Beruflich Dokumente
Kultur Dokumente
LLP Act, 2008 passed by Lok Sabha on 12th of December 2008 and the President gave assent to the Bill
on 7th January 2009.
LLP Rules, 2009 Notified on 01st of April 2009.
Constituent of LLP Act, 2008
81 Section
4 Schedules
29 Forms
Out of 81 Sections, 75 Sections were so far Notified (Except provisions on Winding up and
dissolution).
Out of Four Schedules, Schedule 1 defines the Mutual Rights and Liabilities of the Partner, in the
absence of any matter in LLP Agreement and other schedules prescribes provisions relating to
conversion
What is Limited Liability Partnership?
Hybrid of Corporate & Partnership business Form.
Limits liability of partners to the extent of their contribution.
provides flexibility without imposing detailed (and costly) legal and procedural requirements.
The organization and operations are on the basis of an mutual agreement.
Features of LLP
1)Body corporate
2)Separate legal identity
3)Perpetual succession
4)Limited liability of partners
5)Only with profit motive
6)Non applicability of partnership act
Benefits as Compared to Partnership Firm
Unlimited No. of Partners
Limited Liability of Partners
LLP is liable to the extent of assets.
No Liability of a partner for the wrongful act of other partner.
No exposure to the personal assets of partners except in case of fraud.
Benefits as Compared to Corporate Form
Easy to Form, Run and manage.
Internal structure and governance through mutual agreement.
No Minimum Contribution
Less Government Intervention
Less requirement as to maintenance of statutory records
Less Compliances
Taxation (Income Tax) of LLP will be like general partnership.
No wealth Tax.
LLP Act-New Features
Mandatory imprisonment with penalty for false statement, fraud and non- compliance of order
of Tribunal/CLB/Court [(Section-11(3),37,30,73)].
Un-limited Liability of Partners and LLP in event of business are carried out with intent of
defraud its creditors or third parties (Sec-30).
Waiver of penalties and protection against future vindictive action to whistle blowers (Sec-31).
LLP is liable to third party to the extent of credit received by it or any financial benefit derived
on falsely holding out of a person as partner of LLP (Sec-29).
Central Govt. by Notification may apply/extend any provisions of Companies Act, 1956
(With or without modifications) to LLPs.
Body Corporate means company as defined under section 3 of the companies Act, 1956 and
includes
a)Limited liability partnership registered under LLP Act
b)Limited Liability Partnership incorporated outside India and
c)Company incorporated outside India
Designated partner : a) Every LLP shall have at least two designated partners who are individuals and at least one of them
shall be resident in India.
b) Responsible for managing the day to day affairs and ensuring the compliances of all applicable laws.
Requirements for Designated Partners : 1) Designated Partner identification Number (DPIN)
2) Only Individual can be the Designated Partners.
3) At least One Designated partner should be resident of India.
4) In case of Body corporate their nominees can be the Designated Partners.
Contribution
Each partner shall bring contribution in LLP and nature & amount shall be disclosed in the
Accounts of LLP.
Contribution can be in tangible, movable, immovable or intangible Form.
In case of tangible/Intangible (other than cash) Form of contribution or contribution by way
of service contract it shall be valued by a practicing Chartered Accountant/Cost
Accountant/Approved Valuer.
Role /rights of partners
1)Right to participate in Management
2)For Business Purposes Agent of Limited Liability Partnership, not of other Partners.
3)Ethical duty to comply with all provisions of LLP Act and LLP Agreement
LLP
Partners
Creditors
Negotiable instrument
Negotiable means transferable by delivery.
Instrument means a written document by which a right is created in favour of some person.
Thus negotiable instrument literally means A written document transferable by delivery.
Definition
According to Section 13 of the Negotiable Instruments Act 1881,
A negotiable instrument means a promissory note, bill of exchange or cheque payable either to order or
to bearer.
Meaning
A negotiable instrument is a written and signed document entitling a person to a sum of money specified
in it and transferable from one person to another person either by mere delivery or by endorsement and
delivery.
Characteristics of a Negotiable Instrument
1) Written instrument with signature
2) Easy negotiability
3) Transferee can sue in his own name without giving notice to the debtor
4) Better title to a bonafide transferee for value
5) Prompt payment
6) Presumptions
Presumptions of Negotiable Instrument
Sections 118 and 119 of the Negotiable Instrument Act lay down certain presumptions which the court
presumes in regard to negotiable instruments.
1) Consideration
2) Date
3) Time of acceptance
4) Time of transfer
5) Order of endorsement
6) Stamp
7) Holder in due course
8) Proof of protest
Conditions of negotiability
Although the Act mentions only three instruments (such as a promissory note, a bill of exchange and
cheque), it does not exclude the possibility of adding any other instrument which satisfies the following
two conditions of negotiability:
2. The person who obtains it in good faith and for value should get it free from all
defects, and be entitled to recover the money of the instrument in his own name.
Documents like share warrants payable to bearer, debentures payable to bearer and
dividend warrants are negotiable instruments.
But the money orders and postal orders, deposit receipts, share certificates, bill of lading,
dock warrant, etc. are not negotiable instruments.
Although they are transferable by delivery and endorsements, yet they are not able to give better
title to the bonafide transferee for value than what the transferor has
Promissory Notes
According to section 4 of the Act,
A promissory note is an instrument in writing (note being a bank-note or a currency note) containing an
unconditional undertaking, signed by the maker, to pay a certain sum of money to or to the order of a
certain person, or to the bearer of the instrument.
The person who makes the promise is called the maker. The person to whom the payment is made is
called the payee.
Characteristics of a Promissory Note
1. It must be in writing
2. It must contain a promise or undertaking to pay
3. The promise to pay must be unconditional.
4. The amount promised must be certain and a definite sum of money
5. The instrument must be signed by the maker
6. The person to whom the promise is made must be a definite person
7. The amount payable must be in legal tender money of India.
Note: No person in India other than RBI or the Central Government can make or issue a promissory note
payable to the bearer of the instrument.
Bill of exchange
Section 5 of the Act defines,
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 sum of money only to, or to the order of a certain person or to
the bearer of the instrument.
A bill of exchange, therefore, is a written acknowledgement of the debt, written by the creditor and
accepted by the debtor. There are usually three parties to a bill of exchange drawer, acceptor or drawee
and payee. Drawer himself may be the payee.
Essentials of a bill of exchange
It must be in writing.
There must be an order to pay.
Cheque
Section 6 of the Act defines
A cheque is a bill of exchange drawn on a specified 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 the electronic
form.
A cheque is a bill of exchange with two distinctive features namely:
(1) It is always drawn on a bank, and
(2) It is always payable on demand
Similarities between cheque and bill of exchange
1) Both are bills of exchange
2) Both have three parties, the drawer, drawee and the payee.
3) The drawer and the payee may be one and the same person in both the instruments.
4) Both must be written and signed.
5) Both must contain an unconditional order to pay a certain sum of money.
6) Both may be endorsed.
Difference between cheque and bill of exchange
A bill of exchange is usually drawn on some person or firm, while a cheque is always drawn on a
bank.
It is essential that a bill of exchange must be accepted before its payment can be claimed. A
cheque does not require any such acceptance.
A cheque can only be drawn payable on demand, a bill may be also drawn payable on demand, or
on the expiry of a certain period after date.
A grace of three days is allowed in the case of time bills while no grace is given in the case of a
cheque.
The drawer of the bill is discharged from his liability, if it is not presented for payment, but the
drawer of a cheque is discharged only if he suffers any damage by delay in presenting the cheque
for payment.
Notice of dishonour of a bill is necessary, but no such notice is necessary in the case of cheque.
A cheque may be crossed, but not needed in the case of bill.
A bill of exchange must be properly stamped, while a cheque does not require any stamp.
A cheque drawn to bearer payable on demand shall be valid but a bill payable on demand can
never be drawn to bearer.
Unlike cheques, the payment of a bill cannot be countermanded by the drawer.
Endorsement
The word endorsement in its literal sense means, writing on the back of an instrument. But under the
Negotiable Instruments Act it means, the writing of ones name on the back of the instrument or any
paper attached to it with the intention of transferring the rights therein.
Thus, endorsement is signing a negotiable instrument for the purpose of negotiation. The person who
effects an endorsement is called an endorser, and the person to whom negotiable instrument is
transferred by endorsement is called the endorsee.
Essentials of a valid endorsement
1. It must be on the instrument. The endorsement may be on the back or face of the instrument and if no
space is left on the instrument, it may be made on a separate paper attached to it called allonage. It should
usually be in ink.
2. It must be made by the maker or holder of the instrument. A stranger cannot endorse it.
3. It must be signed by the endorser. Full name is not essential. Initials may suffice. Thumb-impression
should be attested. Signature may be made on any part of the instrument. A rubber stamp is not accepted
but the designation of the holder can be done by a rubber stamp.
4. It may be made either by the endorser merely signing his name on the instrument (it is a blank
endorsement) or by any words showing an intention to endorse or transfer the instrument to a specified
person (it is an endorsement in full). No specific form of words is prescribed for an endorsement. But
intention to transfer must be present.
5. It must be completed by delivery of the instrument. The delivery must be made by the endorser himself
or by somebody on his behalf with the intention of passing property therein. Thus, where a person
endorses an instrument to another and keeps it in his papers where it is found after his death and then
delivered to the endorsee, the latter gets no right on the instrument.
6. It must be an endorsement of the entire bill. A partial endorsement i.e. which purports to transfer to the
endorse a part only of the amount payable does not operate as a valid endorsement.
Who may endorse?
The payee of an instrument is the rightful person to make the first endorsement. Thereafter the instrument
may be endorsed by any person who has become the holder of the instrument. The maker or the drawer
cannot endorse the instrument but if any of them has become the holder thereof he may endorse the
instrument. (Sec. 51).
