insurance. Tranfer of ownership :only when actually delivered at port of destination.

Condition and warranty

Representations or statements are usually by the seller in the course of sell. Some are opinion only of seller. Some may part of the contract of sale. Buyer relies them, are called stipulations. Every stipulation is not of equal significance. Most important : is called condition and of lesser importance is called warranty. Condition : Sec 12 (2) .is stipulation essential to the main pupose of contract breach of which gives to a right treat contract as repudiated. Car suitable for touring purpose. Seller suggested Bugati car. Unfit. Types of conditions .Express and implied. Express condition Expressly agreed upon by the both parties at the time of contract of sale.

Implied condition: Not included by express words but law presumes that parties have incorporated in the contract. These are read in every contract unless expressly excluded. Following are the implied conditions. 1.Condition as to title. Seller has the right to sale in sale in a/s will have right to sale. Stolen car. true owner can recover from buyer. S 14 2.Description: sold by description it must correspond to description.S15 3.Sample : Must match with sample. S 17 opportunity of comparison and merchantability. Free from latent defects. 4.Sample as well as description. Must correspond to both. 5.Quality or fitness for the buyers purpose.16(1) Buyer requirement made known to seller, he relies on sellers skill and judgment and sellers business is to supply such goods.

More than one purposes, to seller must be informed. Hessian- cloth can Be used for packing but not good for packing food stuff. Purpose for packing foodstuff was not informed can not reject goods. Special circumstances as to use must be disclosed otherwise seller will not be responsible. Tweed coat.B developed skin disease due to his oversensitiveness. Patent or trade name .If purchased under a trade name or patent name no c/w. 6.Merchantability:If goods are for resale must sold under that description. If for self use reasonably fit for pupose for which they are used. Supplied under description and seller usually supplies the same . 7.wholesomeness:fit for human consumption.

warranty
A stipulation collateral to the main pupose of the contract, breach of which gives rise to claim damages .No right to reject or repudiate. Healthy horse .S told as to speed capacity 40 km per hour .Later on found only 20.He can not reject because it was warranty only not condition. Express and implied Implied warranties are : 1.Quiet possession.14 (b): B should not be interfered .Typewriter stolen sold to B. B may recover damages . 2.Free from encumbrance: Hypothecation car sold without clearing the loan. Financer of car was paid by the B.B can claim damages 3.By customs and usages:

Change of condition to warranty Voluntary circumstances and compulsory circumstances Voluntary circumstances : 13(1) Waiver and option to treat c as w Compulsory circumstances :13(2) contract is not divisible .B have partly accepted partly rejection not allowed. Caveat Emptor Let the buyer beware. B purchases goods on his own risk. Sec. 16 incorporates this doctrine. subject to provisions of the Act and any other t. b. i f there is no implied c/w as to quality or fitness for any particular purpose of goods supplied under contract of sale. Exceptions:1.condition as to quality 2.Merchantabilty.3.wholesomeness 4.Cusoms and usage of trade.

Rights of unpaid seller

Unpaid seller who is ? Section 45 1.Whom whole price has not been given. 2.N I drawn but dishonored . Rights of unpaid seller : 1.Against the goods and 2. against buyer. 1.Right of lien 2.stoppage in transit 3 resale 1.R/L: I. property in goods is transferred from seller to B .And possession is with seller.S 47. ii. Sold without credit or credit but term has expired or B has become insolvent even if on credit or credit terms have not expired. iii. Linked with possession not title. iV. Against all goods which are with seller. V. Only for price not for other charges.

Vi. Can be exercised on non delivered goods may be some delivered. Termination of Lien I. By payment of price. ii. Delivery to the carrier . iii. Buyer has obtained possession of goods lawfully. iV. By waiver Stoppage in transit When goods are delivered to carrier or other bailee for transmission to the buyer. seller may stop the goods. Sec 54 After getting back goods seller has only right to retain the goods till B pays the price. After giving notice he may sell the goods. Conditions: 1.S unpaid 2.B must have become insolvent 3.Ownership has passed to B.4.goods must in trasit.

