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C HAPTER O UTLINE
4.1 MEANING OF POLITICAL AND LEGAL ENVIRONMENT
4.2 BRANCHES / CLASSIFICATION / CATEGORIES OF LAW
4.3 SCOPE OF LEGAL ENVIRONMENT
4.4 FEMA (FOREIGN EXCHANGE MANAGEMENT ACT)
4.4 THE ESSENTIAL COMMODITIES ACT, 1955
4.5 THE TRADE & MERCHANDISE MARK ACT, 1958
4.6 THREE POLITICAL INSTITUTIONS
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given rise to serious threat to many existing products by way of increased competition; many
seller’s markets have given way to buyer’s markets.
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In most countries, the scope of legal environment, is to give proper conditions for doing
business by giving facilities like, government performing as a regulatory role, promotional
role entrepreneurial role and planning role.
Apart from those laws that control investment and related matters, there are a number of laws
that regulate the conduct of business. These laws cover such matters as standards of product,
promotion, ethics, ecological factors, etc…
In many countries, with view to protecting consumer interest, relations have become
stronger. Regulations to protect the purity of the environment and preserve the ecological
balance have assumed great important in many countries.
Some government specify certain standards for the product, including packaging to be
marked in the country: some even prohibit the marketing of certain products. In most nations,
promotional activities are subject to various type of control. Several examples are as follows:
a. European countries restrain the use of children in commercial advertisement.
b. In India, the advertisement of alcoholic liquors is prohibited.
c. In countries like Germany, product comparisons advertisement and the use of
superlatives like best or excellent in advertisement is not allowed.
Many countries today have laws to regulate competition in the public interest. Elimination of
unfair competition and dilution of monopoly power are the important objectives of these
regulations.
Any Branch, office and agency, which is situated outside India, but is owned or
controlled by a person resident in India.
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Any contravention of provisions of FEMA, by all those, who are covered under above
two aspects committed outside India.
Rationalization of Tariffs
SCOPE OF FEMA
The act applies to the whole of India and to the transactions mention below:
a). Current Account transaction
b). Capital account transaction
c). Export of goods and services
d). Realization and repatriation of foreign exchange
e). Exemptions from realization and repatriation (Sec. 9)
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b). Make any payment to or for the credit of any person resident outside India in any
manner;
c). Receive otherwise through an authorized person, any payment by order or on behalf
of any person resident outside India in any manner;
d). Enter into any financial transaction in India as consideration for or in association
with acquisition or creation or transfer of a right to acquire, any asset outside
India by any person.
2. Holding of foreign exchange, etc. (Sec.4)
Permission from RBI by resident in India shall acquire, hold, own, possess or transfer any
foreign exchange, foreign security or any immovable property situated outside India.
3. Current account transactions. (Sec.5)
Any person may sell or draw foreign exchange to or from an authorized person if such
sale or drawl is a current account transaction:
Provided that the Central Government may, in public interest and in consultation with the
Reserve Bank, impose such reasonable restrictions for current account transactions as
may be prescribed.
4. Capital account transactions. (Sec.6)
1. Any person may sell or draw foreign exchange to or from an authorized person for a
capital account transaction.
2. The Reserve Bank may, in consultation with the Central Government, specify—
a). Any class or classes of capital account transactions which are permissible;
b). The limit up to which foreign exchange shall be admissible for such
transactions.
3. Without prejudice to the generality of the provisions of sub-section (2), the Reserve
Bank may, by regulations, prohibit, restrict or regulate the following—
a). Transfer or issue of any foreign security by a person resident in India;
b). Transfer or issue of any security by a person resident outside India;
c). Transfer or issue of any security or foreign security by any branch, office or
agency in India of a person resident outside India;
d). Any borrowing or lending in foreign exchange in whatever form or by whatever
name called;
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b). Furnish to the Reserve Bank such other information as may be required by the
Reserve Bank for the purpose of ensuring the realization of the export proceeds
by such exporter.
2. The Reserve Bank may, for the purpose of ensuring that the full export value of the
goods or such reduced value of the goods as the Reserve Bank determines, having
regard to the prevailing market conditions, is received without any delay, direct any
exporter to comply with such requirements as it deems fit.