The maker or drawer cannot endorse or negotiate an instrument unless he is in lawful possession of
instrument or is the holder there of. A payee or endorsee cannot endorse or negotiate unless he is the
holder there of.
Classes of endorsement
An endorsement may be:
(1) Blank or general
(2) Special or full
(3) Partial
(4) Restrictive
(5) Conditional
1. Blank or general endorsement (Sections 16 & 54)
It is an endorsement when the endorser merely signs on the instrument without mentioning the name of
the person in whose favour the endorsement is made. Endorsement in blank specifies no endorsee. It
simply consists of the signature of the endorser on the endorsement. A negotiable instrument even though
payable to order becomes a bearer instrument if endorsed in blank. Then it is transferable by mere
delivery.
2. Special or full endorsement (Section 16)
When the endorsement contains not only the signature of the endorser but also the name of the person in
whose favour the endorsement is made, then it is an endorsement in full. Thus, when endorsement is
made by writing the words Pay to A or As order, followed by the signature of the endorser, it is an
endorsement in full. In such an endorsement, it is only the endorsee who can transfer the instrument.
3. Partial endorsement (Section 56)
A partial endorsement is one which purports to transfer to the endorsee a part only of the amount payable
on the instrument. Such an endorsement does not operate as a negotiation of the instrument.
Example: A is the holder of a bill for Rs.1000. He endorses it pay to B or order Rs.500. This is a
partial endorsement and invalid for the purpose of negotiation.
4. Restrictive endorsement (Section 50)
The endorsement of an instrument may contain terms making it restrictive. Restrictive endorsement is one
which either by express words restricts or prohibits the further negotiation of a bill or which expresses
that it is not a complete and unconditional transfer of the instrument but is a mere authority to the
endorsee to deal with bill as directed by such endorsement.
Pay C, Pay C for my use, Pay C for the account of B are instances of restrictive endorsement. The
endorsee under a restrictive endorsement acquires all the rights of the endorser except the right of
negotiation.
3) What is Limited Liability Partnership?
Limited liability Partnership (LLP) - Hybrid of Corporate & Partnership business Form.
Allows the benefits of limited liability with the flexibility of organizing the internal structure as a
partnership based on mutually agreed Agreement
Gateway for Multi Disciplinary Professionals LLP
Requirements of LLP
Contribution
Minimum 2 Partners
Minimum 2 Designated Partners
Designated Partner Identification Number
LLP Name
LLP Agreement
Registered Office
Management of LLP
Partners
designated partners
Shareholders
directors
Who can be partner?
1)Individual & or 2)Body corporate
Body Corporate Includes
Limited liability partnership registered under LLP Act
Limited liability partnership incorporated outside India and
Company incorporated outside India,
Even all the Foreigners can form a LLP in India. Since a partner need not to be resident in India except a
designated Partner who should be resident in India
Role of Partner
Right to participate in Management
For Business Purposes Agent of Limited Liability Partnership, not of other Partners
Ethical duty to comply with all provisions of LLP Act and LLP Agreement
Liability of Partners
Limited to the Extent of their Contribution
Not Liable for the wrongful Acts /Omissions of other Partners
Not Liable for Obligation of LLP arising out of a contract
Unlimited Liability of relevant Partners in case of Fraud.
Designated Partners
Designated partner means any partner designated as such pursuant to Section 7 of Limited Liability
Partnership Act 2008 .
Responsible for managing the day to day affairs and ensuring the compliances of all applicable laws.
Requirement for Designated Partners
Designated Partner Identification Number
Only Individual can be the Designated Partners
At least One designated Partner should be resident in India
In case of Body Corporate their nominees can be the Designated Partners
Benefits as Compared to Corporate Form
Easy to Form
Easy to Run & Manage
Low cost of Formation
No Minimum Contribution
No Stamp Duty as on date
Alike worldwide LLPs, an option may be there to tax the income either in the hands of the LLP or in the
hands of the Partners.
Regular Compliances of LLP
Filing of Statements of Accounts & Solvency Within 6 months of closure of Financial Year.
Section34(2)
Filing of Annual Return with in 60 Days of closure of Financial Year .Section 35(1)
Penalty for Non Filing will be Rs. 100 per day - Rs. 3000 for a month where as in case of
Company with a capital of Rs. 1 lakh penalty will be only Rs. 200 for Non Filing up to 30 days
.
The maximum time limit in which the Forms can be filed along with Penalty is 300 Days
thereafter prosecution will be initiated.
In case of Non Filing of Annul Return & Statement of Account & Solvency for Consecutive five
years the LLP may be wind up.
Foreign LLP
Section 59 of LLP Act, 2008 contain provisions regarding Foreign Limited Liability Partnership but
Central Government has not specified any rules for Foreign Direct Investment in India through LLP.
Benefit For Foreigners
1. Invest in India without being present in India.
2. Brand Reservation.
3. Less No. of Compliances.
Winding up of LLP
Alike Companies, LLP may be wound up either Voluntary or by the Order of Tribunal.
1. In one contract 29 hand pumps were installed on paper; but actually only 14 pumps were installed.
2. Out of 253 gratings only 30 were installed. The Court has directed for investigation. Now the whole
contract is being investigated.
3. Barbers in Raj Bhavan
4. Security cost of P.M 360 Crores in 2008.
Right to information
What can be done?
o People holding ration cards can check the stocks and sales registers held by dealers and the food
dept. to make sure that they are getting their proper amount of rations and that rations are not
being siphoned off in their name;
o Parents may seek details of grants made to government-aided schools to ensure that funds are
being spent properly, or can check that admissions are not being bought through bribes or that
funds meant to education are not being diverted for other purposes;
o Owners of small businesses may find out the basis on which licenses and/or tax concession and
subsidies are granted by govt. is granting licenses/ concessions/ subsidies on the basis of properly
applied criteria;
o Unemployed people may ask about the criteria for giving government jobs or the status of their
application and position in the waitlist;
People can check on the progress of their applications for govt. services, eg. By checking the status of an
application for an electricity or water connection, including which officers have handled the file, over
what period of time and what action was taken.
Right to information
As a community-minded person, you may want to find out information about issues of public importance
and try to gent the government to address problems. For example, you can find out:
How many deaths have occurred in a govt. hospital and for what reasons or what the shortfall of
doctors and nurses in compared with sanctioned staff;
The daily attendance of teachers in govt. schools;
How many people are being housed in local jails compared with the sanctioned capacity of the
jail;
How often inspectors visit factories and other manufacturing units to check that they are not
illegally releasing hazardous materials into the environment;
How many contractors have been blacklisted by the municipal authorities and of the blacklisted
how many have been given contracts for executing public works.
Right to Information Act 2005
1. When did it come into force?
It comes into force on the 12th October, 2005 (120th day of its enactment on 15th June, 2005).
Some provisions have come into force with immediate effect viz.
- Obligations of public authorities [S.4( 1)],
- Designation of Public Information Officers and Assistant Public Information Officers[S.5(1)
- Constitution of Central information Commission (S.12 and 13), constitution of State Information
Commission (S.15 and 16),
- Non-applicability of the Act to Intelligence and Security Organizations
(S.24)
- Power to make rules to carry out the provisions of the Act (S.27 and 28).
2. Who is covered?
The Act extends to the whole of India except the State of Jammu and Kashmir. [S.(12)]
3. What does information mean?
Information means any material in any form including records, documents, memos, emails, opinions,
advices, press releases, circulars, orders, logbooks, contracts, reports, papers, samples, models, data
material held in any electronic form and information relating to any private body which can be accessed
by a public authority under any other law for the time being in force. [S.2(t)].
4. What does Right to Information mean?
It includes the right to I. inspect works, documents, records.
Ii. take notes, extracts or certified copies of documents or records.
iii. take certified samples of material.
iv. obtain information in form of printouts, diskettes, floppies, tapes, video cassettes or in any other
electronic mode or through printouts.[S.2G)]
Right to Information Act - 2005
1. What are the obligations of Public Authority? 4(1) b
It shall publish within one hundred and twenty days of the enactment:a. The particulars of its organization,.
b. The powers and duties .
c. The procedure followed in its decision making process.
d. The norms set by it for the discharge of its functions,
e. a statement of the categories of the documents held .
f. A directory of its officers and employees; - the monthly remuneration received by each of its officers
and employees, including the system of compensation as provided.
g. The budget allocated to each of its agency. Expenditures and reports on disbursements
h. manner of execution of subsidy programmes, including the amounts allocated and the details of the
information available to, or held by it.
i. The particulars of facilities available to citizens for obtaining information, including the working hours
of a library or reading room, if maintained for public use.
J. the names, designations and other particulars of the Public . Information Officers.[S.4(l )(b)]
2. What does a "public authority" mean?
Any authority or body or institution of self government established or constituted: [S.2(h)]
-by or under the Constitution;
-by any other law made by Parliament;
-by any other law made by State Legislature;
-by notification issued or order made by the appropriate Govt. and includes any- body owned, controlled
or substantially financed non-Government organization substantially financed directly or indirectly by the
appropriate Government.
3. Who are Public Information Officers (PIOs)?
- PIOs are officers designated by the public authorities in all administrative units or offices under it to
provide information to the citizens requesting for information under the Act.
- Any officer, whose assistance has been sought by the PIO for the proper discharge of his or her duties,
shall render all assistance and for the purpose of contraventions of the provisions of this Act, such other
officer shall be treated as a PIO.
4. What are the duties of a PIO?
PIO shall deal with requests from persons seeking information and where the request cannot be made in
writing, to render reasonable assistance to the person to reduce the same in writing.
Right to Information Act - 2005
If the information requested for is held by another public authority, the PIO shall transfer, within
5 days, the request to that other public authority and inform the applicant immediately.
PIO may seek the assistance of any other officer for the proper discharge of his /her duties.
