31108729 Business Environment Law

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Business Environment

& Law



Module I Module I

LEGAL ENVIRONMENT OF BUSINESSLEGAL ENVIRONMENT OF BUSINESS



Business Environment

Business environment is a set of political-legal,economic, social and technological forces that

are largely outside the control and influence of abusiness, and that can potentially have both apositive and a negative impact on the business.



Factors affecting Business Environment:

y Social Ȃ how consumers, households and communitiesbehaveand their beliefs.

y Legal Ȃ the way in which legislation in society affects the

business.y E conomic Ȃ how the economy affects a business.

y P olitical Ȃ how changes in government policy might affectthe business.

y T echnolo gical Ȃ how the rapid pace of change in productionprocesses and product innovationaffect a business.

y E thical Ȃ what is regarded as morally right or wrong for abusiness to do.

y I nter national Ȃ what changes are taking place in theinternational environment.



What is Law?

Law means any rule of conduct, standard or pattern, to which actions are required to conform.

Law is a major force in business decision making. Itconsists of rules and regulations to provide firmness tomutual relations.



Importance of Law for Business:Study of business laws will answer the follo wing questions:

y

What is legal and illegal?y What form of business is to be adopted?

y What sanctions are required?

yHo w a business is to be conducted?

yHo w the disputes will be settled?



Legal Environment of Business:

The legal environment provides the legalframework within which business is to function.



Components of Legal Environment of Business :yIndustrial Polic y

yTrade Polic y

yIntellectual Propert y R ights

yBusiness Laws

yLabour Laws

yCapital Market R egulation

y

Taxation



M odul e 2 M odul e 2INDIAN CO NTRAC T AC T OF 1872INDIAN CO NTRAC T AC T OF 1872

9



What is

law

Socialperspective

HistoricalPerspective

PoliticalPerspective

10



y School of Thoughts:

y Salmond:ǳ Law is a body of pr inci pl es reco gnized and a pplied b y the state in administr ation of justices.

y Black stone: ǲ Law in its most gener al and com prehensive sense si gnifies a r ul e of action and is a pplied indiscr iminately to all k inds of actions whether animate or inanimater ational or irr ationalǳ

11



SOURCES

OF

LAW

PRINCIPAL

yCustomsyJudicial

Decisions(Precedents)

yStatutes

yPersonal Law

(Goverened by

Vedas,Quran)

SECONDARY

yJustice

yEquity

yGood Conscience

12



y NEED FOR STUDY OF THE STR EA M:

y IGN ORANTIA JU RI S N O N EX CU S AT

This maxim implies ignorance of Law is no excuse.

We need to study, the law of land.

13



Indian Contract Act, 1872Contract:Section 2 (h) : ǲ Every agreement and promise enforceable at law is

a contract.ǳContract = agreement + enforceability at law.

Agreement :Section 2(e) : ǲevery promise and every set of promise forming

consideration for each other is an agreement.ǳagreement = offer + acceptanceagreement = social agreement +legal agreement

y Case in point :y Balfour vs Balfour (1919)

14



y CL A SSIFIC A TION OF CONTR A CTS

y On the basis of enforceabilit y

y V alid Contracts

y V oid Contractsy V oidableContracts

y Ilegal Contracts

y On the basis of mode of creation

y Expressed

y Implied Contracts

y Quasi Contracts

15



y On the basis of extent of execution

y Executed Contracts

y Executory Contracts

y On the basis of form of Contracts

y Formal Contracts

y SimpleContracts

16



y ESSENTIA L ELEMENTS OF A CONTRA CT

1. Offer and Acceptance2. Legal Relationship

3. Lawful Consideration4. Competency to contract5. Consent between the parties6. Legality of Objects7. Certainity of Objects8. Possibility of Performance/

Discharge of Contract9. Legal formalities

17



OFFER AND A CCEPTANCE

RULES OF OFFER

Ȉ Must be clear,definite , complete and final. It must not be vague . Eg. A monetary dealing

Ȉ Must be communicated to the offeree. An opportunity of makinghim accept or reject must be given.

Ȉ May be by express words oral or written. Or implied by conduct. Eg :Offer for sale of car, a chartered bus for passengers.

Ȉ May be general or specific. Eg : IPO to General Public, Specifictender bids.

y *It Must be distinguished from :Invitation to make an offer . eg auction.

18



Makes a

counter

offer

Non-

fulfillmentof

conditionOfferee

dies

before

acceptance

Offeree

rejects

not

acceptedin mode

prescribed

If not

accepted

on time

Revoca

tion of

OFFER

19



y Case :

Lalman Shukla

V s

Gauri Dutt ( 1913)Facts of the case:

y Gauri Duttǯ s son was lost.

y Lalman shukla, a serv ant was set to trace the child

20



y Acceptance

y Rul es of acceptance

y - M ay be expressed b y wor ds wr itten or s poken or im plied f r om theconduct.

y - M ust be in the mod e prescr ibed . eg : fa x, e- mail.

y - M ust be unqualified and absolute

y - M ust be communicated to the O ff er or

y - M ere sil ence does not amount to acceptance

y - M ust be mad e within a reasonabl e time and be fore the off er la psed is re voked.

21



y Case in point :

Carlill

V sCarbolic Smoke Ball Co.( 1893)Facts:

y CSB came with an add to reward 100pounds toan yone contrcating influenza af ter using the smoke balls.

y Mrs. Carlill contracts and f iles a suit

22



y 2. Legal Relationship:

Ȉ Intention among the parties that the

agreement should be attached by legalconsequences and create legal obligations.

Ȉ Intentions of both the parties are taken

into consideration.

Ȉ Not a social agreement

23



y 3.Lawful Consideration

y Section 2 (d) : ǲ When at the desire of the promisor, promisee or any other person has done orabstained from doing or promises to do abstains

from doing such act or abstinence is called aconsideration for the promise.ǳ

y Consideration is at the desire of the promisor

y Consideration may move from promisee or any other person.

24



y Rul es

y -E ver y contr act must be su ppor ted b y consid er ation

y - M ay be an act of abstinence or pr omise.y - M ust be mutuality

y - M ust be real and not va gue.

y

- M ust be full retur n for the pr omise.y - M ust be somethin g per son is bound to

per for m for the pr omise.

25



y W hen not necessar y

y - M ad e out of natur al love and aff ection

y -Done as voluntar y act.

y -T o pay a time barred d ebty Case in point :

y Chinnaya V s Ramayya

26



y COMPETENCY TO CONTRACT

y *SECTION 10 and section 11:

y Following persons are qualifi ed t o contract:

y *Must be a major

y *Must be of Sound Mind

y *Must not be disqualified by law from contracting to

which they are subject.

27



Minors

*Minors agreement is void abinitio.

*Can be a beneficiary or a Promisee.

*Cannot be ratified on attaining Majority

*No compensation awarded under the agreement.

*No specific performance allowed.

*Parents Guardian not liable

28



y Legal concepts under minors for discussion :

y R estituition- only a benef iciary

y Estoppel.eg - sale of scooter cant be def ensi v e

29



II. PERSONS OF UNSOUND MIND ARE

CAPABLE OF CONTRACTING WHEN

THEY BECOME SOUND.

III. DISQUALIFIED PERSONS.

y CONVICTS

y

ALIENSy CORPORATIONS

y FOREIGN NATIONALS

30



CASE :

MOHIRIBIBI

VSDHARMODAS GHOSH

Facts:

Mortogage of Rs. 20000/- and received

Rs. 8000/-.

31



y F AQ

y Mr. D a minor borro wed a sum from M by executing a mortogage deal in f a vour of M.

Subsequently D absconded. M f iled a suit forrecov ery . will he succeed. Quote rele v ant case law.

32



Coercion( SEC 15)

Mistake

(SEC

20&21)`

Misrepresen

tation

( SEC 18)

Fraud(SEC 17

Undue

influence

(SEC 16)

Free

consent

33



y Coercion :

y Doing of any Act forbidden by Indian Penal Code.

y *Main Components:

y There must be a Contract made .

y Contract must be made to under threat.

y Can be rescinded because it is executed under threat.

y Eg : agreement under a gun point.

34



UNDUE INFLUENCE:

³Relations between the parties are such that one of theparties is in a position to dominate the other and uses

that position to obtain unfair advantage over the other.´

Eg : Undue Influence in Relations

35



y M i srepresentat ion :

y Is unintentional and has the following features:

y A representation or assertion

y Such assertion induced the party to act.

y Statement was made with a honest belief turned to be untrue.

y Assertion related to a matter of fact.

y Eg : A detergent : ³ washes whiter than whitest´

36



Fraud :

Main constituents are :

yA false representation.

yIntentions that the other party should Act.

yThe party being deceived must be indeminified because

there no other relief.

yThe statement must have been made after the belief that it

was actually false.

yEg : Sale of an unfit horse

37



y Mistake :y Mistake implies an erroneous belief.

Types:

y Mistake of law

y Mistake of Fact

Mistake of Law can be of two types:

a) Mistake of law of the country is based on the maxim ³

ignorance of l aw´ is no excuse

b) Mistake of foreign law is based on premise of bilateralmistake.

38



y Mistake of Fact is of two types:

y Bilateral Mistake caused by both the parties.

y Unilateral Mistake caused by one of the contracting parties.

39



LEGALITY OF OBJECTS

-

Every agreement of which object is unlawful is forbidden

by law.-

Could be either when :

-Forbidden under any Statutes

-Implies Injury to any person / Property-Court Regards it immoral or opposed to Public Policy .

40



y AGREEMENTS OPPOSED TO PUBLIC POLICY ARE :y -REL ATED TO TRADING WITH ENEM Y y -COMMIT CRIMEy -INTER FERENCE WITH ADMINISTARTION OF JUSTICEy -REL ATED TO RESTRAINT OF LEGA L PROCEEDINGS.y -REL ATED TO SA LE OF PUBLIC OFFICES.y -RESTRAINT OF PARENTA L RIGHTS.y -RESTRICTING PERSONA L LIBERT Y y -RESTRAINT OF MARRIAGE( LOWE V S PEERS)y -MARRIAGE BROKERAGE AGREEMENTS.

y -INTER FERING WITH MARITA L DUTIES .y -RESTRAINT OF RE V ENUE AUTHORITIES.y -RESTRAINT OF TRADE (S.B. FRASER &CO. V S BOMBA Y ICE

MFG. CO.)