End of the transit : 1 delivery to the buyer . wrongfully delivered after notice will not bring an end of transit. 2.Interception by the Buyer .Even before reaching to destination. 3 Acknowledgment to the buyer .Holding on behalf of buyer. 4.Reection of goods by the buyer does not bring transit to end if goods are in the hands of carrier or other bailee. 5.Part delivery: remainder could be stopped. 6.Morethan one carrier as a part of original contract transit continues till last destination. New destination is shown it continue till final destination is arrived. How to stop? Notice.

Resale: Where B has defaulted in paying and repudiates the contract the becomes owner has right to sell the goods. The seller sells when sale remains unrescinded in such a case he is selling defaulting Bs property. He can reserve the right to sell the property even without giving notice to the buyer.

Tortuous Liability
Tort has been derived from the Latin term Tortum which means to twist. Conduct which is not lawful,rather twisted,crooked or unlawful wrong. No scientific definition has yet emerged because it is based judicial decisions and because of the diverse species of wrongs are included. The Limitation Act : Tort means a civil wrong which is not exclusively a breach of contractor breach of trust. Salmond- It is a civil wrong for which remedy is common law action for unliquidated damages and not breach of contract or breach of trust. Winfield , Tortiuous liability arises from the breach of a duty primarily fixed by law: this duty is towards persons generally and breach is redressible by action for unliquidated damages.

Basis of tort: 1.This law exists for the purpose of preventing men from hurting one another whether in respect of property ,their presence, their reputation or anything which is theirs. 2.This law is founded and structured on morality that no one has aright to injure or harm others intentionally or even innocently. 3.Purpose is to adjust these losses and offer compensation for injuries by one personas a result of anothers conduct. Nature of Tort: 1.Civil wrong opposed to criminal wrong. 2.Wrong is other breach of contract or breach nof trust. 3.Tort is redressible by an action for unliquidated damages.

Tort and crime 1.Civil wrong ,crime is criminal wrong. 2.Plaintiff and defendant, prosecution and accused. 3 Tort based on judicial decision crime is based on statutory law (I.P.C) 4.Civil procedure applies in crime criminal procedure applies. 5.Damages are awarded in crime punishment is awarded. Same wrong may be civil and criminal .No harm to bring both action. Tort and Breach of contact 1.Tort is based on judicial decisions whereas contract is on the C .Act. 2 In tort duty is fixed by the law,in contract fixed by parties. 3.In tort it is violation of right in rem whereas in contract it is violation of Right in personam.

4.In tort damages are unliquidated but in contract damages may be fixed by the parties beforehand. 5.Some torts motive is important whereas not so in tort. 6.Defaulting is stranger to plaintiff not so in contract. Similarities In both civil action is brought in case of injury. Parties in suit will be called as plaintiff and defndant. Constituents of tort 1.Wrongful act or omission on the part of defendant.(act or omission) 2.Legal damage not social or moral political .Explained in two maxims. Injuria/ sine damno : Injuria infringement of legal right. Sine means without. Damno means damages.

Violation of legal right without causing any harm. Ashby v white ,Plaintiff was voter wrongfully not allowed to cast his vote. The candidate won with thumping majority whom he wanted to vote. Court grant compensation because his right is infringed. Municipal corporation Agra V Asharfi lal M.C. he was not to vote .He was given compensation. Bhim Singh V .J and K. Detained unlawfully ,not allowed to go in Assembly .Compensation was given to him. Damnum Sine Injuria Damage but there is no infringement of legal right, no tort ,no compenstion. Gloucester grammar school case Defendant a school master opened

School in opposite to plaintiff .He suffered huge loss. No compensation was allowed. Chesmore v Richard. A plaintiff mill owner using water for over 60 Years from a stream which was chiefly supplied by the percolating underground water .Defendant dug well on his premises deep enough to stop large volume of water. No compensation was allowed . P.Seetharamayya v Mahalakshama Built a fence prevent damage to his ground by overflow of river. Overflow is diverted casing loss to the neighbor. Town Area committee V Prabhu Dayal .Collector ordered to dismantle the building illegally constructed .The action of collector was right under U.P. Municipality Act. Though huge loss .No compensation was allowed.

Insurance
Fundamental principles of insurance 1.Goodfaith: Both the parties are required to observe good faith. In other words they are required to disclose all material facts within their knowledge. Before acceptance of proposal assured fell seriously ill. Non-disclosure of this fact entitled to rescind the contract. 2.Insurable interest: Pecuniary interest in the subject matter. This elements distinguishes it from wagering agreement. This interest must be real not mere love and expectation.i. In LIC it must exist the time of contract and not at the time of death. ii. At the both tome n iii.Marine insurance at time of loss.