PIO, on receipt of a request, shall within 30 days of the receipt of the request, either provide the
information on payment of such fee as may be prescribed or reject the request for any of the
reasons specified in S.8 or S.9.
Where the information requested for concerns the life or liberty of a person, the same shall be
provided within forty-eight hours.
If the PIO fails to give decision on the request within the period specified, he shall be deemed to
have refused the request.
Where a request has been rejected, the PIO shall communicate to the requester - (i) the reasons
for such rejection, (ii) the period within which an appeal against such rejection may be preferred,
and (iii) the particulars of the Appellate Authority.
PIO shall provide information in the form in which it is sought unless it would disproportionately
divert the resources of the Public Authority or would be detrimental to the safety or preservation
of the record in question.
If the information sought for concerns the life and liberty of a person, the same shall be provided
within (48) hours of the receipt of request.
Disposal of Information of Third Party :
A Central Public Information Officer or State Public Information Officer intends to disclose any
information which relates to a third party and treated as confidential by that third party, he shall
be invited to know whether the information should be disclosed.
Except, in case of trade or commercial secrets protected by law, disclosure may be allowed if the
public interest in disclosure outweighs in importance any possible harm or injury to the interest of
such third party.
Penalties provided under the Act :
Require the public authority to compensate the complainant for any loss or other detriment
suffered.
Impose a penalty of Rs.250/- each day not exceeding Rs.25, 000/- till application is received or
information furnished.
Also recommend for disciplinary actions against Central Public Information Officer or State
Public Information Officer under Service Rules applicable to them.
The burden proving that he acted reasonably or diligently is on the Central Public Information
Officer or State Public Information Officer.
The Penal provisions are the real teeth of the Act, which if properly implemented will bring the
rule of law into governance.
Exemption clause in detail
National security
Trade secrete/IPR/copy right
Privacy
Foreign relation
Danger to life & physical safety
Impede the investigation
Cabinet papers
Public interest v/s protected interests
Monitoring
Quantitative and qualitative devise formats
Trainings and workshops
Consultation and review
Involve Civil society
Responsive government
Continuous improvement by issue of guidelines.
Periodical evaluation & Monitoring & Annual report.
Monitoring and Reporting:
The Central Information Commission or State Information Commission as the case may be, shall
prepare a report on the implementation of the Act at the end of every year and forwarded it to the
appropriate Government.
The respective Government cause a copy of such report to be laid before each House of
Parliament and State Legislature as the case may be.
What information is not available?
V) Information, which would endanger the life or physical safety of any person or identify the source of
information or assistance given in confidence for law enforcement or security purposes;
VI) Information which would impede the process of investigation or apprehension or prosecution of
offenders;
VII)Cabinet papers including records of deliberations of the Council of Ministers, Secretaries and other
officers;
VIII)Information which relates to personal information the disclosure of which has no relationship to any
public activity or interest, or which would cause unwarranted invasion of the privacy of the individual;
Notwithstanding any of the exemptions listed above, a public authority may allow access to information,
if public interest in disclosure outweighs the harm to the protected interests.
Right to Information Act - 2005
2. Is partial disclosure allowed?
Only that part of the record which does not contain any information which is exempt from disclosure and
which can reasonably be severed from any part that contains exempt information, may be provided. [S.10]
3. Who is excluded?
Central Intelligence and Security agencies specified in the Second Schedule like IB, R&A W, Directorate
of Revenue Intelligence, Central Economic Intelligence Bureau,Directorate of Enforcement, Narcotics
Control Bureau, Aviation Research Centre,Special Frontier Force, BSF, CRPF, ITBP, CISF, NSG, Assam
Rifles, Special Service
Bureau, Special Branch (CID), Andaman and Nicobar, The Crime Branch-CID-CB,Dadra and Nagar
Haveli and Special Branch, Lakshadweep Police. Agencies specified by the State Governments through a
Notification will also be excluded. The exclusion, however, is not absolute and these organizations have
an obligation to provide information pertaining to allegations of corruption and human rights violations.
Further, information relating to allegations of human rights valuations could be given but only with the
approval of the Central or State Information Commission, as the case may be. [S.24)]
Right to Information Act 2005
What are the powers and functions of Information Commissions?
The Central Information Commission/State Information Commission has a duty to receive complaints
from any person a) who has not been able to submit an information request because a PIa has not been appointed;
b) who has been refused information that was requested;
c) who has received no response to his/her information request within the specified time limits ;
d) who thinks the fees charged are unreasonable;
1.Who thinks information given is incomplete or false or misleading ;and any other matter relating
to obtaining information under this law.
2. Power to order inquiry if there are reasonable grounds.
3. CIC/SCIC will have powers of Civil Court such asa. summoning and enforcing attendance of persons, compelling them to give oral or written evidence on
oath and to produce documents or things;
b. requiring the discovery and inspection of documents; receiving evidence on affidavit;
c. requisitioning public records or copies from any court or office issuing summons for examination of
witnesses or documents any other matter which may be prescribed.
4. All records covered by this law (including those covered by exemptions) must be given to CIC/SCIC
during inquiry for examination.
5. Power to secure compliance of its decisions from the Public Authority includesa. providing access to information in a particular form;
b. directing the public authority to appoint a PIO/ APIO where none exists;
c. publishing information or categories of information;
d. making necessary changes to the practices relating to management, maintenance and destruction of
records ;
e. enhancing training provision for officials on RTI;
f. seeking an annual report from the public authority on compliance with
this law; require it
to compensate for any loss or other detriment suffered by the applicant;
g. impose penalties under this law; or
h. reject the application. (S.18 and S.19)
5)Dishonour of negotiable instruments
Protest is a formal certificate of the notary public attesting the dishonour of the bill by non-acceptance or
by non-payment. After noting, the next step for notary is to draw a certificate of protest, which is a formal
declaration on the bill or a copy thereof. The chief advantage of protest is that the court on proof of the
protest shall presume the fact of dishonour.
Besides the protest for non-acceptance and for non-payment the holder may protest the bill for better
security. When the acceptor of a bill becomes insolvent or suspends payment before the date of maturity,
or when he absconds the holder may protest it in order to obtain better security for the amount due. For
this purpose the holder may employ a notary public to make the demand on the acceptor and if refused,
protest may be made. Notice of protest may be given to prior parties. When promissory notes and bills of
exchange are required to be protested, notice of protest must be given instead of notice of dishonour. (Sec.
102)
Contents of protest
Section 101 of the Act lays down the contents of a regular and perfect protest which are as follows:
1. The instrument itself or a literal transcript of the instrument; and of everything written or printed
thereupon.
2. The name of the person for whom and against whom the instrument has been protested.
3. The fact of and reasons for dishonour i.e. a statement that payment or acceptance or better security, as
the case may be, has been demanded of such person by the notary public from the person concerned and
he refused to give it or did not answer or that he could not be found.
4. The time and place of demand and dishonour.
5. The signature of the notary public.
6. In the case of acceptance for honour or payment for honour the person by whom or for whom such
acceptance or payment was offered and effected.
6) The Indian Partnership Act-1932
What is Partnership?
Partnership is the relation between persons who have agreed to share the profits of a business carried on
by all or any one of them acting for all (Section 4).
It, therefore follows that a partnership consists of three essential elements:
(i) It must be a result of an agreement between two or more persons.
(ii) The agreement must be to share the profits of the business.
(iii)The business must be carried on by all or any of them acting for all.
All these essentials must coexist before a partnership can come into existence.
Essential Elements of Partnership
(1)Agreement: Partnership must be the result of an agreement between two or more persons. An
agreement from which relationship of Partnership arises may be express. It may also be implied from the
act done by partners and from a consistent course of conduct being followed, showing mutual
understanding between them. It may be oral or in writing.
(2) Sharing profits of the business: First, there must exist a business i.e. trade, occupation and
profession. The motive of the business is the acquisition of gains. Therefore there can be no partnership
where there is no intention to carry on the business and to share the profit thereof.
Secondly, there must be an agreement to share profits. The agreement to share losses is not an essential
element. However in the event of losses, unless agreed otherwise, these must be born in the profit sharing
ratio.
(3)Business carried on by all or any of them acting for all: Each partner carries on the business as a
principle as well as the agent on behalf of the other partners. This is the cardinal principle of the
partnership Law. Therefore, the true test of partnership is mutual agency rather than sharing of profits.
True test of Partnership
The sharing of profits or of gross returns accruing from property by persons holding joint or common
interest in the property would not by itself make such persons partners. Although the right to participate
in profits is a strong test of partnership, and there may be cases where, upon a simple participation in
profits, there is a partnership, yet whether the relation does or does not exist must depend upon the whole
contract between the parties.
But the task becomes difficult when either there is no specific agreement or the agreement is such as does
not specially speak of partnership. In such a case for testing the existence or otherwise of partnership
relation, Section 6 has to be referred. According to this Section, regard must be had to the real relation
between the parties as shown by all relevant facts taken together.
Distinction between partnership and firmPersons who have entered into partnership with one another are called individual Partners and
collectively and the name under which the business is carried on is called firm name.
Partnership is merely an abstract legal relation between the partners. A firm is a concrete thing signifying
the collective entity for all the partners. Partnership is thus that invisibility which binds the partners
together and firm is the visible form of those partners who are thus bound together
Partnership vs. Joint Stock Company1. Personality : A firm is not legal entity I.e., it has no legal personality distinct from the personalities of
its constituent members. On the other hand, a registered company is a judicial person distinct from its
members.
2. Agency: In a firm, every partner is an agent of the other partners, as well as that of the firm, but in the
case of the company a member is not an agent of the other members or of the company.
3. Distribution of profits: the profits of the firm must be distributed among the partners according to the
term of the partnership deed but there is no such compulsion in the case of company.
4. Extent of liability : In a firm,the liability of the partners is unlimited.while in the case of the company
the liability of the shareholder is limited to the amount, if any unpaid on his shares, in the case of the
company limited by shares; otherwise to the guaranteed amount.