41



y F AQy A promises to obtain for B an employment in the

public serv ice and B promises to pa y R s. 1000 to A Is this a v alid contract? ( 5 marks)

y A is a dealer in diff erent kinds of oil. He sa y s toB . ǲ I will sell you a hundred tonnes of oilǳ . Is this a v alid contract? ( 5 marks)

42



DISCHARGE OF CONTRACT / PERFORMANCE OFCONTRACT

A CONTRACT IS TERMINATED OR DISCHARGED BY :

1. -PERFORMANCE ( FULFILLMENT OF DUTIES)

2. -MUTUAL CONSENT OR AGREEMENT

3. -LAPSE OF TIME

4. -OPERATION OF LAW

5. -IMPOSSIBILTY OF PERFORMANCE

6. -THRU A BREACH OF CONTRACT.

-43



PERFORMANCE OF CONTRACT

RULES OF PERFORMANCE:

CONTRACT TO BE PERFORMED BY THE PROMISOR , IN CASE OF

DEATH BY THE LEGAL HEIR OR REPRESENTATIVES.

A STRANGER TO A CONTRACT CANNOT SUE FOR PERFORMANCE. MUST BE DEMANDED BY THE PARTY TOWHOM THE PROMISE IS MADE.

WHEN THE PROMISEE HAS REFUSED TO PERFORM HIS SIDE OFPROMISE, IT CAN BE PUT TO AN END BY THE PROMISOR.(ARTIST PERFORMANCE).

MUST BE PERFORMED BY THE PROMISOR/ PROMISEE (IN CASEOF ARTIST)

DEVOLUTION OF JOINT RIGHTS44



DISCHARGE BY MUTUAL AGREEMENT

COULD BE :

-Thru novation: substitution of a new contract

-Alteration

-Recission :discharge at any other time before end

-Remission acceptance of a lesser sum-Waiver : abandon

DISCHARGE BY LAPSE OF TIME

Time barred debt to be accounted

45



DISCHARGE BY OPERATION OF LAW

-By merger

-By unauthorized alteration of items of a written document

-By insolvency

DISCHARGE BY IMPOSSIBILTY

-Could be at the time of contract ( eg : act of magic)

-Or supervining impossibility ( eg : singer falls ill)

Exceptions :

-Difficulty of performance-Commercial impossibility( higher profits not realized)

Strikes, lockouts

46



y Supervining impossibility

y Contract which becomes impossible subsequent to

the formation is called supervining impossibilty. For

the doctorine to apply the following should befulfilled :

y Act should have become impossible

y Act was such that the promisor could not prevent

y Impossibilty was not self induced by the promisor /

promisee.

47



DISCHARGE BY BREACH

COULD BE :

ACTUAL OR ANTICIPATORY

Case in point :

H OCESTER

VS

DE LA TOUR

F acts of the case :-De la tour hired hocester as their courier agents in month of april.

-Contract was signed and to be commenced from the month of june.

-During the month of may they sent a letter and repudiated the contract .

-Hocester sued them for breach of contract

48



y REMEDIES FOR BREA CH:

y R ESCIND THE CONTR A CT

y SUIT FOR DA M A GESy SUIT FOR SPECIFIC PERFORM ANCE

y SUIT FOR INJUNCTION

y

SUIT FOR QU ANTUM MERUIT

49



y RESCIND THE CONTRACT

y WHEN THERE IS BREACH ODF CONTRACT BY

ONE PARTY , THE AGGREIVED PARTY MAYRESCIND THE CONTRACT.WHEN RECISSION

IS GRANTED THE OTHER PARTY IS ABSOLVED

OF ALL THE OBLIGATIONS OF THE

CONTRACT.

50



y SUIT FOR DAMAGES

y THE PRINCIPLE FOR CLAIM SAYS:

y DAMAGES FOR BREACH ARE INTENDED TOCOMPENSATE THE AGGREIVED PARTY AND NOT

PUNISH THE GUILTY OF BREACH

51



52

LIQUIDATEDUNLIQUIDATED

1.

ORDINARY

EG : SALE

OF GOODS

2. SPECIAL3) EXEMPLARY

OR VINDICTIVE

AND

4).NOMINAL

Types of Damages



Sue for damagesUnderlying principle: Damages to be made good by theparty who has broken the contract.

Case in point :

H ADLEY VS

BAXENDALE

- H ad l ey sent a br ok en mill sha f t t o the repai rman thr ou g h

a cour i er Baxendal e.-

53



SPECIFIC PERFORMANCE :

The principle states where damages are not adequateremedy to measure the loss, the court may on a petetionfiled by aggreived party direct the party to perform his

part of promise.

IS NOT ORDERED WHERE:

MONETARY COMPENSATION IS ENOUGH

CONTRACT NOT CERTAIN IS OF PERSONAL NATURE

MADE BY COMPANY IN EXCESS OF POWERS.

REQUIRES CONTINOUS SUPERVISION OF THE COURT.

54



INJUNCTION : AN ORDER OF A PERSON RESTRAINING HIM FROMDOING A PARTICULAR ACT . IT COULD BE PROHIBITORY OR MANDATORY. IS A MODE OF SECURING SPECIFICPERFORMANCE OF NEGATIVE TERMS OF THE CONTRACT

Case in Point

Lumley

VsWagner

Facts of the Case :

-W agreed to sing a t l¶s theatre and nowhere else

-W in breach of contract agreed to sing for Z.

SUED W.

DECIDE!!!

( handle specific performance and Injunction)

55



y Quantum Meruit :

y ³Means as much as earned or reasonableremuneration´.

Principle states that:

Person claims reasonable remuneration for theservices rendered by him where there is no

express promise to pay the same. Eg : worker on daily piece rate system.

Co-author completes half the manuscript

56



y The claim under this principle arises in follo wing wa y :

1. When one part y lea v es the contract mid wa y or refuses to

perform2. When a contract is not di v isible and there is part

performance.

3. When an indi v isible contract is completed but badly .

4. Expressed or implied contract without mentioning the remuneration.

5. When a contract becomes void

57



y QUASI CONTRACTS:

y Inspite of the fact there was no legal relationship,

contract entered but the conduct and relationship of

the parties impose a obligation on one party andconferring a right on the other.

y Eg : finder of the lost goods

58



y Principle of quasi contract states :

y A quasi contract rests on the contract of equit y that a

person shall not be allo wed to enrich himself at the expense of another .

y It is therefore also called as the principle of restitution.

59



y L AW OF CONTRA CT - SPECIA L CONTRA CTSy INDEMNIT Y AND GUARANTEE

y INDEMNITY ( SEC 124)

y ³ A CONTRACT BY WHICH ONE PARTY

PROMISES TO SAVE THE FROM LOSS CAUSEDTO HIM BY CONDUCT OF PROMISOR HIMSELFOR ANY OTHER PERSON IS CALLEDCONTRACT OF INDEMNITY´

y EG : A CONTRACTS TRO INDEMNIFY BAGAINST ANY LEGAL ACTION TAKEN BY C FOR

rs. 2000/.y Parties : Indemnifier and Indemnified

60



yContract of Idemnit y has the follo wing f eatures:

y It is a contract between two parties

y One person promises to sa v e the other from loss

y Such loss can be caused by promisor himself oran y other person

y There is an element of futurit y or contigenc y since it will arise only if the loss in the contract has happened.

61



CONTRACT OF GUARANTEE ( SEC 126)³ A CONTRACT OF GUARANTEE IS A CONTRACT TO

PERFORM THE PROMISE OR DISCHARGE THE LIABILITYOF A THIRD PERSON IN CASE OF DEFUALT.´

EG ; BANK GUARANTEE

WHEN IS CONTRACT OF GUARANTEE INVALID?

-WHEN GUARANTEE IS OBTAINED BY MISREPRESENTATION

-WHEN OBTAINED BY CONCEALMENT

-WHEN CONDITION OF CO-SURETY JOINING NOT BEINGFULFILLED

-WHEN THE CONTRACT OF GUARANTEE LACKS ONE OR MORE OF THE ESSENTAIL ELEMENTS OF CONTRACT.

62



y Diff erence between Contract of guarantee andidemnit y

y 1. Idemnity is a contingent contract. In guarantee

it is on actual liability.y 2. Liability is primary for ideminifier. Liability is

secondary for surety.

y 3,. Idemnity is between two parties. Guarantee is

between three parties.

63



CONTRACT OF BAILMENT AND PLEDGE

SECTION 148

BAILMENT MEANS DELIVERY OF GOODS TO ANOTHER PERSON FOR A CERTAIN PURPOSE OR FOR A CERTAINPERIOD.

BAILOR BAILEE

ESSENTIALS

DELIVERY OF GOODS BY ONE PERSON TO ANOTHER

FOR SPECIFIC PURPOSE

AGREED BETWEEN THE PARTIES THAT AS SOON THEPURPOSE IS ACHIEVED GOODS SHALL BE RETURNED/DISPOSED

THE OWNERSHIP REMAINS WITH THE BAILOR, THEPOSSESSION GOES TO THE BAILEE

HANDING OVER GODOWN KEYS FOR STORING MATERIAL

64



y Duties of Bailor

y To disclose kno wn def ects in the goods

y Not to make an y unauthorised use of goods bailed

y Dut y to return the goods .y To return an y accretion to the goods

y Not to set up an y adv erse title gainst the bailor.

65



y Rights of the Bailee

y To enforce bailor dut y

y Deli v ery of goods to bailor without title

y R ight of action against third parties.y R ight of lien( Lien could be particular on particular

commodit y or general on pre v ious dues with v arious commodities)

66



y PLEDGE ( SECTION 172)

y PLEDGE IS A CONTRACT

y WHEREBY ARTICLE IS DEPOSITED WITH THE

LENDER AS SECURITY

y REPAYMENT OF LOAN OR PERFORMANCE OF

THE PROMISE.

y ARTICLE MUST BE MOVABLE

y

-THE DEPOSITOR IS PAW NOR y -THE DEPOSITEE IS PAW NEE.

67



y Difference between Bailment and Pledge:

y Bailment can be for an y purpose , pledge is specif ic securit y .

y Bailment lien can be exercised on goods , In pledge

goods can be sold af ter due period.y Goods can be used, as the contract permits, In pledge

goods cant be used.

68



y LAW OF AGENCY

y AN AGENT IS A PERSON WHO IS

EMPLOYED TO BRING HIS PRINCIPAL

INTO CONTRACTUAL RELATIONS WITHTHE THIRD PARTIES.

y -Parties Involved : Agent, Principal, Third

Parties.

y -CLASSES OF AGENTS : Special or general (with relation to third Parties)

69



y Personal liability of the agent to the Third Party:

y Where it is agreed

y Where the principal is residing abroad

y Where he signs a negotiable instrument in his ownname.

y Where the agent acts for a minor principal.

y Agent liable for breach of warranty

70



Module 3Module 3

LAW OF TORTSLAW OF TORTS

71



y DEFINITION Tort law is a body of law that addresses,and provides remedies for, civil wrongs not arising outof contractual obligations.