3 Indemnity :Promise to save from the loss is called of indemnity. this means in case of loss only losses subject to limit of insurance could be allowed not more than that. He is not allowed to make profit out of the happening of the loss insured against. But contract of L.I and personal insurance do not fall in this category because death and personal accident can not be indemnified in terms of money. The insurer is liable to pay the fixed amount agreed to be paid on death or personal accident. It is contingent contract and not indemnity. 4.Causa proxima: (proximate or immediate cause) The assured can recover the loss from insurance company only when it is caused by an event insured against, and such event is is the proximate cause of loss. If there is one cause no problem in fixing liability. But loss has been caused by series of causes i.e by two or more causes. In such cases c.p. will apply.

It does not mean the latest i.e. nearest in time .It means the cause which proximate inefficiency i.e. direct ,operative, dominant and effective cause of loss. The cause which sets the other causes in motion and brings about the loss. If proximate cause is within risk covered the assured can recover the compensation. But if the loss is brought about by the cause which is attributable to the misconduct of the assured, the insurance company is not liable. Hamilton Fraser V Pandrof Cargo of rice in a ship was insured against The loss arising on account sea water. Rats caused hole at the bottom of ship. water flowing through this whole destroyed the cargo. The insurance company refused to give compensation .The court said proximate cause was sea water a peril insured against.

Cargo of oranges was insured against loss arising out of collision. The ship collided with another ship. As result of the collision ,the cargo was mishandled and arrival was delayed. Due to delay the oranges deteriorated .Damages could not be awarded because the proximate cause was mishandling and delay. Meat cargo deteriorated due to delay. The meat was thrown away. loss caused not due to perils of sea. Subrogation: Substitution of insurance company in the place of assured in respect to all the rights and remedies which assured has against third party .Assured ,Insurance company. Third caused loss to the Assured. After payment to assured ,I C, may move against third party. 1.Insurance company is entitled to move against third party only when it has paid compensation to the assured.

2. Insurance co .is subrogated to only those rights which are availableto assured in respect of thing insured. 3.Avilble only to the extent value insured. 4.Assured has recovered full indemnity from it. 5 Not applicable in case of life insurance or personal accident case> EX.A insured factory against fire. Loss is caused to him. I C. paid the losses. C a miscreant set fire .I C. can move against C. This right is known as subrogation. As goods were lying in Bs warehouse which was insured. Loss is caused. A recovered From I C .full amount. I C paid to A. Now I C can go B for rights of A against B. There were two ships Ship Rose and Jasmine belong to Mr. x Both were insured by two I Cs Ic1 and Ic 2. Both collided caused loss to ship Rose

Jasmine. Rose was indemnified by I C 1.Rose wanted to proceed against jasmine because fault of J collision took place. He could not because one can not go against oneself. Simpson v Thompson. 6.Contibution : This principle applies only where two insurances companies insured one assured. Loss has be contributed by between two. 1 assured same.2 event insured is the same 3.subject matter same. 4.Policy may be different.5.policies were in force at the tome of loss. 6.One of the I C has paid to assured.7.Does not apply to personal insurance. 7.Mitigation of loss : At time of happening of the event assured is under duty to mitigate loss as a man of ordinary prudence.He is not required to risk his own life.

8 Risk must attach to every contract of insurance: If no risk is attached the consideration fails. 9.Term of insurance : The period for which insurance remains in force.

Life Insurance
Acts ,I Act 1938,L I C Act 1956,I R A Act 1998. Contract L I :a contract by which an insurer in consideration of
certain sum of money (premium) undertakes to pay to the assured (insured )or to person for whose benefit the policy is taken ,a stated sum of money on the death of the insured person or on the expiry of certain period whichever is earlier. It is contingent contract not indemnity contract. Types of Policies L I C Act 1956; 1. Whole Time. 2. Limited period policy. Amount is payable only on the death. 3. Endowment policy .Money is payable on attainment of agreed age or death .