5. Property: The firms property is that which is the joint state of all the partners as distinguished from the
separate state of any of them and it does not belong to a body distinct from its members. So in the case of
insolvency , the joint estate, after meeting the liability in respect of the joint debts devolves on the
partners.
6. Transfer of shares: In a firm,a share in the partnership cannot be transferred without the consent of all
the partners but in the public limited company it is freely transferable.
7. Management: In the absence of an express agreement to the contrary all the partners are entitled to
participate in the management of the firm but the members of the company are not entitled to participate
in the management unless they have been appointed as directors.
8. Number of membership: In the case of a firm carrying banking business the number of
members cannot exceed 10 but otherwise 20.A private company may have as many as 50 members but
not less than two and a public company may have any number of members but not less than seven.
Partnership vs. ClubA club is an association of persons formed with the object not of earning profit, but of promoting some
beneficial purposes such as improvement of health or providing recreation for the members, etc. On the
other hand, partnership is also an association of persons but formed with the object of earning profit.
1. Unlike a partner, a member of a club is not the agent of other members nor is he liable to a creditor of
the club, except when he is responsible for the contract which gave rise to the liability.
2. A member of a club has no interest in the property of the club, as a partner has in the property of the
firm. Also, the change in the membership of a club does not affect its existence.
Partnership vs. Hindu Undivided Family1. Creation: The relation of partnership is created necessarily by an agreement, whereas the right in the
joint family is created by status. The creation of a right by status means its creation by birth in the family.
2. Death: Death of a partner ordinarily leads to the dissolution of partnership. But the death of a member
in the Hindu undivided family does not give rise to dissolution of the family business.
3. Management: The right of management of joint family business generally vests in the Karta, the
governing male member of the family. But in the case of a partnership, all the partners are equally entitled
to take part in the partnership business.
4. Authority to bind the firm: In the joint family, the Karta or the manager has the authority to contract for
the family business. In partnership, every partner can, by his act, bind the firm.
5. Liability: In a partnership, the liability of a partner is unlimited; but in a Hindu undivided family, only
the liability of the Karta is unlimited, and the other copartners are liable only to the extent of their share in
the profits of the family business, unless they take part in the act performed or transactions entered into by
the Karta.
6. Calling for accounts: On the separation of the joint family, a member is not entitled to ask for account
of the family business. But a partner can bring a suit against the firm for accounts, provided he also seeks
the dissolution of the firm.
7. Governing Law: A partnership is governed by the Partnership Act; a Joint Hindu family business is
governed by the Hindu Law.
8. Minors capacity: In a partnership, a minor cannot become a partner, though the can be admitted to the
benefits of partnership, only with the consent of all the partners. In Hindu undivided family business, a
minor becomes a member of the ancestral business by the incidence of birth. He does not have to wait for
attaining majority.
9. Continuity: A Joint Hindu Family has the continuity till it is divided. The status of Joint
Hindu Family is not thereby affected by the death of a member, but a firm subject to a contract between
the partners gets dissolved by death or insolvency of a partner.
Partnership vs. Co-Ownership1. Partnership always arises out of a contract, express or implied co-ownership may arise either from
agreement or by the operation of law, such as by inheritance.
2. In partnership, there is community of interest. It means that profits and losses must have to be shared
but co-ownership does not necessarily involve sharing of profits and losses.
3. In the case of partnership, a partner is the agent of the other partners, but in the case of a co ownership,
a co-owner is not the agent of other co owners.
4. A share in the partnership is transferred only by the consent of other partners. Co-ownership may be
dissolved at the will of co-owners; also a co owner may transfer his interest or rights in the property
without the consent of other co-owners.
Partnership vs. Association1. Partnership means and involves setting up relation between two or more persons who have entered into
a business for gains, with the intention of share the profits of such a business; but partnerships does not
exist between members of a charitable society or religious association or an improvement scheme or
building corporation etc
2. Partnership does not exist between members of a mutual insurance society.
3. In a trade combine or protection association, the relation between the members is not that of
partnership.
Types of Partners1. Partner by holding out (Section 28)-A person may himself, by his words or conduct have induced
other to believe that he is a partner or he may have allowed others to represent him as a partner, though
actually he is not. He is liable like a partner in the firm to anyone who on the faith of such representation
has given credit to the firm. The result in both the cases is identical. Partnership by holding out is also
known as partnership by estoppel.
2. Sub-partnership: A sub-partnership may arise when, consequent upon an agreement between a
partner in a firm and a stranger, the latter is vested with interest jointly with that partner so far as his share
in the firm is concerned. Such an agreement will not render the stranger a partner of the main firm. A subpartner can claim the agreed share from the actual partner, but he can have no right against the main firm
to take part in or to interfere with its business or to examine its account.
Minors Position in PartnershipThough a minor cannot be a partner in a firm, he can nonetheless be admitted to the benefits of
partnership under Section 30 of the Act. In other words, he can be validly given a share in the partnership
profits. When this has been done and it can be done with the consent of all the partners then the rights and
liabilities of such a partner will be governed under Section 30 as follows:
Rights:
(i) A minor partner has a right to his agreed share of the profits of the firm.
(ii) He can have access to, inspect and copy the accounts of the firm.
(iii) He can sue the partners for accounts or for payment of his share but only when severing his
connection with the firm, and not otherwise.
(iv) On attaining majority he may within 6 months elect to become a partner or not to become a partner. If
he elects to become a partner, then he is entitled to the share to which he was entitled as a minor. If he
does not, then his share is not liable for any acts of the firm after the date of the public notice served to
that effect.
Liabilities: (i) The minors share is liable for the acts of the firm, but he is not personally liable for any
such act. (ii) Within 6 months of his attaining majority or on his obtaining knowledge that he had been
admitted to the benefits of partnership, whichever date is later, he may give public notice that he has
elected not to become partner and such notice shall determine his position as regards the firm.
If he fails to give such notice he shall become a partner in the firm on the expiry of the said six months. If
the minor becomes partner of his own willingness or by his failure to give the public notice within
specified time, the position will be as follows:
(i) He becomes personally liable to third parties for all acts of the firm done since he was admitted to the
benefits of partnership.
(ii) His share in the property and the profits of the firm remains the same to which he was entitled as a
minor.
The contract may provide that a partner shall not carry on any business other than that of the firm while
he is a partner (Section 11). Subject to a contract between the partners the mutual rights and liabilities are
as follows:
Rights:
(1) Right to take part in the conduct of the Business: Every partner has the right to take part in the
business of the firm. This is because partnership business is a business of the partners and their
management powers are generally coextensive.
Now suppose this management power of the particular partners is interfered with and he has been
wrongfully precluded from participating therein. Can the Court interfere in these circumstances? The
answer is in the affirmative. The Court can, and will, by Injunction, restrain other partners from doing so.
The main point is that a partner who has been wrongfully deprived of the right of participation in the
management has also other remedies, e.g., a suit for dissolution, a suit for accounts without seeking
dissolution, etc. The above mentioned provisions of law will be applicable only if there is no contract to
the contrary between the partners.
2. Right to be consulted: Where any difference arises between the partners with regard to the business of
the firm, it shall be determined by the views of the majority of them, and every partner shall have the right
to express his opinion before the matter is decided. But no change in the nature of the business of the firm
can be made without the consent of all the partners [Section 12(c)].
3. Right to remuneration: No partner is entitled to receive any remuneration in addition to his share in
the profits of the firm for taking part in the business of the firm. But this rule can always be varied by an
express agreement, or by a course of dealings, in which event the partner will be entitled to remuneration.
4. Interest on Capital: The interest will be payable only out of profits. As a general rule, interest on
capital subscribed by partners is not allowed unless there is an agreement or usage to that effect. The
principle underlying this provision of law is that regards the capital brought by a partner in the business;
he is not a creditor of the firm but an adventure.
5. Interest on advances: The partner is entitled to claim interest thereon @6% per annum [Section
13(d)]. While interest in capital account ceases to run in dissolution, the interest on advances keep
running even often dissolution and up to the date of payment.
6. Right to share profits: partners are entitled to share equally in profits earned and so contribute equally
to the losses sustained by the firm (section 13(b))
7. Right to access the books of accounts: Every partner whether active or sleeping is entitled to have
access to any books of firm and to inspect and take out the copy thereof (Sec12 (d))
8 Right to be indemnified: Every partner has the right to be indemnified by the firm with respect of
payments made and liabilities incurred by him in the ordinary and proper conduct of the business as well
as in the performance of an act in an emergency for protecting the firm from any loss. (Section 13(e))
9. Right to stop admission of a new partner: Every partner has the right to stop the introduction of the
new partner without the consent of other partners.(section 31)
10. Right to retire: Every partner has the right to retire with the consent of other partners and in the case
of partnership at will, by giving notice to that effect to all other partners.(section 32(1))
11. Right not to be expelled: Every partner has got a right not to be expelled from the firm by the
majority of the partners.(Section33)
12. Right to dissolve the firm: Every partner has the right to dissolve the partnership with the consent of
other partners and in the case of partnership at will, by any partner giving notice to that effect to all other
partners.(section 40)
13. Right of outgoing partner to carry on competing business: An outgoing partner can
carrying on business competing with the firm and he may advertise such business, but without using the
firm name or representing himself as carrying on the business of the firm or soliciting the custom of
persons who were dealing with the firm before he ceased to be a partner (Section36(1)).
14. Right of outgoing partner to share subsequent profits: When any partner has died or ceased to be a
partner, and the surviving or continuing partners carry on the business of the firm with the property of the
firm without any final settlement of the accounts as between them and the outgoing partner, than at the
representative option, can either take them proportion of the profits attributable to the share of property or
interest at the rate of 6% per annum.