FEATURES

y INJUR Y MUST HA V E SUSTAINED: Compensated inthe event that someone's carelessness, recklessness orunintentional misconduct has resulted in injury

y REMED Y provides a remedy to all parties who areinjured as a result of a civil wrong.

72



y NEGLIGENCE has resulted in Injury

y INTENTIONS must not be Malaf ide

y T wo or MOR E TH AN T W O P A RTIES in volv ed.

73



y Situation def ining tort

y 1. A doctor while carry ing surgery lea v es the scissors

inside the patient.y 2. Falling of a windo w pane on a tresspasser from a

hotel top.

y 3. Minor dri v ing a car and hits an accident. Guardian

to be held liable.

74



y TORT AND CONTRA CT

y The area of law that developed in the EnglishCommon Law other than breach of contract,

which imposes a duty by operation of law on all

persons to avoid harm to others.y The breach of this obligation gives the injured

person a right to be compensated for damagessuffered.

75



y LI A BILITIES

y CIVIL LI A BILIT Y

y A rising in the normal course of damagey VIC A RIOUS LI A BILIT Y

y A rising when a the doer is diff erent from the main culprit

76



y Case in point :

DONOGHUE

V S STE V ENS

(Law of Torts and Sale of Goods A ct , 1930 are applicable)

77



Module 4Module 4

SALE OF GOODS ACT SALE OF GOODS ACT

OF 1930 OF 1930

78



SECTION 4

STATES SALE OF GOODS IS A CONTRACT

WHEREBY THE SELLER :

TRANSFERS OR AGREES TO TRANSFER THEPROPERTY IN GOODS

TO THE BUYER

FOR MONEY CONSIDERATION.

ALL ESSENTIAL ELEMENTS TO CONTRACT MUSTBE PRESENT.

79



y Essentials to the Contract

y A contract

y Between two parties

y

To transf er or agree to transf ery The propert y in goods

y From the seller to buy er

y For a price( monetary consideration)

80



SALE AND AGREEMENT TO SELL: DISTINCTION

-PROPERTY IN GOODS : IN SALE AT THE TIME OF CONTRACT .IN AGREEMENT TO SELL ON FULFILLMENT OF CONDITIONS.

-

TYPE OF CONTRACT: SALE IS EXECUTED. AGREEMENT TO SELLIS EXCUTORY.

-

LOSS/DESTRUCTION OF GOODS: IN SALE LOSS TO BE FALLS ONBUYER. IN AGREEMNT TO SELL LOSS FALLS ON SELLER.

-BREACH : IN SALE SUIT FOR DAMAGES PLUS ANY OTHER PERSONAL REMEDY/ SUIT FOR CONVERSION. IN CASE OFAGREEMENT TO SELL ONLY SUIT FOR DAMAGES

81



y Classif ication of goods

y

GOODS

EXISTING GOODSSpecific goods

Generic Goods

Ascertained Goods

nascertained Goods

FUTURE GOODSCONTING

GOOD

82



y 1. Existing Goods

y Goods which ph y sically exist and are o wned orpossessed by the seller at the time of sale

y Can be :y Specif ic Goods which are identif ied like buy ing a

LG Micro wa v e

y Generic Goods which are def ined by description like choosing between LG, Samsung, whirlpoolmicro wa v e.

83



y A scertained goods: Specif ic goods identif ied at time of sale.

y Unascertained goods: generic goods unidentif iedat the time of sale.

y 2. Future Goodsy These goods are to be produced or manuf actured

at a latter point of timey 3. Contingent goods are like future and

unascertained goods. Ho we v er execution of such contract is depended on the happening or non-happeneing of an e v ent.

84



y DOCTRINE OF CAVEAT EMPTOR

y .The Principle states that it is the duty of the buyer to be

careful while purchasing goods of his requirement and inthe absence of any enquiry from the buyer , the seller is

not liable to disclose every defect in the goods of which he

may be cognizant.

85



y Illustration

y X purchases a horse from Z , who needed the horse

for riding but did not make complete enquiry, the horse was f it for carriage. Hence X can neither reject nor claim compensation.

86



CASE IN PT:

W ARD

VS

H OBBS

F ACTS :

-HOBBS AUCTIONED PIGS IN THE MARKET.

-

87



y EXCEPTIONS TO DOCTORINE OF CAVEAT

EMPTOR:

y -SELLER MAKES FALSE REPRESENTATION.

y

-SELLER CONCEALS MATERIAL FACTS.y -GOODS BOUGHT FROM A SELLER WHO

DEALS IN THOSE GOODS.

88



y TR ANSFER OF PROPERT Y

y Depends on three stages

y Transf er of Propert y in goods

y

Transf er of possession of goodsy Passing of the risk

89



y The Principle:

y ǲ PROPERT Y IN GOODS MEANS O W NER SHIP

OF GOODS . THE TERM PROPERT Y IN GOODS MUST BE DISTINGUISHED FROM POSSESSION OF GOODS WHICH R EFER S TO CUSTODY OR CONTROL OF GOODS ǲ

y For eg : A carrier or serv ant entrusted with goods is not the o wner of the goods.

90



y Rules regarding transf er of propert y

y

1. Goods must be ascertained : No propert y in goods can pass if the goods are unascertainedgoods.

y 2. Intention to pass the property : Intention depends on the terms of the contract, conduct of the parties and the circumstances of the situation

91



Transfer of title by non-owners

This is based on the maxim ǲ NEMO DAT QUOT NON-

HABETǳ implies no one can give what he has not got.This is intended to safeguard the interest of the trueowner. However it has the following exceptions:

92



EX CEPTIONS:1. TITLE B Y ESTOPPEL2.S A LE B Y MER C ANTILE A GENT3. S A LE B Y A JOINT O W NER

4. S A LE B Y PER SON IN POSSESSION UNDER VOIDA BLE CONTR A CT

5. S A LE B Y SELLER IN POSSESSION A FTER S A LE6. S A LE B Y BU YER IN POSSESSION A FTER S A LE

7. S A LE B Y AN UNP A ID SELLER .

93



AUCTION SALES

( SEC 64)

A SALE WHERE GOODS ARE OFFERED TO BE

TAKEN BY BIDDERS.

AS PER THE ACT SALE IS COMPLETE WHEN

THE AUCTIONEER ANOUNCES THE COMPLETION BY

FALL OF THE HAMMER.

94



Rights of an unpaid seller

Unpaid seller (section 45)

y

Whole price not paid

y B/E has been received as a conditional payment or has been dishonoured

RIGHTS CAN BE ENFORCEDy Against the goods

y And against the buyer personally

95



RIGHTS AGAINST THE GOODS:

1.RIGHT OF LIEN (SEC 47 to 49): RIGHT TORETAIN POSSESSION AND REFUSE TODELIVER TILL PRICE IS PAID.

2. RIGHT OF STOPPAGE OF GOODS (SEC50 to 52):

RIGHT TO STOPWHEN THEY ARE INTRANSMISSIONWHICH CAN BE DONE

Either by taking actual possession // giving noticeof his claim to the carrier.

3.RIGHT OF RESALE( SEC 54)

96



RIGHTS AGAINST THE BUYER

1. SUIT FOR PRICE (SEC 55)

2. SUIT FOR DAMAGES FOR NON ACCEPTANCE(SEC 56)

3. SUIT FOR INTEREST ( SEC 61)

97



Remedies to the Buyer against the Seller

1. SUIT FOR DAMAGES FOR NON-DELIVERY (SEC 57)

2. SUIT FOR SPECIFIC PERFORMANCE ( SEC 58)

3. SUIT FOR BREACH OFWARRANTY

( SEC 59)

4. SUIT FOR RESCINDING THE CONTRACT

( SECTION 60)

5. SUIT FOR RECOVERY OF PRICE AND

INTEREST ( SEC61)

98



CONDITIONS AND WARRANTIES:

Stipulation means a requirement or specified item in an

agreement. It can be of two types:

yCondition

yWarranty

A stipulation is a condition if it is essential to main purpose of

contract.A stipulation is a warranty if it is collateral to the main purpose

of the contract.

99



y T Y PES OF CONDITIONS AND W A RR ANTIES

y Both ma y be either

y Expressedy Implied

y Expressed are in the Contract and def ined in terms of sale.

100



y IMPLIED CONDITIONS:1. Condition as to title eg : a stolen car cannot ha v e a

good title.

2.Sale by description eg : selling a new LG machine as in

in voice , but on deli v ery found to be second hand.3. Sale by sample: eg sample of cloth supplied and gi v en

diff ers. Contract can be a voided by buy er.

101



y 4. Sale by sample as well as description

y 5. Condition as to qualit y or f itness.

y

Eg : buy ing a tweed coat and catching disease. The seller cannot be guilt y .

y 6. Condition as to merchantibilit y .

y 7. Condition as to wholesomeness

102



y IMPLIED W A RR ANTIES

1. Warrant y of quiet possession

2. Warrant y of freedom from encumbrances

3. Warrant y as to qualit y or f itness by usage of trade4. Warrant y to disclose dangerous nature of goods

103



y F AQ

1. Conditions and warranties are indispensable toformation of contract.

2. Doctorine of Ca v eat emptor and itǯs exceptions.

3. What are the v arious t ypes of goods.

104



105

Module 5Module 5

NEGOTIABLE INSTRUMENTSNEGOTIABLE INSTRUMENTS ACT ACT

OF 1881OF 1881



y Definition

y Section 13 states negotiable instrument means:

y ³ promissory note or bill of exchange or cheque payable

to order or the bearer whether the words order or bearer

appear on the instrument or not.´

y Negotiable Instrument means any document

transferable from one person to another.

106



y Essential f eatures of negotiable instrument:

1. Free transferability

2. Offer better title to the transferee.

3. Holder in due course is the owner.4. Holder in due course can file recovery on

suits

5. The instrument is transferable till maturity.

107



y TYPES OF NEGOTIABLE INSTRUMENT

y *PROMISSORY NOTES

y ³Instrument in writing containing unconditionalundertaking signed by the maker to pay acertain sum of money to or to the order of acertain person or to only the bearer of theinstrument´

y Parties : Maker, payee, holder, endorser,endorsee.

108



y Essentials of Promissory note:1. Instrument in writing

2. Undertaking to pa y

3.The undertaking to pa y is unconditional.4. It must be signed by the maker.

5. A mount pa y able must be certain andinmone y form.

6. The pa y ee must be certain.7. Must be duly stamped as per the Stamp A ct.

109



BILLS OF EXCHANGE

y IS AN INSTRUMENT IN WRITINGUNCONDITIONAL ORDER SIGNED BY THE

MAKER DIRECTING A CERTAIN PERSON TOPAY A CERTAIN SUM OF MONEY ONLY TO OR THE ORDER OF CERTAIN SUM OR TO THEBEARER OF THE INSTRUMENT.

y Parties: Drawer, Drawee, Acceptor, payee, holder,endorser, endorsee, drawee, acceptor

110



y Essentials of Bills of Exchange1. It must be in writing

2. It must be an order to pa y

3.The order to pa y must be unconditional4. It must be signed by the drawer.