3. Every exporter of services shall furnish to the Reserve Bank or to such other
authorities a declaration in such form and in such manner as may be specified,
containing the true and correct material particulars in relation to payment for such
services.
6. Realization and repatriation of foreign exchange. (Sec.8)
Save as otherwise provided in this Act, where any amount of foreign exchange is due or
has accrued to any person resident in India, such person shall take all reasonable steps to
realize and repatriate to India such foreign exchange within such period and in such
manner as may be specified by the Reserve Bank.
7. Exemption from realization and repatriation in certain cases. (Sec.9)
The provisions of sections 4 and 8 shall not apply to the following, namely:—
a). Possession of foreign currency or foreign coins by any person up to such limit as
the Reserve Bank may specify;
b). Foreign currency account held or operated by such person or class of persons
and the limit up to which the Reserve Bank may specify;
c). Foreign exchange acquired or received before the 8th day of July, 1947 or any
income arising or accruing thereon which is held outside India by any person in
pursuance of a general or special permission granted by the Reserve Bank;
d). Foreign exchange held by a person resident in India up to such limit as the
Reserve Bank may specify, if such foreign exchange was acquired by way of gift
or inheritance from a person referred to in clause (c), including any income
arising there from;
e). Foreign exchange acquired from employment, business, trade, vocation,
services, honorarium, gifts, inheritance or any other legitimate means up to such
limit as the Reserve Bank may specify; and
f). Such other receipts in foreign exchange as the Reserve Bank may specify.
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OBJECTIVE OF ACT:
Following are the objectives of the Act:
1. To control production, supply and distribution of essential commodities.
2. To check the inflationary trend in prices.
3. To ensure equitable distribution of essential commodities.
ESSENTIAL COMMODITIES:
It means any of the following classes of commodities.
1. Cattle fodder, including oil cakes and other concentrates.
2. Coal including coke and other derivatives.
3. Component parts and accessories of automobiles.
4. Cotton and woolen textiles.
5. Drugs
6. Foodstuffs, including edible oilseeds and oils.
7. Iron and steel, including manufactures products of iron and steel.
8. Paper including newsprint, paperboard and straw board.
9. Petroleum and petroleum products.
10. Raw cotton, whether ginned or unginned, and cotton seed.
11. Raw jute.
12. Any other class of commodity which the central government may, by notified order,
declare to be an essential commodity for the purposes for this Act.
13. Food-crops
14. Sugar
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If it is found that the violation of order is done, the collector or director or town may
order confiscation of such seized articles, means of transport or books or accounts.
9. Section 7 of the act provides for punishment of fine and impressments up to 1 year in
case of violation of order under section 3. In case of a company such punishment would
be to the person like director, manager, secretary or other officer attributable to
negligence resulting in violation of order.
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prevent the monopolistic, restrictive, and unfair trade practices that are prejudicial to
the public interest.
4. Augmentation of supply: Increasing the supply of goods and services is of
paramount importance to reduce the hardships of the people by making goods
available at reasonable prices. Laws like the industries Act and the Essential
commodities Act contain provisions to prevent unjustifiable reduction in production
by industrial undertakings.
5. Enlargement and smoothening of the supply system: To remove the
imperfections in the supply system in order to ensure the availability of essential
goods at reasonable prices to the vulnerable sections in all areas, it is enlarge and
strengthen the distribution channels to cover all areas. It is one of the aims of our
public distribution system to provide the benefits of its services even to the remote
areas and thereby assure social justice.
6. Supply of inputs to priority sectors: Ensuring supply of essential inputs to the
priority sectors at reasonable price is an important objective of the price and
distribution controls. For instance, in India, certain industries are accorded priority in
the allocation of certain raw material and intermediate goods which are in short
supply. Small scale industries, export industries, agriculture and other riority sector
have been given credit at concessional terms.