4.Double Endowment :Double the amount is payable after expiry of endowment period. 5 Pure Endowment policy :Policy amount is payable on death, if remains alive only premium paid will be refiunded. 6.Joint Life policies. 7.Convetible policy. Originally whole life .Certain premium is paid for specified period. After expiry of this period Insured is given option to convert it in endowment policy. 8.Participaing profit policy : Bonus is paid to the insured. 9.Non participating. 10.Money back policies. 11.Annuity Policy. The sum is paid annually.

12. Ascending premium: Lower rate at the beginning higher at later. 13.Children endowment :For marriage or education of children. 14.Janata policy :Death by accident is covered. General insurance co. 15.Multipurpose policy: old age marriage ,education of children 16.Sinking fund policies: Fixed amount is paid annually and interest is accrued on it .Amount so accumulated is paid back with interest . 17.Progressive policies : Both premium as well value of policies increases. Principles governing Life Insurances : 1,Insurable Interest : Interest in subject matter of insurance. Peron must have interest in life of person sought to be insured. Husband and wife vice versa, children sons and daughter vice versa. Father has till sons are dependent. Brothers no interest. Creditor .guarantor has in debtor. Employer has interest in the life of employees

. Good faith :Inure person must disclose every thing which might

affect the judgment of insurer. Two policies were taken two were declined not declared in current proposal .concealed the material fact. Heart disease not disclosed. 3.Assignment: passing the rights and liabilities to third party. This may be with consideration or without consideration. Procedure for assignment is given in Sec 38. i. Either by endorsement or separate document. ii. Notice of should be given to the insurance corporation. iii. Date notice will determine conflicting claims . iv. On receipt of notice assignee is entitled to all rights of assignor. v. May be absolute or conditional.

Nomination To appoint some person whom payment under policy should be made on death of insured. i. In text of policy or by endorsement. ii. Can be made if made policy is on his own life. iii. May be at the time of taking or subsequently. iv. Changed or cancelled. v. Notice be given to corporation. vi. Assignment cancels all nominations. vi. Nominee is entitled to money if insured dies before maturity. On maturity he is entitled to take money not nominee. Vii. If nominee dies before insured money is paid to insured.

Position of nominee I . Collecting agent only in event of death of insured. ii. Money due can be recovered from estate of insured. iii. After death of insured money due under policy becomes iv. part of estate of the insured. Suicide by policy holder. If there is no specific clause in the policy insurance can not escape from liability. But if specific denial in policy it is not liable. Within one year of taking policy I C will not be liable. But if assignment is made and same is notified it is liable to assignee for consideration. It may limit liability.

Fire insurance
F I is governed by the I Act 1938 ,General I Business 1972 I C Act ,Indian stamp Act 1899 I R Act 1998. Definition: a contract by which an insurer in consideration of certain sum of money, undertakes to pay to the assured the amount of his not exceeding a specified amount, caused by fire during specified period. Principles : i. Covers loss by fire alone. Fire means production of light and heat by combustion (i. e .by burning). Actual ignition is must. Heating is not enough. Sugar spoiled due to heat. Not covered. ii. Losses like, expenses from efforts to put out fire, removal of goods burning place, destroying or damage neighboring house to extinguish fire and theft during the conbustion.

iii. Insurable interest must exist at both the time. At the time of insurance and loss of subject matter. It may exist in owner, carrier and bailee. iv. The assured can recover the loss only when it is caused by an event insured against ,and such event is is the proximate cause of loss by fire. Origin of fire is immaterial unless it is self caused, covers loss even if goods are set on fire due assured own negligence or inadvertence and unintentional. Loss occurred due to smoking in bed. Jewellery hidden under coal in her grate .Having forgotten she inadvertently lit the fire and it was damaged. Entitled to recover. An insured later on became insane set himself on fire. died but loss to goods insured .can recovered by heirs. Wife lost the temper and set goods on fire .Can recover. iii. It is contract from year to year .