5. The parties to the bill must be certain.

6. The oder to pa y must be in mone y .

7. The formalities like date , stamp and others should be there.

111



y FORMS OF BILL OF EX CHANGEInland Bill

Foreign Bill

Trade Bill

Accomodation BillBank Draft

112



y Negotiation and Endorsementy Negotiation is a process of transf erring from one

person to another ( f irst hand transf er). Thus alsoconf irms the right of the o wner to bring a legal suit

if necessary .y Endorsement ( endorsement) means writing of the

persons name on the back of the instrument forthe purpose of negotiation.The person who signs is

endorser, who recei v es is called endorsee.

113



NEGOTIATION BY ENDORSEMENT AND DELIVERY

Types:

-BLANK OR GENERAL: SIGNS OR WRITES AT THE BACK PAYABLE TO BEARER.

-SPECIAL OR FULL: ORDERED TO SPECIFIC PERSON

-RESTRICTIVE : PROHIBITS OR RESTRICTS FURTHER NEGOTIATION OF INSTRUMENTS.

-PARTIAL: ENDORSEMENT OF HALF OF THE AMOUNT

-CONDITIONAL OR QUALIFIED : CONDITIONS STIPULATED

114



CHEQUEA cheque is a bill of exchange drawn on a specified banker

and not expressed to be paid otherwise than ondemand.

-It is a B/E with two additional features:-Always drawn on a banker.

-Always payable on demand.

A cheque could be open cheque( payable across counter ) orclosed cheque ( named with two parallel lines.)

115



TYPES OF CROSSINGS

General Crossing-

shown by two parallel lines

Special Crossings-y mentions name of the banker on the face of cheque

y Not negotiable may or may not be written.

Restrictive Crossings-

y Adopted for commercial or banking usage.

116



HUNDIS

ARE NEGOTIABLE INSTRUMENTS NOT COVERED UNDER

THE ACT. THEY MAY AT TIMES BE B/E OR P/N

TYPES: SHAH JOG: PAYABLE TO A RESPECTABLE HOLDER.

JOKHMI : DRAWN ON GOODS TO BE SAILED ON SHIP.

JAWABEE HUNDI: USED FOR REMITTING MONEY FROM

ONE PLACE TO ANOTHER.

NAM JOG : PAYABLE TO THE PARTY NAMED IN THEBILL

DARSHANI HUNDI : PAYABLE AT DEMAND AND

PRESENTED AT DEMAND.

MIADI HUNDI : PAYABLE AFTER A SPECIFIC PERIOD OF

TIME117



y F AQ

y 1. What are the reasons for dishonour of cheques.

y 2. Discuss the criminal labilit y arising on dishonourof a cheque.

118



119

Module 6Module 6

COMPANY LAW COMPANY LAW



y MAIN FEATURES :

y -INDEPENDENT CORPORATE EXISTENCE

y -PERPETUA L SUCCESSION

y

-LIMITED LIABILIT Y y -TRANSFERABLE SHARES

y -POWER TO SUE AND SUED.

120



KINDS OF REGISTERED COMPANIES-PRI V ATE LTD.

-PUBLIC LTD.

Which could be:*LIMITED B Y SHARES: LIABILT Y OF MEMBERS LIMITED B Y

ITS MEMORANDUM.

*LIMITED B Y GUARANTEE: MEMBERS UNDERTAKE TO PA Y DURING ITS WINDING UP.*UNLIMITED COMPANIES: PERSONA L ASSETS ARE A LSO

SEIZED OFF.

121



DISTINCTION BETWEEN PRI V ATE LTD. COMPAN Y ANDPUBLIC LTD. COMPAN Y

1. Minimum Paid-upCapital : A compan y to be Incorporated as a Pri v ate Compan y must ha v e a minimum paid-up capital of R s. 1,00,000,

whereas a Public Compan y must ha v e a minimum paid-up capital of

R s. 5,00,000.

2. Minimum number of members : Minimum number of members required to form a pri v ate compan y is 2, whereas a Public Compan y requires atleast 7 members.

y

3. Maximum number of members : Maximum number of members in a Pri v ate Compan y is restricted to 50, there is no restriction of maximum number of members in a Public Compan y .

122



y 4. Transferability of shares : There is complete restriction on the transf erabilit y of the shares of a Pri v ate Compan y through its A rticles of A ssociation , whereas there is norestriction on the transf erabilit y of the shares of a Public compan y .

y 5. No. Of shareholders Pri v ate Ltd. ha v e minimum 2Shareholders.Public Ltd. ha v e minimum 7 Shareholders,Liabilit y of Compan y & Its properties.

y 6. Public ltd co. has board of directors. Whereas a Pv t. ltd has partners.

123



y F AQ

y Q1. Should common seal be aff ixed to all the documents of the Compan y .

y A ns. No . Common seal ma y be aff ixed only PO A ,Documents requiring Off icial seal, Share warrant andShare Certif icates.

y Thus it has to be specif ied by A O A .

124





y MEMORANDUM OF ASSOCIATION

y IS THE CHARTER OF THE COMPANY

y DEFINES THE RELATIONSHIP OF THE COMPANY WITH

THE OUTSIDE WORLD.y BASED ON TABLES B,C,D AND E OF SCHEDULE I OF THE

COMPANIES ACT , 1956

y BASED ON THE DOCTORINE OF ULTRA VIRES

IT IMPLIES ³ BEYOND THE POWERS´ . THEREFORE IF

ANYTHING IS DONE BEYOND THE OBJECTS OF

MEMORANDUM IT IS ULTRA VIRES.

126



Has Six Clauses:

y -NAME CLAUSE

y -REGISTERED OFFICE CLAUSE

y -OBJECTS CLAUSE

y -LIABILITY CLAUSE

y -SHARE CAPITAL CLAUSE

y ASSOCIATION CLAUSE

y All the clauses are subject to alteration in theAGM

127



ARTICLES OF ASSOCIATION

y Are the bye laws of the company.

y Defines the internal rules and regulations of thecompany.

y Mandatory for a public ltd. Company to register articles else TABLE A of Schedule I comes intoexistence.

y TABLE A could be adopted in full

Or in partOr wholly exclude TABLE A through a clauseand adopt its own byelaws.

128



CONTAINS DETAILS RELATING TO :

-SHARES

-MEETINGS

-DIRECTORS

-CAPITAL

-PROXIES

AND ANY OTHER RELEVANT TO THE

FUNCTIONING.

A COMPANY MAY ALTER ITS ARTICLES WHEN

NEEDED

129



COMPANY FORMATION

PROMOTION

y REGISTRATION

FLOTATION

130



INCORPORATION

-AVAILABILTY OF NAME IN FORM IA

-PREPARATION OF MEMORANDUM AND ARTICLES OF

-ASSOCIATION: MOA CONTAINS CLAUSES AND AOA DETAILSABOUT DIRECTORS, MEETINGS ETC.

-VETTING OF MOA AND AOA

-POWER OF ATTORNEY

-

131



y OTHER DOCUMENTS TO BE FILED WITH ROC:

y FORM 18,

y FORM 29,

y FORM 32.

y -STATUTORY DECLARATION IN FORM 1

y -PAYMENT OF REGISTRATION FEES AND FILING

FEES.

y -CERTIFICATE OF INCORPORATION

132





yMC A 21:y DSN

y DIN

y ONLINE R EGISTR A TION OF COMP ANIES

134



y Types of Meetings:

y Ȉ ANNUA L GENERA L MEETING

y Ȉ BOARD MEETING

y Ȉ STATUTOR Y MEETING

y Ȉ EXTRA ORDINAR Y GENERA L MEETING

135



y F AQy Q1.Def ine Doctorine of Ultra V ires.

y Q2. Diff erence between Motion and resolution.

136



Shares and Share CapitalSHARE

Section 2(46) :

It is a share in the share capital of a Compan y and includes stock except where the distinction between a share

and stock is expressed or implied.

137



Difference Share and Stock

1. Nominal Value: Share present . In stock absent.

2. Distintintive No.: Share present . In stock absent

3. Fully Paid up: Share can be partly or fully paidup. Stock is fully paid up.

4.Transfer : A share cannot be transferred in

fractions whereas stock can be t/ferred in parts.

138



Classes of shares :

y Preference

y Equity

y

Deferred or Founders1. PREFERENCE SHARES ( section 85)

They carry a preferential right over payment of

dividend and repayment of capital on winding up

139



Types:y Participating or non ±participating

y Cumulative or non-cumulative

y Redeemable or irredeemable

2. EQUITY SHARES ( section 85)

Shares which are not preference are equity shares.As per Companies ( Amendment Act ) 2000

y Equity share capital has

y Voting rights, OR

y Is with differential rights regarding dividends , voting or inaccordance with the specific guidelines provided.

SHARE CAPITAL =EQUITY SHARE K +PREFERENTIAL SHARE K y 3. DEFERRED SHARES ISSUED BY A PVT CO AND HELD BY A

PROMOTER

140



y Sweat equity shares

y Implies issue of equity shares to employees or directors at a

discount or for consideration other than cash for providing

know-how or making available rights by way of IPR or Value

additions.y Issued after consent of members by a special resolution in

AGM/EGM.

y Such shares have a lock in period of three years from the date

of allotment.

141



-SHARE CAPITALIt is total capital or figures of rupees divided into shares of fixed amount.

Since:

Share K=Equity share K + Prefr.Share K.

It can be used in the following terms:y AUTHORISED / REGISTERED OR NOMINAL CAPITAL

y ISSUED CAPITAL

y SUBSCRIBED CAPITAL

y

CALLED UP CAPITALy PAID UP CAPITAL AND

y RESERVE CAPITAL

142



y Reserve Capital and Capital Reservey R eserv e Capital is the uncalled part of Capital ehich

Compan y in e v ent of liquidation would be called.

y Capital R eserv e are created out of prof its not fro

distribution to shareholders like re v enue reserv e. Stautory Capital reserv e are ǲCRR A ccount, Securities Premium accountǳ

143



BUY BACK OF SHARES

SEC 77A, 77AA OR 77B

A company can buy its own shares or securities out of :

y Its free reserves

y Securities premium account

y Proceeds of any shares or other specified

securities.

144



The buy back ma y be in an y one of the follo wing modes :- Purchase from open market

- Purchase from odd lot holders

- Purchase from Sweat Equity.

- Purchase of existing equity shareholders.

Conditions

-Must be authorized by articles of association

-Special resolution in AGM/EGM must be passed

-The buy back cannot must be completed within 12months of announcement

145



SHARE CERTIFIC ATE AND SHARE WARRANTShare Certificate is issued within three months of

allotment on fully or partly paid up shares.