Duties:
1. Partners are bound to carry on business of the firm
a. to the greatest common advantage
b. To be just and faithful to each other
c. To render to any partner or his legal representative a true account and full information of all the things
affecting the firm(Section9)
2. Every partner is liable to indemnify the firm for any damage caused ti it by the reason of its fraud in the
conduct of his business of the firm (Section10)
3. Every partner is bound to attend diligently to his duties relating to the conduct of the firms business
(Section12 (b))
4. All the partners are liable to contribute equally to the loss sustained by the firm.
5. If a partner derives any profit for himself from any transaction of the firm or from the use of the
property or business connection of the firm or the firms name then he is bound to account for that profit
and refund it to the firm.(Section16(a)
6. A partner must identify the firm for any loss caused to it by the wilful neglect of the business of the
firm. (Section13 (f))
7. If a partner carries on business of the same nature as and competing with that of the firm, then he must
account for and pay to the firm all profits made by him in the business and the firm is not liable for any
loss(Section16(b))
Personal Profit Earned by Partners (Section 16)Where a partner derives any profit for himself from any transaction of the firm or firm the use of the
property or business connection of the firm name, he must account for that profit and pay it to the firm. A
deed of partnership may contain a clause that some or all the partners are not to carry any business other
than of the firm during the continuance of partnership [Section 11(2)].
A breach of such a provision may entitle the other partner to recover damages from the defaulting partner,
but it will not gives rise to any occasion for accounting to his co-partners for the profit earned unless the
business is shown to be in rivalry with the business of the firm.
Rights and Duties of Partners after a Change in the constitution of the firm (Section 17)
Change in the constitution can occur in one of the four ways, namely:
(i) Where a new partner or partners come in,
(ii) Where some partner or partners go out, i.e., by death or retirement,
(iii) Where the partnership concerned carries on business other that the business for which it was
originally formed,
(iv) Where the partnership business is carried on after the expiry of the term fixed for the purpose.
(a) Where the change occurs in the constitution because of the first three reasons then the mutual rights
and duties of the partners remains the same as before. (b) Where the partnership business is carried on
after the expiry of the term fixed for the purpose so far they are consistent with the incidents of
partnership at will.
Relation of Partners to Third Parties (Sec. 18-30)The principal distinction between him and a mere agent is that he has a community of interest with other
partners in the whole property and business and liabilities of partnership, whereas an agent as such has no
interest in either.
Partner is the agent of the firm for the purpose of the business of the firm, cannot be applied to all
transaction and dealings between the partners themselves. It is applicable only to the act done by partners
for the purpose of the business of the firm.
Implied Authority of a Partner of the firm-
If the act is outside the usual course of the business of the firm it will not bind the firm even if it is
prudent or has benefited the firm unless it is ratified and approved by all the partners. Power to do the
usual does not include power to do the unusual.
A partner has implied authority to bind the firm by all acts done by him in all matters connected with the
partnership business and which are done in the usual way and are not in their nature beyond the scope of
partnership.
Acts beyond Implied Authority (Section 19)
If there is no usage or custom of trade to the contrary, the implied authority of the partner does not
empower him to:
(a) Submit a dispute to the business of the firm to arbitration as it is not the ordinary business of
partnership firm to enter into a submission for arbitration:
(b) Open a bank account on behalf of the firm in his own name;
(c) Compromise or relinquish any claim or portion of a claim by the firm against a third party (i.e. an
outsider).
(d) Withdraw a suit or proceedings filed on behalf of the firm;
(e) Admit any liability in a suit or proceedings against the firm;
(f) Acquire immovable property on behalf of the firm;
(g) Transfer immovable property on belonging to the firm; and
(h) Enter into partnership on behalf of the firm.
Liability to Third Parties (Section 25 to 27)1. Contractual liability: Under Section 25, it is necessary that the act of the firm, in respect of which
liability is bought to be enforced against a party, must have been done while he was a partner.
2. Liability for tort or wrongful act: Section 26, the fact that the method employed by the partner in
doing it was unauthorised or wrongful would not affect the question. Furthermore, all the partners in a
firm are liable to a third party for loss or injury caused to him by the negligent act of a partner acting in
the ordinary course of the business.
3. Liability for misappropriation by a partner: Section 27 provides that (a) when a
partner, acting within his apparent authority, receives money or other property from a third person and
misapplies it or (b) where a firm, in the course of its business, received money or property from a third
person and the same is misapplied by a partner, while it is in the custody of the firm, is liable to make
good the loss.
Rights of Transferee of a Partners Share (Sec. 29)-
A share in a partnership is transferable like any other property but as the partnership relationship is based
on mutual confidence, the assignee of a partners interest by sale, mortgage or otherwise cannot enjoy the
same rights and privileges as the original partner. The Supreme Court has held the assignee will enjoy
only the rights to receive the share of the profits of the assignor and the account of profits agreed to by
other partners.
The rights of such a transferee are as follows:
(1) During the continuance of partnership, such transferee is not entitled (a) to interfere with the conduct
of the business, (b) to require accounts, or (c) to inspect books of the firm. He is only entitled to receive
the share of the share profits of the transferring partner and he is bound to accept the profits as agreed to
by the partners, i.e., he cannot challenge the accounts.
(2) On the dissolution of the firm or on the retirement of the transferring partner, the transferee will be
entitled, against the remaining partners: (a) to receive the share of the assets of the firm to which the
transferring partner was entitled, and (b) for the purpose of ascertaining the share, he is entitled to an
account as from the date of the dissolution.
Rights of Transferee of a Partners Share (Sec. 29)By virtue of Section 31, which we will discuss hereinafter, no person can be introduced as a partner in a
firm without the consent of all the partners. A partner cannot by transferring his own interest, make
anybody else a partner in his stead, unless the other partners agree to accept that person as a partner. At
the same time, a partner is not debarred from transferring his interest. A partners interest in the
partnership can be regarded as an existing interest and tangible property which can be assigned.
Legal Consequences of Partner Coming in and going out (Section 31-38)Introduction of new partner (Section 31):
As we have studied earlier, subject to a contract between partners and to the provisions regarding minors
in a firm, no new partners can be introduced into a firm without the consent of all the existing partners.
Introduction of the new partner: The liabilities of the new partner ordinarily commence from the date
when he is admitted as a partner, unless he agrees to be liable for obligations incurred by the firm prior to
the date. The new firm, including the new partner who joins it, may agree to assume liability for the
existing debts of the old firm, and creditors may agree to accept the new firm as their debtor and
discharge the old partners.
Retirement of a partner: A partner may retire:
(i) With the consent of all the other partners;
(ii) By virtue of an express agreement between the partners; or
(iii) In the case of a partnership at will, by giving notice in writing to all other partners of his intention to
retire.
Such a partner, however, continues to be liable to the third party for acts of the firm after his retirement
until public notice of his retirement has been given either by himself or by other partners. But the retired
partner will not be liable to any third party of the latter deals with the firm without knowing that the
former was partner [Sub-Section (3) and (4)].
Right of outgoing partners(i)However, the partner may agree with his partners that on his ceasing to be partner, he will not carry on
a business similar to that of the firm within a specified period or within specified local limits. Such an
agreement will not be in restraint of trade if the restraint is reasonable [Section 36(2)]. A similar rule
applies to such an agreement of sale of the firms goodwill [Section 53(3)].
(ii) (a) on the retirement of a partner, he has the right to receive his share of the property of the firm
including goodwill.
(b) An outgoing partner, where the continuing partners carry on business of the firm with the property of
the firm without any final settlement of accounts with him, is entitled to claim from the firm such share of
the profits made by the firm, since he ceased to a partner, as attributable to the use of his share of the
property of the firm.
In the alternative, he can claim interest at the rate of 6% per annum on the amount of his share in firms
property (Section 37).
(c) However, if by a contract between the partners, an option has been given to the surviving or
continuing partners to purchase the interest of the outgoing partner and the option if duly exercised, the
outgoing partner or his estate will not be entitled to any further share of the profits.
Liabilities of an outgoing partner: The retired partner will not be liable to any third party of the latter
deals with the firm without knowing that the former was partner [Section 32 (3)&(4)]. Expulsion of a
partner (Section 33): It is, thus, essential that: (i) the power of expulsion must have existed in a contract
between the partners; (ii) the power has been exercised by a majority of the partners; and (iii) it has been
exercised in good faith.
If all these conditions are not present, the expulsion is not deemed to be in bonafide interest of the
business of the firm. The test of good faith as required under Section 33(1) includes three things:
(a)That the expulsion must be in the interest of the partnership.
(b) That the partner to be expelled is served with a notice.
(c) That he is given an opportunity of being heard.
Insolvency of a partner (Section 34): When a partner in a firm is adjudicated an insolvent, he ceases to
be a partner on the date of the order of adjudication whether or not the firm is thereby dissolved. His
estate (which thereupon vests in the official assignee) ceases to be liable for any act of the firm done after
the date of the order, and the firm also is not liable for any act of such a partner after such date (whether
or not under a contract between the partners the firm is dissolved by such adjudication).
Death of a partner (Section 35): Where under the contract a firm is not dissolved by the death of
partner, the estate of the deceased partner is not liable for act of the firm after his death. Ordinarily, the
effect of the death of a partner is the dissolution of the partnership, but the rule in regard to the dissolution
of the partnership, by death of partner is subject to a contract between the parties and the partners
competent to agree that the death of one will not have the effect of dissolving the partnership as regards
the surviving partner sunless the firm Consists of only two partners. In order that the estate of the
deceased partner may be absolved from liability for the future obligations of the firm, it is not necessary
to give any notice either to the public or the persons having dealings with the firm.
In relation to Section 35, let us consider a concrete case. X was a partner in a firm. The firm ordered
goods in Xs lifetime; but the delivery of the goods was made after Xs death. In such a case, Xs estate
would not be liable for the debt; a creditor can have only a personal decree against the surviving partners
and a decree against the partnership assets in the hands of those partners.