Life contingent Human life whole claim Event is certain Period is lengthy Insurable interest at time of contract Surrender value

Fire Indemnity Fire Actual loss Event uncertain One year Insurable interest both time Surrender value

Marine insurance
Definition: A contract by which an insurer or underwriter in consideration of sum of money ( premium) undertakes to pay to the assured the amount of his loss caused by perils of sea. Sec.3 of M I Act. a contract of marine insurance is an agreement whereby the insurer undertakes to indemnify the assured , in the manner and to the extent thereby agreed against losses incidental to marine adventure. Some important terminology i.Marine perils: Perils (risk or dangers) consequent on or incidental to the navigation of sea. And includes perils of sea, fire, war perils ,pirates, roves ,thieves, capture, seizure, restraint, Detainment, jettison, barratry Sec 2(e)

It does not include every causality .It may be perils of sea or due to sea. Fortuitous accidents or causalities of the seas and does not include ordinary action of winds or waves. Following have been held perils of sea : i. Foundering of the ship at sea ii. Collision with another ship iii. Damage to the cargo by entering of sea water through holes iv. Damage by heating due to closing of ventilators to prevent incursion of water in rough weather. Marine adventure : Adventure where i. any insurable property is exposed to marine perils ii. The earnings iii. Liability to third party

Insurable property: Ship, goods ,or other movable which are exposed to marine perils. Movable property means tangible property the other than the ship, and includes money valuable securities and other documents Jettison :Throwing of goods overboard in order to lighten the ship bonafide, and in emergency . Barratry: Fraudulent practices of the master (captain) of a ship or crew with a View of causing loss to the owner of the ship or cargo e,g intentionally causing fire. Bottomry : Contract by which the money is borrowed by the master of the sea Going ship on security of the ship or ship and cargo both.

Respondentia : A contract by which money is borrowed by the master of sea-going ship on the security of the cargo alone laden or to be laden on board a ship. In above two cases the amount of loan is repayable when the ship and/cargo, as the case may be ,reaches safely at the port of destination. If it lost before arrival at destination ,the money lender loses his money. That is why money has insurable interest. Marine policy : 1name of the assured, subject matter, risk, voyage, sum, name of I C

Essentials
1.Contract 2.Writing and stamped. 3.Not more than 12 months Not in case of voyage policy. 4.Assured must have insurable interest at the time of loss only. Lost or not lost clause. 5.Good faith. S.19 if good faith is not observed contract may be put to an end. De costa a merchant heard that ship to his was captured, did not disclose .Held lack of good faith. i. nationality of insured ii. new mens cloth whereas it were war surplus clothes . iii. ship had grounded and sprung a leak. Sec 20 6.Assignment. 7.Re- insurance means insurance by original insurer.

8.Double insurance : means same subject matter is insured again.

WARRANTIES A SIPULATION, express or implied ,in assurance of certain particulars in connection with the contract. i. Certain particular thing shall be done or not be done. ii. Some conditions shall be fulfilled. iii. Some facts exist or does not exist. Express warranties :incorporated. Port, date on which it will sail, destination ,not to carry contraband ,safety. Implied warranties : Sea worthiness, legality of adventure, nondeviation from the prescribed voyage. If warranties are not followed I C may discharge from liability from loss.

Competition Laws/IB
The Competition Act 2002 Objectives :
1. Establishment of completion commission to prevent practices having adverse effect on competition. 2. Promote or sustain competition in markets. 3. To protect the interest of consumers, and 4. To ensure freedom of trade carried on by other paticipants in markets. Definitions 1 Acquisition :Means directly or indirectly acquiring. shares, voting rights or assets of any enterprise. or ,ii. control over management or control over assets of any enterprise.

Agreement: It includes any arrangement or understanding or action

in concert. 1.Whether or not formal or informal or in writing or not. 2. Enforceable intended tobe enforceable or not. 3.Cartel: an association of producers ,sellers, distributes, trades, or service providers who by arrangement amongst themselves, limit, control or attempt to control the production, distribution ,sale or price of or trade in goods or provisions of services. 4.Enterprise : Person or government who is or has been engaged in any activity, relating to the i. production, storage, supply,, distribution, acquisition or control of articles of goods, or ii. The provision of services of any kind or Iii investment, or in business of acquiring ,holding ,underwriting or dealing with shares, debentures or other securities of any body corporate, either directly, or through one or more of its units or division or subsidiary located any where.

But does not include sovereign functions of govt . Bid rigging : any agreement between enterprises or persons referred to above ,engaged in identical or similar production or trading of goods or provision for services which has effect of eliminating or reducing competition for bids or adversely affecting or manipulating process for bidding. Prohibition of Anti-competitive agreements Sec 3. No person etc. shall enter into any agreement in respect of production etc of goods or services which causes or likely to cause an adverse effect on competition within India .Any such agreement is bad/void. The following activities are presumed to have adverse effect on competition.

i. ii.