7. Resource allocation: Control over prices and distribution enables the planning
authorities to achieve the desired pattern of resource allocation more easily. Apart
from distributing the productive resources as mentioned above, this can be made use
of in other ways also to achieve the objective of resource allocation. To encourage
investment in a particular field, it is essential to ensure a remunerative price for the
output. In such cases deliberate variations in relative prices may be effected to
redistribute the area under different crops to obtain a desirable output mix.
8. Prevention of Hoarding and Black marketing: Hoarding and Black marketing have
almost become by-products of shortage of economy. An effective system of control
should prevent the creation of artificial scarcity by the unscrupulous businessman for
profiteering. Laws like the prevention of black marketing and maintenance of
supplies of essential commodities and this Act, are designed to serve this purpose.
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OBJECTIVES:
1. The registration and better protection of trade marks for goods and services
2. The prevention of the use of fraudulent marks
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the course of trade between the goods and some person having the right, either as
proprietor or as registered user, to use the mark whether with or without any
indication of the identity of that person, and includes a certification trade mark
registered.
A certification trade mark is a mark adopted in relation to any goods to distinguish in
course of trade, the goods certified by any person with respect to origin, materials, mode of
manufacture, quality, accuracy or other characteristic; from the goods not so certified. It is
registrable under the provision of act in respect of those goods and in the name of that
person as proprietor.
Thus, a trade marks:
d. Establishing connection between the goods and proprietor.
e. Can be use by other with prior registration as users.
f. Is use in due course of business?
g. May contain the identity of proprietor
h. Can be certified by other person
i. Distinguishes the goods from other similar goods without trade marks.
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11. The act also provides for penalty for falsely applying trade mark, special provision for
textile goods, legal procedures, etc.
I. Legislature
Of the three, the legislature is the most powerful political institution vested with such
power as policy making, law-making, budget approving, executive control and acting as a
mirror of public opinion.
The influence of the legislature on business is considerable. It decides such vital aspects as
the type of business activities the country should have, who should own them, what should
be their size of operation, what should happen to their earnings and other related factors.
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play a vital role in helping the government to develop its functioning capabilities. a few
important responsibilities of business towards the government are explain below:
a. Tex payment:- taxes paid by business enterprises constitute a major source of revenue
to the government.
b. Voluntary programmes: - business firms co-operate with government agencies on
voluntary basis in connection with various programmes such as withholding stated
amounts from wages and salaries of employees for the purchase of national saving
certificates, or giving special assistance to local l governmental units in connection
with drought relief, education, pre planting, sanitary works or re creational activities.
c. Providing information: political leaders, either because of in experiences or over
enthusiasm, make certain decision which may not be in the overall interest of
business. Business leaders possess the necessary knowledge and experience to place
their points of view before the political leaders.
d. Government service: business often services of its leaders to the government its is
not unusual for business executives to lead or accompany delegation to the foreign
countries for exploring trade and industry prospects.
e. Government contracts: many business firms bid for government contracts and, if
successful, carry out the resulting projects with the required specifications and
standards.
f. Political activities: political participation is a much debated subject today.
One way is to make monetary contribution to political parties, particularly at the time of
elections. Corporate contributions to the political parties have now been legalese in our
country, merits and demerits notwithstanding. The other way of participation is for business
leaders to contest elections as independent or on party labels.
Government Responsibilities to Business.
Government responsibilities to business are much greater than the obligations of business
to government. Government has the power, will and resources to decides shape guide and
control business activities.
Establishment and enforcement of laws: government establishes and enforces law and
regulations under which the business functions. Laws and regulations covering all aspects
of business are enacted by the government.
a. Maintenance of order: government has the responsibility of maintaining order and
protecting persons and property. It would be impossible to carry on business in the
absence of a peaceful atmosphere.
b. Money and credit: The government provides a system of money and credit by means
of which transaction can be affected.
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Particularly in the are of industrial relations, the role of judiciary has been more
pronounced and unfortunately regressive. During the last decade and a half, in the name
of ‘Directive Principals’’. ‘Social justice’ and ‘activist law making’. The Supreme Court,
instead of having a balanced and reserved consideration of opposing interests has entirely
vitiated the industrial relations fabric by making wholesale dogmatic assertions in
undermining despises.
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