A suit for goods sold and delivered would not lie against the representatives of the deceased partner. This
because there was no debt due in respect of the goods in Xs lifetime.
Revocation of continuing guarantee by change in the firm (Section 38): It provides that a continuing
guarantee given to a firm or to third party in respect of the transaction of a firm is, in the absence of an
agreement to the contrary, revoked as to future transaction from the date of any change in the constitution
of the firm.
7)COPRA-
The consumer Councils (Central Consumer Protection Council, State C P C, District CPCouncil) have to
ensure the following to the consumers
Connectivity via the Internet has greatly abridged geographical distances and made communication
even more rapid. While activities in this limitless new universe are increasing incessantly, the need
for laws to be formulated to govern all spheres of this new revolution was felt. In order to keep pace
with the changing generation the Indian Parliament passed Information Technology (IT) Act, 2000.
The IT Act has been conceptualized on the United Nations Commission on International Trade Law
(UNCITRAL) Model Law
Technological Revolution.
User wants the electronic records to be confidential & protected from tampering
IT Act 2000
Became statute on 17th May 2000- 12th nation in the world to have cyber laws
Also Amended: -
The Act aims at providing legal recognition for transactions carried out by means of electronic
data interchange and other means of electronic communications commonly referred to as
"electronic commerce" which involve the use of alternative to paper based methods of
communication and storage of information and aims at facilitating electronic filing of documents
with the government agencies and e-payments.
Extends to whole of India and also to people who contravene the provisions of the act outside
India.
The Act applies to the whole of India. It also applies to any offence committed outside India by
any person.
a will as defined in section 2 (h) of the Indian Succession Act, 1925 (39 of 1925) including any
other testamentary disposition by whatever name called;
any contract for the sale or conveyance of immovable property or any interest in such property;
any such class of documents or transactions as may be notified by the Central Government in the
Official Gazette.
The Act has adopted the Public Key Infrastructure (PKI) for securing electronic transactions. A
digital signature means an authentication of any electronic record by a subscriber by means of an
electronic method or procedure in accordance with the other provisions of the Act.
Thus a subscriber can authenticate an electronic record by affixing his digital signature.
A private key is used to create a digital signature whereas a public key is used to verify the digital
signature and electronic record.
They both are unique for each subscriber and together form a functioning key pair.
Further, the Act provides that when any information or other matter needs to be authenticated by
the signature of a person, the same can be authenticated by means of the digital signature affixed
in a manner prescribed by the Central Government.
These signatures are to be authenticated by Certifying Authorities (CAs) appointed under the Act.
These authorities would inter alia, have the license to issue Digital Signature Certificates (DSCs).
The applicant must have a private key that can create a digital signature. This private key and the
public key listed on the DSC must form the functioning key pair.
Once the subscriber has accepted the DSC, he shall generate the key pair by applying the security
procedure. Every subscriber is under an obligation to exercise reasonable care and caution to
retain control of the private key corresponding to the public key listed in his DSC.
The subscriber must take all precautions not to disclose the private key to any third party. If
however, the private key is compromised, he must communicate the same to the Certifying
Authority (CA) without any delay.
All electronic records sent by an originator, his agent or an information system programmed by or
on his behalf are attributable to him
Where the originator has not agreed with the addressee that the acknowledgement of receipt of
electronic data shall be given in a manner, the acknowledgement may be given by
Any conduct of the addressee, sufficient to indicate to the originator that the electronic record has
been received
Where the originator had stipulated that it shall be binding only on receipt of acknowledgement,
then unless acknowledgement has been received, it shall mean that the electronic data was never
sent.
Where no such stipulation was made, then the originator may give a notice to the addressee
stating that no such acknowledgement has been received and specifying a time by which the
acknowledgement must be received by him, if still no acknowledgement is received, he may after
giving notice to the addressee treat the electronic data as never sent
Unless otherwise agreed the dispatch of an electronic record occurs when it enters a computer
resource outside the control of the originator
Unless otherwise agreed the time of receipt of electronic record shall be determined as follows:
if the addressee has designated a computer resource for the purpose of receiving electronic
records-
receipt occurs at the time when the electronic record enters the designated computer resource; or
if the electronic is sent to a resource that is not designated, receipt occurs when it is retrieved by
the addressee
Sections 5, 6 & 7 -
Sent by originator
The act to apply for offences or contraventions committed outside India. (sec 68)
Damage" means to destroy, alter, delete, add, modify or rearrange any computer resource by any
means
Tampering with the computer source documents. Whoever knowingly or intentionally conceals,
destroys, or alters or causes another to do the same any computer source code used for a
computer, computer programme, computer system or computer network, shall be punishable with
imprisonment up to three years, or with fine upto Rs. 2 lakhs or with both.
Whoever commits hacking of the computer system shall be punished with imprisonment up to
three years, or with fine upto Rs. 2 lakhs or with both.
Whoever publishes or transmits or cause to be published any matter which is obscene, shall be
punished on first conviction with imprisonment may extend upped five years with a fine of upped
RS. 1,00,000 (for second and subsequent convictions, imprisonment of upped 10 years and a fine
of upped RS. 2,00,000)
The government may notify certain computer systems or networks as being "protected systems",
unauthorized access to which may be punishable with imprisonment upped 10 years in addition to
a fine.
Whoever makes a misrepresentation to, or suppresses any material fact from the Controller of
Certifying Authorities and whoever commits breach of confidentiality and privacy, having access
to electronic data under the Act shall be punished with imprisonment for a term which may
extend to two years, or with fine which may extend to RS. 1,00,000 or with both.
Penalties have also been prescribed for publishing false digital signature certificates or for use of
such certificates for fraudulent and unlawful purposes, which is imprisonment for a term which
may extend to two years, or with fine which may extend to Rs. 1,00,000 or with both
ADJUDICATION /COMPENSATION
a) Damages by way of compensation not exceeding Rs. 10 million may be imposed for unauthorized
access, unauthorized downloading or copying of data, introduction of computer viruses or
contaminants, disruption of systems, denial of access or tampering with or manipulating any
computer/network.
- to modify, destroy, record, transmit data or programe residing within a computer, computer
system or computer network; or
- by any means to usurp the normal operation of the computer, computer system, or computer
network;
Computer virus" means any computer instruction, information, data or programme that destroys,
damages, degrades or adversely affects the performance of a computer resource or attaches itself to
another computer resource and operates when a programme, data or instruction is executed or some
other event takes place in that computer resource;
b) The Act does provide that no penalty imposed under the Act shall prevent imposition of any other
punishments attracted under any other law for the time being in force.
The provisions of the Act shall also apply to offences or contravention outside India, if such offences or
contravention involves a computer, computer system or computer network located in India.
A Cyber Regulations Appellate Tribunal (CRAT) is to be set up for appeals from the order of any
adjudicating officer. It consists of one person only- the Presiding Officer.
No appeal shall lie from an order made by an adjudicating officer with the consent of the parties.
Every appeal must be filed within a period of forty-five days from the date on which the person
aggrieved receives a copy of the order made by the adjudicating officer
As per the Act a provision has been made to appeal from the decision of the CRAT to the High Court
within sixty days of the date of communication of the order or decision of the CRAT .
A police officer not below the rank of Deputy Superintendent of Police, or any other officer
authorised by the Central Government has the power to enter any public place and arrest any person
without a warrant if he believes that a cyber crime has been or is about to be committed.
Public place includes public conveyance, any hotel, any shop or any other place intended for use by,
or accessible to the public
Section 79- provides for non liability of network service provider in certain cases if he proves that the
offence or contravention was committed without his knowledge or that he had exercised all due
diligence to prevent the commission of such offence or contravention
Network services providers shall not be liable under this Act for any third party information or data
made available, if they prove that the offence or contravention was committed without their
knowledge or that they had exercised all due diligence to prevent such offence.
Third party information means any information dealt with by network service provider in his capacity
as intermediary
OFFENCES BY COMPANIES
In respect of offences by companies, in addition to the company, every person, who at the time the
contravention was committed, was in charge of, and was responsible to the company for the conduct
of the business of the company, shall be guilty of the contravention, unless he proves that the
contravention took place without his knowledge or that he exercised all due diligence to prevent such
contravention.
To give a general introduction to the concept of Intellectual Property Rights and Their Role in
Technology Transfer
Plan of Presentation
Rationale of Protection
Different kinds of IPRs
Movable Property
Land, Building
Intellectual Property
Territorial
Definition of Intellectual Property
Intellectual Property shall include the rights relating to
International Treaties
Basic Principle
Patents
Industrial Designs
Trade Marks
Geographical Indications
Layout Designs/Topographies Integrated Circuits
Trade Secrets
Protection of New Plant Varieties
IP Laws of IndiaAct
Ministry/Department
Higher Education
Information Technology
Sound Recordings
Rights
Moral Rights
To protect personality of author
Economic Rights
Right of Authorship
Right of Integrity
Digital Manipulation
No Right for Display
Inalienable Rights
Economic Rights -1
Right of Reproduction
Digital Distribution
Public Performance
Internet Communication
Economic Rights 2
Adaptation Rights
Ownership of Rights
Literary author
Drama Dramatist
Music Composer
Artistic work Artist e.g. Painter, sculptor, architect
Photograph Photographer
Author of Computer Programme Person who causes the work to be created
Cinematograph film producer
Sound Recording - producer
Photograph, painting, cinema for valuable consideration person who pays money
Author as Owner of Rights: Exceptions
Securing Copyright
Registration does not as a matter of law establish that what is registered is in fact and in law
copyrightable subject matter
Duration of Copyright
Literary, dramatic, Musical and Artistic Works published during life time of author: Life + 60
years
All Other Works: 60 years from date of publication
Photograph
RELATED RIGHTS
Performers
Broadcasting Organizations
Performers Rights
Duration: 50 years
Rights Of Broadcasting Organisations
Duration: 25 Years
Patents-What is a PATENT?-
A patent is an exclusive right granted for an invention, which is a product or a process that provides a
new way of doing something, or offers a new technical solution to a problem
The limited monopoly right granted by the state enables an inventor to prohibit another person from
manufacturing, using or selling the patented product or from using the patented process, without
permission.