Directly or indirectly ,determines purchase or sale price Limits or controls production, supply, markets, technical development investment or provision for services. iii. Shares the market or type of goods and services by way of allocation of geographical area of market or types of goods or services. iv. Directly or indirectly engaged in bid-rigging. v. If such agreement are by way of joint ventures if it increases efficiency in production and supply of goods or provision for services. Examples 1.Tie-in agreements. 2.Exclusive supply agreements

3.Exclusive distribution agreement. 4.Refusal to deal. 5 re-sale price maintenance unless it is stated that prices are lower than those prices may be charged. Exemptions :restrain any infringement of ,or to impose reasonable conditions to protect his rights under 1.Copy Rights Act 2.Patent Act 3.Design Act Abuse of dominance is prohibited Sec 4. there shall be an abuse of dominant position, if an enterprise: directly or indirectly imposes unfair or discriminatory : i. Condition in purchase or sale of goods or services price in purchase

Goods or services . b. .Limits or restricts i. production of goods or provision for services or market. ii. Technical or scientific development relating to goods or services iii. Indulges in practices resulting in denial of market access iv. Makes contract subject to acceptance by others. v. Uses its dominant position in one relevant market to enter in uints or protect other relevant market. Regulation of combinations Sec.5. The acquisition of one or more enterprise by one or more persons or acquiring of control or merger or amalgamation under certain circumstances shall be construed as combination. These Circumstances are : A. shares , Voting right assets 1.Acquirer acquiring assets of enterprise which has assets of the value more than Rs 1ooo crores or turn over of more than Rs 3000 crores in India which after acquisition have

more than Rs 4ooo cr. or turn over of Rs 12000 Acquirer acquiring enterprise which (acquired )has in India or outside India assets of the value of more than $5oo m or turn over $1500 m and after acquisition comes to US $ 2 Billion or turn over more than U S $6 billion. Control over production ,distribution or trading Acquirer acquiring control over production of enterprise (acquired) which has in India assets of the value of more than Rs 1ooo and turn over Rs 3000 cr or outside India assets is Rs US $ 500 m or turn over of more than U S$1500 million after acquisition Will be In India assets of Rs.4000 cr Or turn over will be Rs 1200 cr or outside India US$ 2 billion or turn over of U S $ 6 billion.

Merger and Acquisition

Acquired has india assets of Rs 1000 cr or turn over of Rs 3000 cr , out side the india assets has been of value of more than U S$ 500 m or turn over of U S$1500m after merger or amalgamation acquiring entity will have assets in India of more Rs 4000 cr or turn over Rs 12000 cr, out side the India assets will be U S $ 2 Billion or turnover of more than U S $6 billion.Section 6.no enterprise will enter in to combination which is likely to cause or causes appreciable adverse effect on competition within relevant market in India. Proposal of enter into combination has to be informed to the Commission within seven days of approval by B.O D. Powers of C C (competition commission) Investigation: Sec 20

Either suo-moto or on information relating to acquisition acquiring control or merger or amalgamation c c enquire into whether such combination has caused or likely to cause an appreciable adverse effect on competition in India. Limitation : one year Central Govt . Factors to be taken into consideration: I .Actual or potential of competition imports in through market ii extent of barriers to entry in market. iii level of combination iv. Countervailing power in market V combination and increase in prices. Vi substitutes available in market.

vii .Nature and extent of vertical integration . vii .Possibility of failing business viii. advantage to the economic development . viii. benefits of combination outweigh the adverse effect if any. Likely orders on after enquiry 1.Approve combination. 2. Combination not to take place 3. Modification in combination scheme. 4. Fail to carry out modification .deal accordingly. 5.Party may come with amendments may be accepted or not . 6.The c c may make scheme to implement its order.

1.a.Define sale .Distinguish between sale and agreement to sell. 04 b. Shares for which certificate has not been issued but kept ectronically u/ depository system. shares here are goods or not? 02 or LPG was supplied through pipe. Whether supply of gas is supply of goods.? o2 2.Distinguish ( Any Two ) a. pledge and mortgage b. tort and crime c. Bailment and sale. 02+02