Share warrant is issued only on follo wing condition:

y Fully paid up sharesy If the AOA permit

y On approval of the Central Government.

y Must have common seal of the Company.

146



MEMBER SHIP A member is a :y Subscriber to the MOA

y Agreeing to become a member by getting name

registeredy Holder of the equity share Capital of the Company.

y FOR A COMPAN Y LIMITED B Y SHARES , MEMBERS WHOSE NAMES APPEARS IN REGISTER OF MEMBERS ARE A LSO C A LLED SHAREHOLDERS.

147





PROSPECTUSSection 2(36) defines:

y Any document described or issued as a prospectus and

includesy any notice circular , advertisement or other document

inviting deposits from the public

y Or for purchase of any shares or debentures in a body

corporte.

149



CONTENTS OF PROSPECTUS

SECTION 56

Schedule II prescribes prospectus into three parts:

PART I

y General Information

y Capital structure of the Co.

y Terms and particulars of the present issue

y Company management and project.

y Prescribed litigations

y Any other risk factor or disclosure

150



PART II

y General Information

y Financial Information

y Statutory and other Information

PART IIIy Explanations to the terms provided in part I and part II

STATEMENT IN LIEU OF PROSPECTUS

( SEC TION 70)

y

Issued when a public ltd. wants to raise capital from pvt.Sources.

y Schedule III contains a model

151



y A ROC ma y not register prospectus if y - it is not dated

y -Does not comply with section 56 or 70

y - it does not contain consent of auditors , brokers etc.

y -it does not contain statement of experts.

152



LIABILITY FOR MIS-STATEMENTS

y Golden rule states that full and honest disclosure

of material facts must be made else any untrue

statement attracts civil or criminal liability.

y 1. Civil Liability

y - against Company- remedy is recession of contract

or claim for damages.

y - against doer- damages and Compensation

153



2. Criminal Liability

-against Company- fine upto Rs.50,000/-

y - against doer - Fine upto Rs. 50000/-

or imprisonment upto 2 years

or both.

154



DIRECTORSSection 197 A provides appointment of

y Managing director

y Manager

But does not exclude appointment of directors( whichdo not fall in the above category).They could be:

y Executive or Whole time

y Part time directors

y Independent directorsy Nominee directors

155



y Additional directors

y The Board of directors may appoint additional directors

y Articles of Association of the company must permit .

y Such additional directors shall hold office only up to the date of

the next annual general meeting of the company.

y Alternate director

y The Board of directors of a company may, if so authorised by

its articles or by a resolution passed by the company in generalmeeting, appoint an alternate director to act for a director during his absence for a period of not less than three monthsfrom the State in which meetings of the Board are ordinarilyheld.

156



y QUALIFICATION

y Qualification shares are the minimum number of shares a person must own, as provided in the articles

of the company, in order to qualify to become adirector of the company.

y Qualification shares must be acquired by a director within 2 months of his appointment.

y The face value of the qualification shares cannot

exceed five thousand rupees,.

157



y DISQUALIFICATION OF DIRECTORS

y he has been found to be of unsound mind

y he is an undischarged insolvent

y he has applied to be adjudicated as an insolvent and hisapplication is pending

y he has been convicted by a Court

y he has not paid any call in respect of shares of the companyheld by him,

y an order disqualifying him for appointment as director has been passed by a court

158



y POWERS OF THE BOARDy SECTION 291 PROVIDES GENERAL POWERS AND STATES;

y THE BOD ARE AUTHORISED TO EXERCISE ALL SUCH POWERS

AS ARE AUTHORISED BY ACT.

y CANNOT EXERCISE POWERS WHICH THE MOA OR AOA OR ACT

HAS SPECIFIED TO BE CARRIED IN AN AGM

y SECTION 292 PROVIDES POWERS AND 293 PROVIDESRESTRICTIONS

159



y SECTION 292 enables powers at Board meeting:y Call on unpaid money on shares

y Buy back as per section 77A

y Power to issue debentures.

y Power to issue funds of the Company.

y Power to make Loan.

y Other Powers at Board ( other sections)

y

Fill Casual vacancy/ additional director / alternatedirector

y Sanctioning of contract having director¶s interest

y Decide on dividend rate prior to AGM.160



DUTIES OF DIRECTORS

y STATUTORY

y GENERAL

General

y Perform in good faith

y Attend Meetings

y Duty of Care and diligence

y

Duty not to delegate

161





LIABILITIES

Can be clubbed under five heads:

1. Liability to the Company

y Can arise for breach of duty.

y For ultra vires acts

y For negligence

y For breach of trust and misfeasence

163



2. Liability to third parties

y For non-complaince of provisions of Companies

Act (like prospectus sec 56,64,70 )

y For breach of warranty.

3. Liability for breach of Statutory duties

( like filing of return on allotment)

4. Liability for acts of Co-directors

5. Criminal Liability.

164



y CASE

SALOMAN

VS SALOMAN LTD.

165



WINDING ± UP

Modes

y Compulsory winding up under an order of the court

y Voluntary winding up

y Voluntary winding up under the supervision of the court

166



I. Compulsory winding up by CourtReasons

y Default in holding a Stautory meeting

y Failure to commence business business after

incorporationy Reduction in the no. of members ( 2 for pvt ltd. 7 for

public ltd.)

y Inability to pay its debts

y Just and equitable reasons.

167



Procedure :1. The winding up petition must be presented to HC.

Petitioner may be Company itself, Creditor,contributory, Registrar, Central Govt, Official

Liquidator.2. Application must also be made for appointing

provisional liquidator.

3. The Court may dismiss / adjourn the hearing/ pass

interim order or as it deems fit maty pass an order for winding up.

168



II. Voluntary winding up :y Members Voluntary Winding Up.

1. Is possible only when Company is solvent and able to payits liabilities in full.

2 . Directors prepare a DECLARATION OF SOLVENCY .Along with

- an affidavit

- Copy of the Auditors Report.

File an application with the ROC .

3. Appointment and fixing remuneration to the liquidators

169



y Creditors V oluntary Winding Upy This unlike Members Winding up , is resorted by

insolvent Companies

y Procedure

y

Meeting of Creditorsy Appointment of Liquidators and remuneration

y Committee of inspection

y Board Powers Cease.

y Liquidator to call meeting of creditors and Company

y Final Meeting and dissolution.

170



III. V OLUNTAR Y WINDING UP UNDER SUPER V ISION OF COURT

y Once voluntary winding up has been done the court ma y under follo wing circumstances,

winding up to be done under the superv ision of court.:

y If resolution for winding up was obtained by fraud

y

Rules not follo wedy Liquidator is negligent or prejudicial.

171



Module 7 Module 7

Consumer Protection Act Consumer Protection Act (1986)(1986)

Intellectual Property RightsIntellectual Property Rights (IPR)(IPR)

TaxesTaxes



Intellectual Property RightsIntellectual Property Rights

Copyright Copyright Patent Patent

TrademarksTrademarks



y Copyright A ct 1957y A mendments in 1983, 84, 92, 94,99

(On the pattern of British Copyright A ct 1956)

y Pre v ious Law-

y Copyright A ct 1914

(on the pattern of British Copyright A ct 1911)



y

Berne Con v ention 1886(as modif ied in Paris in 1971)y Uni v ersal Copyright Con v ention 1951y TRIPS A greement 1994y

Phonograms Con v ention G

ene v a 1971y Rome Con v ention 1961- India not a signatory, but

Indian law complies with ity Internet Treaties 1996 ( W IPO)y W IPO Copyrights Treat y y W IPO Performance and Phonograms treat y

( W PPT)



y

Berne Con v ention for the Protection of Literary and A rtistic works (1886, 1971). y Uni v ersal Copyright Con v ention 1971. y Con v ention for the Protection of Producers of

Phonograms against Unauthorised Duplication of

their Phonograms (1971). y Multilateral Con v ention for the A voidance of Double

Taxation of Copyright Roy alties. y Trade R elated A spects of Intellectual Propert y R ights

(TRIPS) A greement 1994.



y Ke y Questions: 1. What is Copyright?2. What Types of Intellectual Properties are Protected?3. What is the nature of Protection?4. Is R egistration Necessary For Claiming Copyright

Protection?5. What is the procedure for R egistration?6. R egistration of Copyright in respect of computer

sof tware

7. R egistration of Copyright of Website8. R emedies a v ailable against infringement



y

Copyright is the exclusi v e right of the author of a literary,dramatic, musical or artistic work or a computer program,cinematograph f ilm or sound recording or a broadcaster ora performer to issue copies of the work or communicate the work to the public. The right is for a limited period.

y In the case of a computer program, cinematograph f ilm andsound recording, copyright includes the right to gi v e a copy on commercial rental or hire

y Copyright includes the right to translate or adapt the work



Copyright means the exclusi v e right:1. In the case of a literary, dramatic or musical work, not being a computerprogram:

y To reproduce the work or to store by electronic means

y To issue copies of the work to the public, not being copies already in circulation

y To perform the work in public

y

To communicate the work to the public. y To make cinematograph f ilm or sound recording in respect of the work

y To make an y translation of the work

y To make an y adaptation of the work.

2. In the case of a computer program, cinematograph f ilm or sound recording, tomake a copy or communicate or to gi v e a copy on commercial rental

3. In the case of an artistic work to reproduce the work in an y material formincluding depiction in three dimensions of a two dimensional work



y A work means an y of the follo wing , namely, a literary,dramatic, musical or artistic work, a cinematograph f ilm, broadcast, performance, a Phonogram (soundrecording) or a work of architecture located in India.





A uthor means:y In the case of a literary or dramatic work the author, i.e.,

the person who creates the work.

y In the case of a musical work, the composer.

y In the case of a cinematograph f ilm, the producer.

y In the case of a sound recording, the producer.

y In the case of a photograph, the photographer.

y In the case of a broadcast, the broadcasting organization

y In the case of a performance, the performer

y In the case of a computer generated work, the person whocauses the work to be created.



y Where the assignee does not exercise the rights assigned to him within a period of one y ear fromthe date of assignment, the assignment in respect of such rights shall be deemed to ha v e lapsed af ter

the expiry of the said period unless other wise specif ied in the assignment.

y If the period of assignment is not stated, it shall be deemed to be f i v e y ears from the date of

assignment.



y

Copyright in published literary, dramatic, musicaland artistic works: 60 y ears from the beginning of the calendar y ear next follo wing the y ear in which the author dies, and in the case of photographs,f ilms and sound recordings 60 y ears from the y ear

of publication.y Broadcast R eproduction R ight-25y ears from the

beginning of the calendar y ear next follo wing the y ear in which the broadcast is made

y Performerǯs R ight- 50 y ears from the beginning of the calendar y ear next follo wing the y ear in which the performance is made



1. for the purpose of research or pri v ate study,2. for criticism or re v iew,

3. for reporting current e v ents,

4. in connection with judicial proceedings,

5. performance by an amateur club or societ y if the performance is gi v en to a non-pa y ing audience,

6. Making back-up copies as a temporary protection against loss

7. the making of sound recordings of literary, dramatic or

musical works under certain conditions







"Indian work" means a literary, dramatic or musical work,y the author of which is a citizen of India; or

y which is f irst published in India; or

y

the author of which, in the case of an unpublished workis, at the time of the making of the work, is or was a

citizen of India.



y Copyright of nationals of countries who are members of the Berne Con v ention (1971)for the Protection of Literary and A rtistic W orks, Uni v ersal Copyright Con v ention 1971, Phonogram Con v ention 1971, and the

TRIPS A greement 1994 are protected in India underthe International Copyright Order 1999 on a reciprocalbasis





1. Broadcast" means communication to the public in the form of signs, sounds or v isual images :

(i). by an y means of wireless diffusion, or

(ii). by wire.