Period of Patents - 20 Years
Novelty;
Non-obviousness (inventive step);
Industrial Application: Invention can be made or used in any useful, practical activity as distinct
from purely intellectual or aesthetic one
Grant of Patent
Patents are granted by national patent offices after publication and substantial examination of the
applications
In India provisions exist for pre-grant and post grant opposition by others
They are valid within the territorial limits of the country
Foreigners can also apply for patents
INVENTIONS NOT PATENTABLE
An Invention Which is frivolous or which claims anything obviously contrary to the well
established Natural Laws e.g.
Gambling machine
device for house-breaking
Biological warfare material or device
Terminator gene technology
A soft drink that is only a mixture of sugar and some colorants in water
But, a mixture resulting in synergistic properties of mixture of ingredients may be patentable e.g
Soap, Detergent, lubricant.
INVENTIONS NOT PATENTABLE
Mere arrangement or re-arrangement or duplication of known devices,each functioning independently
of one another in a known way
for example -.
Scheme for learning a language , Method for solving a crossword puzzle, Method of learning a
language, Method of teaching /learning - Not patentable
Novel apparatus for playing game or carrying
out a scheme patentable
Non-patentable
Presentation of information
Examples
Any manner or method of expressing
information , whether by spoken words,
Visual display, symbols ,diagrams or information recorded on a carrier
Topography of integrated circuits.
An invention which, in effect, is the
Traditional Knowledge or an aggregation or duplication of known properties of traditionally known
component or components
Design means only the features of shape, configuration, pattern, ornament or composition of lines
or colours applied to any article whether in two dimensional or three dimensional or in both forms,
by any industrial process or means, whether manual,mechanical or chemical, separate or combined,
which in the finished article appeal to and are judged solely by the eye.
1. CONSUMER PRODUCTS-IRON,SHOE,PEN,BRUSH,fridge.
2. Pharmaceutical Product-Injection,medicine,insulin.
3. Textile & Jewellery neklace,silk cloth etc.
The proprietor of the registered design has the exclusive right to apply the design to any article in
the class in which the design is registered
Any mode or principle of construction or anything which is in substance a mere mechanical device
Trade mark
Property mark
Artistic work
What is not registrable?
Layout designs of integrated circuits Basic shape, variations commonly used in the trade
Mere workshop alteration
Mere change in size
Any principle or mode of construction of article
Trade marks-TRADE MARK-
Trade Marks are registered by national trade mark registries and are valid in that country
Registration is made after examination and publication
Marks on goods
Service Marks
Certification trademark
Collective Marks
Well known marks
Trade Names
TRADE MARK
Service Marks include banking, education, finance, insurance, real estate ,entertainment,repairs,
transport, conveying news and information, advertising etc
Certification Trade marks: Certified by the Proprietor as having characteristics like geographical
origin, ingredients, quality e.g.AGMARK,WOOLMARK Certification mark cannot be used as
a trade mark.
Certifies that the goods on which it is applied are made of 100% wool. It is
registered in 140 countries and licensed to the companies which assure that they
will comply with the strict standards set out by the Woolmark company , the owner
of the mark.
COLLECTIVE MARK
COLLECTIVE MARK is a Mark that distinguishes the goods -or services of members of
association from marks of other undertakings
It could be manufacturers, producers, suppliers, traders or other profession bodies like institute of
chartered accountants, test cricketers association etc.
WELLKNOWN MARKS
Trade Names
GE- Bulbs
Forms of TM
Visual: Words, letters, numerals, devices including drawings and symbols or 2-D representations of
object or a combination of two or more of these, colour combinations or colour per se, 3-D sign as
shape of goods or packaging.
Audio: Sounds, Musical Notes
Olfactory: Smells
What is protected and
whats not?
Right to use TM in relation to goods/ services as registered are protected (If TM consists of
several parts, protection is for TM as a whole)
State Emblems, Official Hallmarks, Emblems of Intergovernmental Organizations cannot be used
as TM.
Original and novel Layout-Designs of semiconductor integrated circuits can get protection through
registration
Registration is done after examination and publication of the application
Registration is valid for 10 years
Non-registrable Layout-Designs
Not original
Has been commercially exploited anywhere in India or in a convention country
Not inherently distinctive
Not inherently capable of being distinguishable from any other registered layout-design
Trade secrets-Trade Secrets-
Some inventions, data, information cannot be protected by any of the available means of IPRs.
Such information is held confidential as a trade secret.
Trade secret can be an invention, idea, survey method,manufacturing process, experiment results,
chemical formula, recipe, financial strategy, client database etc.
National legislations provide protection in form of injunction and damages if secret information is
illegally acquired or used.
Plant varieties and farmers rights-PROTECTION OF PLANT VARITIES-
New Varieties
Novelty, Distinctiveness, uniformity and stability
Extant varieties
Distinctiveness, uniformity and stability
Period of protection
Rights of Breeders
Production
Sale
Marketing
Distribution
Export
Import
However, if the breeders variety is essentially derived from a farmers variety, the breeder
cannot give any authorisation without the consent of the farmers or communities from
whose varieties the protected variety is derived.
Farmers RightsTo save, use, sow, re-sow, exchange, share or sell his farm produce including seed in the same manner as
he was entitled earlier (Seeds for sale should not be branded)
To full disclosure of the expected performance of the Seeds or planting material by the plant breeder.
Where these fail to perform in the manner claimed by the breeder, the farmer may claim compensation
from the plant breeder.
Researchers RightsFree and complete access to protected materials for research use in developing new varieties of
plants.However, authorisation of the breeder is required whose repeated use of such variety as parental
line is necessary for commercial production of such other newly developed variety.
International organisations-International Organizations in IP-
Licence is a permission granted by an IP owner to another person to use the IP on agreed terms and
conditions, while he continues to retain ownership of the IP
Licensing creates an income source
It establishes a legal framework for transfer of technology to a wider group of researchers and
engineers
Creates market presence for the technology or trademark
consumer forums are the bodies who function like courts in order to settle the consumer disputes. Their
composition is so made as to best represent the interests of the consumer dispute. Their composition is so
much made as to best represent the interests of the consumers, and they have specified jurisdictions of
their own.
Section 13 of the Act has detailed the procedure in context of District Forum only. For state commission,
section 18 say that it will follow the same procedure as followed by District Forum with such
modifications as necessary.
Similary,section22 empowers the Nation Commission to make modifications in the procedure prescribed
for the District Forum as per its needs.
Note that earlier to the Amendment Act,2002(effective from 15th march,2003),power to make rules
regarding the procedure to be followed by the National commission was vested with the Central
Government.
Provisions of section13 discusses about the procedure to be followed by the District forum, or the
state commission, or the National commission, as the case may be, on the receipt of a complaint. A
complaint may be with respect to the goods or services:
When the complaint related to goods, the criteria for the decision is-
Whether the goods are defective or not. Now the question is-how to hold that the goods are
defective?
The most logical way is to get the goods tested to determine the defect. However , in certain case
defect can be determined without technical support or it may happen that the test is not feasible.
They are:
The opposite party admits the defect.
The defect is obvious and is visible to naked eyes.
When the complaint is not in possession of the subject- matter of the complaint.
When subject-matter of the complaint gets destroyed, like in case a pressure cooker burst, its
remain cannot be send to the laboratory for testing.
In case of complaint regarding deficiency in service there is no question of testing or analysis.
Where the laboratory test is required to determine the defect in the goods.
Where no laboratory test is required to determine the defect in goods or the complaint relates to
services under two sub-headings:
How a complaint is dealt by consumer forums.
The admissibility of the complaint should ordinarily be decided within 21 days from the date on
which complaint was received .
(b) Within 21 days from the date of admission of complaint the District forum should refer a copy of such
complaint to the opposite party directing him to give his version of the case within a period of 30 days
which has been extended to 45 days.
(c) Every complaint shall be heard as expeditiously as possible and endeavour shall be made to decide the
complaint within a period of 5 months in case laboratory testing is not required , from the date of receipt
of notice from the opposite party.
And no adjournment shall be ordinarily granted by the district forum unless sufficient cost is shown and
the reasons for grant of adjournment have been recorded in writing by the forum.
(d) where the laboratory test is required to determine the defects in goods. When the opposite party on
receipt of a complaint refer to him admits the claim there is no contention and the forum will pass the
appropriate order.
But where the opposite party denies or disputes the allegations contained in the complaint or omits
or fails to take any actions to represents his case within the time given by the district forum, the
district forum would take the following steps to settle the disputes:
(1) the district forum may require the complaint to deposit the specified fees for payment to the
appropriate laboratory for carrying out the necessary analysis or test in relation to the goods in question.
The district forum will remit such fees to the appropriate laboratory to enable it to carry out required
analysis or test.
(2) the district forum will obtain a sample of the goods, seal it, authenticate it and refer the sample so
sealed to the appropriate laboratory for an analysis or test, whichever may be necessary with a view to
find out whether such goods suffer from any defects.
3) upon receiving laboratory reports, its copy will be forwarded by the district forum to the opposite party
along with its own remarks.
(4) in the event of any party disputing the correctness of findings, or the method of analysis or test
adopted by appropriate laboratory, the district forum shall require the objecting party to submit his
objection in writing.
(5) the district forum will give a opportunity of hearing to the objecting party.
(e) where no laboratory test is required to determine the defect in goods or the complaint related to
service.
The opposite party on receipt of complaint referred to him may
(1.) admit the complaint
(2.) deny or disputes the allegations contained in the complaint, or
(3.) omits or fails to respond within the time given by the district forum
Where the opposite party admits the allegations, the district forum should decide the matter on the
basis of merits of the case and the documents before it.
Where the opposite party deny or dispute the allegation made in the complaint, the district forum
will proceed to settle the dispute on the basis of evidence brought to its notice by both the parties.
Where the opposite party omits or fails to respond within the time given by the forum, the district
forum will proceed to settle the ex-party on the basis of evidence brought to its notice by the
complainant.
(f) Where the complainant fails to appear on the date of hearing before the district forum, the district
forum may either dismiss the complaint for default or decide it on merits, and where the opposite party
omits or fail to take any actions, the forum shall decide the dispute ex-party.
(g) Where during the pendency of any proceeding before the forum, it appears to its necessary, it may
pass such interim order as is just and proper in the fact and circumstances of the case.
(h) The district forum shall issue an appropriate order after hearing the parties and taking into account the
available evidence.
What is the appropriate laboratory under the Act Section 2(1)(a) of the act defines an appropriate
Recognised by state government, subject to such guidelines as may be prescribed by the central
government or any such laboratory or organisation established by or under any law for the time
being in force, which is maintained financed or aided by the central government or a state
government for carrying out analysis or test of any goods with a view to determining whether
such goods suffer from any defect.
Procedure to be followed by the national commission[section 22& 22A]-
Section 22 of the act provides that the provisions of sections 12,13 & 14 and rules made there under
for the disposal of complaints by the district forum shall, with such modifications be applicable to
the disposal of disputes by the national commissions.
where an order is passed by the national commissions ex-parte against the opposite party or a
complaint as the case may be , the aggrieved party may apply to the commission to set aside the
said order in the interest of justice
Further , the national commission shall have the power to review any order made by it, when there
is an error apparent on the face of record.
SERVICE OF NOTICE[ SECTION28 A]-
The act has laid down certain rules with respect to service of notice:
(a) the service of notices may be made by delivering or transmitting a copy there off the registered
post acknowledgement duly addressed to opposite party against whom complaint is made or to the
complaint by speed post or by such courier service as are approved by the district forum , the state
commission or the national commission, as the case may be , or by any other means of transmission
of documents( including fax message)
(b) when an acknowledgement or any other receipt purporting to be signed by the opposite party or
his agent or by the complaint is received by the district forum ,the state commission or the national
commission , as the case may be shall declare that the notice has been duly served on the opposite
party or to the complainant.
(c) when the postal article containing the notice is received back by consumer forum ,with an
endorsement to have been made by a postal employee or by any person authorised but the courier
service to the effect that the opposite party or his agent or complainant had refused to take delivery
of the postal article containing the notice or had refused to accept the notice by any other means
when tendered or transmitted to him, the forum shall declare that the notice has been duly served on
the opposite party or to the complainant
(d) where the notice was properly addressed, prepaid and duly sent by registered post
acknowledgement has been lost or mislead, or for any other reason, has not been received by the
consumer forum, within 30 days from the date of issue of notice, the forum shall declare that the
notice has been duly served on the opposite party or the complainant.
POWERS OF THE CONSUMER FORUMS[SECTIONS 13(4),14(1)&RULE 10]1)Powers akin to those of civil court [section 13]:
The Consumer Forums are vested with the Civil Court powers with respect to the following:
(a)Summoning and enforcing the attendance of any defendant or witness and examining the witness on
oath;
(b) Discovery and production of any document or other material object producible evidence;
(c) Receiving of evidence on affidavits;
(d) Requisitioning of the report of the concerned analysis or test from the appropriate laboratory or from
any other relevant source;
(e) Issuing of any commission for the examination of any witness;
(f) The Forum may make such orders as to the costs occasioned by the adjournment as may be provided
in the regulations made under this Act;
(g) During the pendency of any proceedings before the Forum ,it may pass such interim order as is just
and proper in the facts and circumstances of he case;
(h) Any other matter which may be prescribed.
2)Powers akin to those of criminal court [Section 27]
The Consumer Forums shall be deemed to be a Judicial Magistrate of the first class for the purpose
of the Code of Criminal Procedure ,1973.It means that as to the consumer disputes dealt with by the
Forums ,they can use the powers which are granted to the first class judicial magistrate under the
Code of Criminal Procedure,1973.
The Consumer Forums have been granted power to try the cases on summary basis by the
Amendment Act,2002(effective from 15th March,2003).
Summary trial means that the Forums need not consider any evidence, they deal with the trial on the
basis of affidavits given by the parties.
4)Additional powers of the consumer forums [Rule 10]
The National Commission ,the State Commission and the District Forum have following additional
powers:
1. Requiring production off any books,accounts,documents,or commodities from any
person ,examining and retaining them.
2. Obtaining information required for the purpose of the proceedings from any person.
3. Enter ans search any premises and seize from such premises books,
papers,documents,commodities required for the purpose of proceedings under the Act.
5)Power to issue order[Section 14(1)]
If, after the proceedings ,the Forum is satisfied that the complainant suffer from any defect in goods or
deficiency in service, it may issue an order to the opposite party directing them to do one or
more of the following things, namely:
To remove the defect pointed out by the appropriate laboratory from the goods in question;
To replace the goods with new goods of similar description which shall be free from any defect;
To return to the complainant the price,or as the case may be the charges paid by the
complainant;
To pay such amount as may be awarded by I as compensation to the consumer for any loss or
injury suffered by the consumer due to the negligence of the opposite party. As for the amount
of damages ,the Consumer Forum has the power to grant punitive damages as it deems fit;
To issue corrective advertisement to neutralize the effect of misleading advertisement at the cost of
the opposite party responsible for issuing such misleading advertisement;
The Amendment Act ,2002,has vested the Consumer Forums with the executory powers which they
were lacking hitherto.These are discussed belowWhere an interim order made under this Act is not compiled with,the Consumer Forum may order
for the attachment of the property of the person not complying with such order.
b) If the non-compliance of such attachment order continues for more than three
months, the
property attached may be sold and out of the proceeds thereof, the Consumer Forum may award
such damages as it thinks fit to the complainant and shall pay the balance , if any to the party
entitled thereto.
c) here under an order made by a Consumer Forum any amount is due from any amount is due from any
person, the person entitled to the amount may make an application to the forum, and such may issue
a certificate for the said amount to the Collector of the district and the Collector shall proceed to
recover the amount in the same manner as arrears of land revenue.
(7) Regulatory powers [Section 30 A]
The National Commission may, with the previous approval of the Central Government by
notification ,make regulations not inconsistent with this Act to provide for all matters for which
provision is necessary or expedient for the purpose of giving effect to the provisions of this Act.
SITTING OF THE FORUMS-
33.7-1 Sitting of the District Forum [Section 14(2)]- For conducting any proceedings to resolve a
consumer dispute ,at least two members of the forum must be there one of whom should be the
president.
33.7-2 Sitting of the State Commission- Every proceeding is required to be conducted by the
president of the State Commission and at least one member thereof sitting together.
33.7-3 Sitting of the National Commission The Act is silent about the sitting requirement of the
National Commission , but the Consumer Protection (Amendment) Rules,1991,require that the
disputes must be disposed of by atleast three members of the National Commission ,one of whom
must be the President .
Moreover it says that the rules regarding sitting are mandatory. Any failure to comply with the same
may invalidate the order.
However the Consumer Protection (Amendment) Act,2002,has introduced the concept of
Benches, whereby the jurisdiction ,powers and authority of the National Commission may be
exercised by Benches thereof.
A Bench may be constituted b the President with one or more members as the President may deem
fit. Thus it seems that the spirit of the Act supports the sitting of two members in total one of the
whom must be the president,is capable of passing a valid order.
ORDERS OF THE FORUMS-
The orders of the Consumer Forums are like orders of the Civil Court and are enforceable like a
decree of the court. The order of a junior Forum is appealable with the senior Forum ,and when no
appeal is instituted ,the order is final. However ,the law has prescribed certain norms as to the
signing of orders without complying which the orders cannot be made.
(1) District forum Section 14(2A) provides that every order made by the District Forum shall be
signed by its President and the member or members who conducted the proceeding.
If there is difference of opinion between any two members, matter should be referred to the third
member for a decision .And the decision of the majority would be final. Thus any order passed by a
single member of the District Forum is not warranted.
(2) State Commission Every order made by the National Commission must be signed by its
President and the member or members who conducted the proceeding.
If there is difference of opinion between any two members ,matter should be referred to the third
member for a decision. And the decision of the majority would be final.
(3) National Commission Every order made by the National Commission must be signed by the
President ,and at least two members who conducted the proceeding ,and in case of any difference of
opinion ,the opinion of the majority shall be the order of the Commission.
Appeals against orders-
Appeal is a legal instrumentality whereby a person not satisfied with the findings of a court has
an option to go to a higher court to present his case and seek justice.
In the context of Consumer Forums1. An appeal can be made with the State Commission against the order of the District Forum within 30
days of the order which is extendable for further 15 days.
2. An appeal can be made with the National Commission against the order of the State Commission
within 30 days of the order or within such time as the National Commission allows.
3. An appeal can be made with the Supreme Court against the order of the National Commission within
30 days of the order or within such time as the Supreme Court allows.
Finality of orders
Where no appeal has been preferred against the order made by the District Forum ,or State
Commission ,or the National Commission ,such order shall be final.
Every order made by the District Forum ,or State Commission ,or the National Commission may be
enforced in the same manner as if it were a decree of the court.[Section 25]
All the persons- the trader ,or complainant,or the opposite party are supposed to comply with the
orders of the District Forum ,or State Commission ,or the National Commission .When any such
person fails or omits to comply with the order ,the District Forum ,or State Commission, or the
National Commission as the case may be, may punish him withImprisonment for a term ranging between one month and three years ,or
With fine ranging between Rs.2,000 and Rs. 10,000, or
With both.