2. A licence under the Telegraph act 1885 and the Wireless Telegraph y A ct 1933 is necessary forbroadcasting











y Performerǯs right subsists for 50 y ears from the beginning of the calendar y ear next follo wing the y earin which the performance is made



y

A copyright societ y is a registered collecti v e administration societ y . Such a societ y is formed by copyright o wners. The minimum membershiprequired for registration of a societ y is se v en. Ordinarily, only one societ y is registered to do business

in respect of the same class of work. A copyright societ y can grant licences in respect of an y work in

which copyright subsists.





y Societ y for Copyright R egulation of Indian Producers for Film and Tele v ision (SCRIPT) 135 ContinentalBuilding, Dr. A .B. Road, W orli, Mumbai 400 018, (forcinematograph and tele v ision f ilms).

y The Indian Performing R ight Societ y Limited (IPR S),208, Golden Chambers, 2nd Floor, New A ndheri LinkRoad, A ndheri ( W), Mumbai- 400 058 (for musical works).

y Phonographic Performance Limited (PPL) Flame Proof Equipment Building, B.39, Off New Link Road,

A ndheri ( West), Mumbai 400 053 (for soundrecordings).



y

Making infringing copies for sale or hire or selling orletting them for hire;

y Permitting an y place for the performance of works in public where such performance constitutes infringement of copyright;

y Distribution or Public exhibition of infringing copies for the purpose of trade; and

y Import of infringing copies into India.





y

Injunctions,y Damages and

y A ccounts.

y District Court has the jurisdiction



REGISTRATION OF COP Y RIGHT



y

It i s not necessary to register a work to claim copyright.Ho we v er, certif icate of registration of copyright and the entriesmade therein serv e as prima facie e v idence in a court of law with ref erence to dispute relating to o wnership of copyright.

y Copyright comes into existence as soon as a work is created.

y Both published and unpublished work can be registered.y The Copyright Off ice has been set up to prov ide registration

f acilities to all t ypes of works and is headed by a R egistrar of Copyrights and is located at B.2/ W.3, C.R . Barracks, KasturbaGandhi Marg, New Delhi- 3























When the TRIPS agreement came into force on January 1,1995, de v eloping countries like India were gi v en a grace period of ten y ears to introduce Ǯproduct patentsǯ. During this interim period of ten y ears, all patent applications were put in a Ǯmailboxǯ and were only to be examined af ter January 1, 2005. Ho we v er, Pharmaceutical companies were allo wed to apply for Ǯexclusi v e marketing rightsǯ (EMR ) fortheir products for f i v e y ears if their product was registeredfor a patent and had recei v ed marketing rights in an y of the W TO member countries. Practice of EMR s stopped af ter January 1, 2005.

y Object: To encourage

Scientific research;



new technology; industrial progress

y Methodology: Opportunity of acquiring exclusive rightsstimulates technical progress in the following ways:-

1. Encourages research & invention

2. Inducement to disclose invention

3. Offers a reward

4. Inducement to invest capital









Themes, ideas, titles, names, catch-phrases and othershort-word combinations.







y Characteristic Features of Patent

y 1. Set of exclusive rights

y



y2. Right granted to the true and first inventor

y 3. Of a product or process

y 4. Right to excl ud e others from making, using, sell ing or importing the pat ent ed product or proce ss without his

consent y 5.. Right Granted by the state (Sort of agreement

between inventor and the state)

y 6. Right In exchange for Public disclosure of complete

specifications of the invention.y 7. Right Granted For a fixed period of time (20 years

from the date of filing)

y Characteristic Features of Copyright



1. Right over original works of authorship 2. Protects the form of expression, not the subject matter or

idea

3. The right is for a longer duration (life of author+60 years)

4. Copyright is automatically granted

5. Registration of Copyright helps in proving the copyright.

The burden of proof shifts to the party who denies copyright

y Examples of Copyright:

y Book, Film, Music, Sound Recording, Casette, Tape, Play/Drama,

Performance, Television and Radio Programs, Art, Photograph,Painting; Computer Program (Software)

ORGANIZATION STRUCTUREORGANIZATION STRUCTURE-- IPIPOFFICESOFFICES



MINISTRY OF INDUSTRY & COMMERCE

Office of the Controller General of Patents, Designs

& Trademarks

Patent office Kolkatta, Delhi, Mumbai, chennai

GI Registry Chennai

TM Registry Kolkatta, Delhi, Chennai, Mumbai,Ahmedabad,

Designs wing Kolkatta

y



Exclusi v e right to pre v ent third parties, who do not ha v e his consent, from making, using, selling orimporting the product or using the process (S. 48)

y Exceptions (S. 47):

1. Use by gov t. for its o wn use

2. Use for experiment, research or instructions topupils

Sec. 2(1)(j): µInvention¶ means a new product or process



involving an inventive step & capable of industrialapplication ±

1. Process, method or manner of manufacture,

2. Machine, apparatus or other article,

3. Substance produced by manufacture,And includes any new & useful improvement of any of

them.

y NEW: that no other inventor has obtained a patent for the same



invention.

y NON-OBVIOUS that the subject matter of an invention was notobvious at the time the invention was made to a person having ordinaryskill in the art to which said subject matter pertains.

y USEFUL :that the machine, product, or process is one that can be usedin industry or commerce.

Novelty Non-Obviousness (an inventive step) Utility (Capable of industrial application)

y



8. A method of agriculture or horticulture, seeds, etc.



9. Any process of medicinal, surgical application on human beings or animals to render them free of disease.

10. Plants, seeds, animals and biological processes for production or propagation of plants and animals

11. Computer program, per se, other than its application to industry or combination with hardware (embedded software)

12. A mathematical method or a business method

13. Literary, dramatic, musical, artistic, aesthetic creation includingcinematic work or television production

14. A method of playing game, presentation of information

15. Integrated circuits

16. Traditional knowledge, or aggregation of traditionally knowncomponents

.



y Atomic energy 1962(S.4)

y Traditional knowledge

y Scientific principle

y Abstract theory

y Discovery of natural substances

y New form of a known substance

y Mixture of known compounds

y Methods of agriculture





1. Application (s 10)2. Publication (S.11-A),

3. Examination (S.11-B, 12).

4. Pre-Grant Opposition (after publication and before grant)5. Grant of patent (Notification)6. Post-Grant opposition (within an year of grant)

7. Maintenance of patent (renewal after three years-renewal fee)8. Working of patent (Satisfactory availability of the patented product atreasonable prices-Compulsory licensing by the Controller , if required)

9. Revocation of patent (s 64- wrongfully obtained)10. Remedies against abuse of patent (S . 66, revocation in public interest by

central govt.-mischievous)11. Penalties ( S. 120- falsely representing µPatented¶, µPatent applied for¶-fine up

to Rs 1 lakh)12 Infringement (S.108, injunction, either damages or an account for profits)















How can one find out that an invention is already patented?y Th d f li i h



y The person concerned can perform a preliminary search on:1. Patent Off ice website in the I ndian patent data base of granted

patents, or 2. Patent Office journal published e v ery week, or3. Search in the documents kept in the Patent Office Search and

Reference Room, which contains Indian patents arranged according tointernational patent classif ication s y stem.

4. One can also make a request for information regarding an y patent under section 153 of the A ct



















5. Power of Controller to direct revision of application if

specification relate to more than one invention or as respects



specification relate to more than one invention or as respects post-dating or ante-dating of application (S.16,17)

6. Power of controller to direct the applicant to insert a referenceto the other specification by way of notice to the public inthe applicants complete specification in case of anticipation

by prior claim or potential infringement (S.18, 19)7.When all the requirements are met, the patent is granted and

notified in the P at ent office J ournal .

8. However before the grant of patent and after the publication of application, any person can make a representation for pr e-

grant opposition.9. Post- grant opposition, within one year from the date of

publication of grant [S. 25 (3)]



y

Jurisdiction District Court (S 104)



Jurisdiction-District Court (S.104)y If the def endant makes a counter claim for

re vocation of the patent-High Court

y Burden of Proof (104- A ): If the patentee f irst

prov es that the product is identical then if the sub ject matter is a process, the court ma y direct the def endant to prov e that the process used by him to obtain the product was diff erent.









y Contra v ention of secrec y directions rele v ant for def ense purposes

(S 35) or applying for patents outside India without prior permissionof the Controller (S 39) is punishable with imprisonment up to 2



(S.35) or apply ing for patents outside India without prior permission of the Controller (S. 39) is punishable with imprisonment up to 2 y ears or with f ine or with both. (S 118)

y Unauthorized claim of patent rights: If an y person f alsely represents that an y article sold by him is patented in India by using words such as ǯ patented ǯ , Ǯpatent applied for ǯ ; he shall be punishable with fine upto Rs 1 lakh ( S.120)

y Failure or refusal to furnish information to: (1) central gov t. to use in v ention for purposes of gov t. [S.100(5)](2) Controller regarding the extent of commercial use of the in v ention

in India as required us 146Punishable with fine up to Rs 10 lakh (S. 122):

y Practice by non-registered patent agents punishable with f ine up toR s 1 lakh(S. 123)

y After 3 years of patent, anyone can request a license from

the govt. on these grounds



y That the reasonable requirements of the

public with respect to the patented invention

have not been satisfied

y That the patented invention is not available

to the public at reasonably affordable price

y Export of pharmaceuticals to poor countries

1. A n y time af ter three years of the sealing of a patent an y interested

person may apply to the Controller for grant of compulsory licence onthe ground that reasonable requirements of the public with respect to



person ma y apply to the Controller for grant of compulsory licence on the ground that reasonable requirements of the public with respect tothe patented invention are not being satisfied at reasonably affordable

price or that the invention is not being worked in I ndia2. The Controller has to take into account the efforts made by the

applicant for obtaining a licence from the patentee on reasonable terms and the f act that such efforts were not successful within a reasonable period.

3. Controller will secure reasonable royalty and other remuneration to the patentee

4. A f ter the expiration of two years from the date of granting the firstcompulsory licence, an y person ma y apply to the Controller to re voke the patent on the same grounds as mentioned in the f irst para.

y Administered by

Offi f th C t ll G l f



Office of the Controller General of Patents, Designs & Trade Marks(CGPDTM)

~300 examinersPatents now granted in 2-3 years

y Balancing of public and private rights

S f h l i l i



y Structure of the patents legislation

y Scope of patentability

y Exclusion from patentability

y Procedure for grant of patents

y Remedies against abuse of patents

y Exceptions to patents rights

y Remedies against infringement

y

More than 90% of patent rights are held in developedt i



More than 90% of patent rights are held in developedcountries

y 95% of patents are not working

y Not all industries are bothered about patents (E.g. Auto

industry)

y Industries keen on Patent-Chemical, Biotech, IT Sector etc

y When an application for a patent complies with the A ct and Rules it is in order for grant

y

and the applicant is notif ied of the date on which the complete specif ication of they application will be published. For a patent to be granted the applicant must request



application will be published. For a patent to be granted the applicant must request

y sealing on the appropriate form and pa y the required f ee. This form must be f iled within

y 4 months of the date on which the complete specif ication is published, sub ject the there

y not being an y pending action on the application in an y court or before the Comptroller.

y Follo wing such an action the request for sealing must be f iled within 2 months af ter the

y action is completed. In all cases an extension of up to 3 months are allo wed for making

y the request for sealing on pa yment of an additional f ee. The patent is prepared on oney of the forms set out in a schedule to the Rules and sealed with the Patent Office seal,

y the date of sealing being entered in the R egister of Patents.

Trademarks ActTrademarks Act 19991999



Trademarks Act Trademarks Act 19991999

TRADE MARK S AC T 1999

BACKGROUND

y It replaced the Trade & Merchandise Marks Act 1958



y It replaced the Trade & Merchandise Marks Act, 1958

y The Trade Mark Act, 1999 was enacted to bring our

law in conformity with the TRIPs Agreement 1994, to

which India is a signatory

y The Trade Marks Act, 1999, came into force on

September 15, 2003.

5/9/2010

y Trade Mark is a mark which is capable of being represented graphically (visually) and is capable of



represented graphically (v isually ), and is capable of distinguishing goods or services of one person fromthose of others.

y It ma y include shape of goods, their packaging andcombination of colours

5/9/2010

y Mark includes brand (name used to identify goods or

services or business) label name letter word numeral



serv ices or business), label, name, letter, word, numeral,signature, shape of goods, packaging, combination of colours, or an y combination of these

5/9/2010

y Trade Mark is a visual symbol, word, letter, numeral,

name, signature, label, identifying or distinguishing thed i f f h f h d



, g , , y g g ggoods or services of one person from those of others, and

capable of graphic representation

y Trade mark shows the connection between:

1. Goods and services on the one hand, and

2. The business dealing with them, or the business from

where they originate on the other

5/9/2010



5/9/2010



5/9/2010



5/9/2010

Some More Definitions

y Well-known Trade Mark: means a mark well known to a sub stantial se gment

of the publ ic using such goods or service s, if the use of such mark in r el ation

to other goods or service s would be taken as indicating a connection with that

well-known trade mark.[ S. 2(zg)], eg. µWal-Mart¶, µMarks and Spencer¶,µXerox¶



Xerox

y Collective Mark: a Trade Mark distinguishing the goods and service s of

members of an association of persons. Collective Mark is owned by an

association of persons (not being a partnership within the meaning of Indian

Partnership Act, 1932) [S. 2(g)] ; eg. ASSOCHAM, FICCI

y Certification Mark: means a mark capable of distinguishing goods or services

which the proprietor of the mark certifies in respect of origin, material, quality,

accuracy, ingredients or other characteristics, etc. e.g. Agmark, ISI mark [S.

2(e)]

5/9/2010

y Any name, surname of the applicant or predecessor in

business or the signature of the person, which is not

unusual for trade to adopt as a mark.



p

y An invented word or any arbitrary dictionary word or

words, not being directly descriptive of the character or

quality of the goods/service.

y Letters or numerals or any combination thereof.

y Monograms

y Marks constituting a 3-dimensional sign

5/9/2010

y Combination of colors or even a single color in combinationwith a word or device Shape of goods or their packaging

y Sound marks



y Symbols

y If it is a word it should be easy to speak, spell and remember.

y Best TMs are invent ed or coined words.

y Avoid selection of a geographical name, names of chemicalelements (S.13). No one can have monopoly rights on suchthings.

y Avoid adopting laudatory word or words that describe thequality of goods (such as best, perfect, super etc)

y Conduct a market survey to ascertain if same/similar mark isused in market.

5/9/2010

1. Identification of goods / or services and their origin

2. Used on goods, containers & wrappers

3 Marketing Advertisement and display on windows etc



3. Marketing, Advertisement , and display on windows, etc.

4. Trade mark is a guarantee for unchanged nature, quality &

characteristics of goods and services; The brand operates as

a seal of authenticity.

5. Creates an image for the goods/ services; a badge of loyalty

and affiliation

6. Trade Mark is a property (goodwill) which can be

transferred, sold or bought

5/9/2010

LEGAL REQUIREMENTS FOR REGISTERING TM:

y The selected mark, brand, label, name, signature or abbreviation, etc should be :

1. Capable of being represented graphically (in the paper

form).C bl f b i d i l ti t d i



2. Capable of being used in relation to goods or services

3. Capable of distinguishing the goods or services of oneundertaking from those of others

4. Capable of indicating the connection, in the course of trade, between the goods or services on the one handand their proprietor or permitted user on the other

5/9/2010

REGISTRATION OF TM

Controller General of Patents, Designs and Trademarks isalso Registrar of Trademarks

Registry H.O.: MumbaiBranch offices (4): Kolkata Chennai New Delhi



g yBranch offices (4): Kolkata, Chennai, New Delhi,

Ahmedabad

Registrar publishes the classification of goods and

services, as far as possible, in accordance withinternational classification. (S.7,8)

Register of TM contains: all record of registered TMs,with names, addresses and description of proprietors,

users, assignments, transmissions, conditions andlimitations (S.6)

A digital library of 1,50,000 TMs and 1250 TM journalson CD-ROM 5/9/2010

A trade mark shall not be registered if :

1. It is devoid of distinctive character 2 It d i th bli f i



2. It deceives the public or causes confusion

3. Its use is prohibited under any law, like the Emblems and

Names (Prevention of Improper Use) Act 1950

4. It is scandalous or obscene matter 4. It is likely to hurt religious susceptibilities

5. It consists exclusively of marks and indications to designate

kind, quality, quantity, intended purpose, values,

geographical origin etc.; or a mark which has become

customary.

5/9/2010

y If there is likelihood of confusion on the part of the public because of identit y with or similarit y to



p y yan earlier trade mark and identit y or similarit y of goods and serv ices cov ered by the trade mark

y Identit y with or similarit y to a well kno wn trade

mark in India which would take unf air adv antage or be detrimental to the repute of that well kno wn trade mark

y Good f aith of parties will be seen while taking a

v iew

5/9/2010

a) Filing

b) Examination



b) Examination

c) Acceptance and advertisement of application

d) Opposition, if any, within three months of

advertisemente) Registration

5/9/2010

y Any person claiming to be the proprietor of a TMused or proposed to be used by him may apply in



writing in prescribed manner for registration.

y The application should contain:1. The TM,

2. Goods/services to which the Trade Mark relates,3. Name and address of applicant and agent (if any) with

power of attorney

4. Period for which the Trade mark has been in use, andsignature, etc.

5/9/2010

y Registrar may withdraw the acceptance if he is satisfied

that the appl ication has been acce pt ed in error or thati h h h i i h ld



circumstances are such that such registration should not be granted

y Registrar has to hear the applicant before withdrawing

the acceptance.

5/9/2010

y Registrar shall get the application advertised in the journal

within six months after acceptance. (However, the application



shall be advertised before acceptance if the application is

related to a TM in respect of which there are grounds of

refusal under sections 9 & 11.

y Purpose of advertisement is to give information to public atlarge in respect of the TM advertised and afford an

opportunity to oppose the registration of the mark on given

grounds.

5/9/2010

y Any person: a customer, purchaser or a member of the public who is likely to use the goods may oppose theregistration of TM (Sec. 21)

y The period of filing opposition: 3 months from



p g pp fadvertisement dat e (extendable by Registrar up to 1month on payment of prescribed fee).

y On r eceiving the notice of opposition, the Re gistrar sends

a cop y to the appl icant . The applicant is given 2 monthstime to file count er stat ement to the registrar. This copyof count er stat ement shall be sent to the person who has filed opposition (sec.21 (3))

y If the opposition is decided in favour of applicant for the

trade mark, the trade mark is registered.

5/9/2010

y The registration shall be made as of the application date

and the applicant shall be issued a certificate of

registration.(S.23)



y Registration is valid for 10 years and may be renewed

indefinitely, for 10 years at a time. (S.25)

y Failure to renew registration leads to removal of TM

from the Register; it could be restored by an application

filed within 1 year. (S.25)

y The mark can be registered jointly for two or more

persons (sec. 24) & none of them is entitled to use themark independently

5/9/2010

1. Renewal of Trade Mark

2. Acquiescence



q

3. Cancellation for non use

4. Infringement

5/9/2010

y A n application for renewal (for ten y ears) should be made

six months before the expiry of the registration with the prescribed renewal fee



prescribed renewal f ee

y R egistrar ma y remov e the trade mark from the register,af ter gi v ing notice, if the trade mark is not renewed.

y R egistrar ma y restore the trade mark on application andpa yment of f ee within one y ear from the expiration

y Where a trade mark is remov ed from the register for non pa yment of renewal f ee, that trade mark will be freezed for one year ( Will not be allocated to another applicant for

one y ear).

5/9/2010

y A registered Trade Mark ma y be taken off the register(remov ed from the register) if there is no bonaf ide use



of the trade mark for a continuous period of five years(S.47)

5/9/2010

y Where the proprietor of an earlier trade mark has acquiesced for five years in the use of a registered trade

k b f h h h ll l b



mark, being aware of that use, he shall no longer be entitled to oppose the use of the later trade mark,unless he can prov e that the registration of the

subsequent trade mark was not obtained in good f aith (S.33)

5/9/2010

y A registered TM is infringed by a person who, without the permission of

the proprietor,

uses in the course of trade an identical or a decept ivel y si mil ar TM



in relation to goods or services for which the TM is registered; or

Uses a mark which because of its identity or similarity with the

regd. TM and the identity or similarity of the goods/services

covered by it

is lik el y t o cause conf usion on the part of the public. (S.29)

y No action for infringement can be taken in respect of unregistered

Trade Mark . However, action can be taken for µpassing off¶

goods/services as those of another person (S. 27)

5/9/2010

y Suit for infringement can be f iled in the District

Court (s.134)R li f il bl i S it f I f i t (S )



y R elief a v ailable in Suits for Infringement (S. 135):

1. Injunction, and

2. Either damages or an account of prof its, at the

option of the plaintiff,3. Destruction or erasure of infringing labels and

marks

5/9/2010

y Where a person, by circulars, adv ertisement orother wise groundlessly threatens a person with action f i f i f d k hi h i i d



for infringement of a trade mark which is registered oralleged to be registered, the person aggrie v ed ma y obtain a declaration that the threats are unjustif ied, an

injunction against the treats and damages (S.142)

5/9/2010

y Falsify ing and Falsely apply ing a trade mark: A pply ing a

trade mark without the assent of the proprietor, or making a decepti v ely similar trade mark, or altering a genuine trade k ( S )



mark ( S. 102)y Penalt y for apply ing f alse trade mark- Imprisonment for 6

months to 3 y ears and with f ine of R s 50,000 to R s 2 lakh (S.103).The offence is cognizable ( S.115)

y Penalt y for selling goods or serv ices to which f alse trade mark is applied- same penalt y (S.104). The offence iscognizable (S. 115)

y Penalt y for f alsely representing a trade mark as registered-imprisonment up to 3 y ears, or f ine, or both (s.107)

y Court ma y order forf eiture of goods to gov ernment in case of con v iction (S.111)

Note: cognizable: Police can arrest without warrant5/9/2010



5/9/2010

y Where a person has made an application in a con v ention country, within 6 months of that date he

t i t d d thi A t i I di d th



ma y get registered under this A ct in India; and the registration will be deemed to be as of date on which the application was made in the con v ention country .

(S.154)

5/9/2010

y Trade mark has legal v alidit y . Itǯs infringement can be

challenged in a court and is punishable according to Trade Marks A ct



y R egistration of domain name is on a f irst come f irst registered basis. It is self regulated by the network and the technolog y used. [Internet Protocols, www, TCP/IP, DNS (Domain Name S y stem)].

y Internet Network Information Centre (Inter NIC) in the US is responsible for handling the DNS. Netwok Solutions Inc. (NSI) assigns domain names on behalf of Inter NIC. Pre-empti v e, and at times fraudulent, registrations (reserv ation) of well kno wn trade marks and compan y

names are of ten being made by persons who ha v e nogenuine interest for later on selling and traff icking on a premium. This is kno wn as Ǯc yber squattingǯ

5/9/2010

y The y are all Intellectual Properties- legal rights, which result from intellectual activity in the industrial scientific



result from intellectual acti v it y in the industrial, scientif ic,literary and artistic f ields.

y The all are time-limited rights to control the use of their

intellectual creations.y Patents and Trade Marks relate to Ǯindustrial propert y ǯ.

Patents relate to creations of technolog y, in v entions,products and processes. Trade marks are used on goods and serv ices of businesses.

y Copyright does not relate to industrial propert y but toliterary, artistic, musical, dramatic, cinematographic,phonographic work, broadcasts or performances.

y Patents can only be acquired through registration

y Trade marks can be acquired through use orregistration



registration

y Copyright is acquired as soon as the literary/ artistic/musical/ dramatic ǥ work is created. R egistration of

copyright only shif ts the burden of proof on the person who is accused of infringement

y Patents- 20 y ears from the date of f ilingy

Trade Mark- 10 y ears from the date of registrationy Copyright:



1. Copyright in published literary, dramatic, musical and artistic works: 60 y ears from the beginning of the calendar y ear next follo wing the

y ear in which the author dies, and in the case of photographs, f ilms and sound recordings 60 y ears from the y ear of publication.

2. Broadcast R eproduction R ight-25y ears from the beginning of the calendar y ear next follo wing the y ear in which the broadcast is made3. Performerǯs R ight- 50 y ears from the beginning of the calendar y ear

next follo wing the y ear in which the performance is made

y Patents-

1. Only ci v il remedies of injunction, damages or accounts of prof its are a v ailable. Seizure, forf eiture or destruction of

f d h C d f (S )



infringing goods, as the Court deems f it (S. 108)2. Infringement of patent is not an off ence. No criminal

action is possible.

3. ǮDamagesǯ or Ǯan account of prof itsǯ shall not be grantedagainst a def endant who prov es that he was not aware of the patent.

y Mere mention of ǮPatentedǯ on the article is not deemed tomake e v eryone aware of the existence of patent, unless the number of the patent is also mentioned on the article (S.111)

4. Burden of prov ing infringement is on the patent o wner.

Trade Mark:

Ci v il as well as criminal remedies are a v ailable against infringement orǮpassing of ǯ. 1 Civil Remedies of Injunction damages or account of profits seizure and



1. Ci v il R emedies of Injunction, damages or account of prof its, seizure anddestruction of infringing material are a v ailable (S.135).

2. Criminal Off ences : Off ences of apply ing f alse trade marks or selling them are cognizable. Police can arrest without warrant (S.115)

y

Penalt y for apply ing f alse trade mark- Imprisonment for 6 months to 3 y ears and f ine of R s 50,000 to R s 2 lakh (S.103).The offence iscognizable ( S.115)

y Penalt y for selling goods or serv ices to which f alse trade mark is applied- same penalt y (S.104). The offence is cognizable (S. 115)

y Penalt y for f alsely representing a trade mark as registered-

imprisonment up to 3 y ears, or f ine, or both (s.107)

Copyright:

1. Ci v il remedies include:

y Injunctions,

y Damages and



g

y A ccounts.

y District Court has the jurisdiction

2. Criminal Off ences include (S. 63):

y A n y person who kno wingly infringes copyright in a work shall be punishable with

imprisonment of 6 months to 3 y ears and f ine of R s 50,000 to R s 2 lakh.y Where infringement has not been made for gain in the course of trade or business, court

ma y gi v e lesser punishment for reasons to be recorded.

y Construction of a building which infringes copyright in some other work is not an off ence under this section

y Ho we v er, none of the off ences is cognizable

3. Police can seize infringing material (S.64)

4. R ights are a v ailable to e v en unregistered work. R egistration only shif ts the burden of proof on the person accused of infringing

y Patents lapse unless renewed periodically during theirlife of 20 years by payment of renewal fee (S 53)



lif e of 20 y ears by pa yment of renewal f ee (S.53). Lapsed patents can be restored on pa yment of renewalf ee (S. 60). Patents can not be renewed af ter the expiry

of their 20 y ear term.y Trade Marks can be renewed, indef initely, for ten

y ears at a time (S. 25 ).

y Patents can be re voked for non working, an y time af ter

two y ears from grant of compulsory licence. (S. 85). Patents can also be revoked in public interest (S 66)



Patents can also be re voked in public interest (S 66).

y A registered trade mark ma y be taken off the registeron the ground of non-use for 5 y ears.(S.47)

y A n y time af ter three y ears from the date of grant of patent,

Controller of Patents can grant compulsory licence to an applicant who could not succeed in his efforts forobtaining a licence from the patentee if he finds that the



obtaining a licence from the patentee, if he f inds that the reasonable requirements of the public with respect to the patent are not being met at reasonable prices. Controllershall secure reasonable roy alt y for the patentee (S.84, 90)

y Copyright Board ma y authorize grant of compulsory licence to publish a work which has been published orperformed in public but is subsequently being withheldfrom public by refusal of the o wner of the copyright torepublish the work. (S 31). Licences ma y also be granted to

publish translations af ter a specif ied period from f irst publication.

INCOME TAX A CT, 1961

It is a tax imposed by the Government of India on any body who earns income in India.



Who is supposed to pay Income Tax?

Any Individual or group of Individual or artificial bodies who/which have earned income during the previous yearsare required to pay Income tax on it. The Act recognizesthe earners of income under seven categories. Eachcategory is called a Status. These are Individuals, Hindu

Undivided Family [HUF], Association of Persons [AOP],Body of individuals [BOI], Firms, Companies, Localauthority, Artificial juridical person.

Previous Y ear:

Income earned in the twelve months contained in theperiod from 1st April to 31st March (commonly calledFinancial Year) is taken into account for purposes of



Financial Y ear) is taken into account for purposes of calculating Income Tax. Under the income tax Act thisperiod is called a Previous year.

Assessment Y ear:

It is the twelve-month period 1st April to 31st Marchimmediately following the previous year. In the

Assessment year a person files his return for the incomeearned in the previous year.

Applicability of Income Tax:

The Income tax Act applies to all persons who earnincome in India. Whether they are resident or non-resident



resident.

Resident:

If an individual stays in India for 182 days or more in a year, he is treated as resident in that year regardless of hiscitizenship. If the stay is less than 182 days he is a non-resident.

Taxable Income:

Under the Act, all incomes earned by persons areclassified into 5 different heads, such as:

y Income from Salary



y Income from Salary

y Income from House property

y Income from Business or Profession

y Income fromCapital gainsy Income from other sources

Exempt Income (Section 10):

Section 10 grants certain exemptions on incomes earned by theassessees. Some of which arAgricultural income

1) Leave Travel Concession received from employer.2) Gratuity (As per conditions mentioned in the Act)



3) Commuted pension (As per conditions)4) Leave Encashment (As per conditions)5) Compensation received for voluntary retirement- upto maximum

of Rs.5 lacs.6) House Rent Allowance (As per conditions)7) Payments received from recognized provident fund.8) Prescribed allowances.

Meaning of salary:

Salary under the Act is defined U/s 17(1), which includesthe following:-

W



y Wages

y Annuity or Pension

y Gratuity

y Fees, commission, perquisites, profit in lieu of salary

y Any advance of salary

y Leave Travel Concession

y

Transferred balance in a recognized Provident Fund, tothe extent it is taxable.

Allowances:

i. Entertainment Allowance - Exempt only forGovt. employees.



ii. Conveyance Allowance - Exempt to the extentof expenditure incurred.

iii. Children Education allowance - Exempt uptoRs.100 p.m. per child to a maximum of 2children.

iv. Transport Allowance- Exempt upto Rs.800

p.m.

v. House Rent Allowance (HRA)- exempt upto minimumof the following:

y 50% of salary, if residential house is situated atMumbai, Kolkata, Delhi or Chennai and 40% in other



Mumbai, Kolkata, Delhi or Chennai and 40% in othercases.

y HRA received

y Rent paid minus 10% of salary.(Salary here means basic salary+DA+Commission)

Deduction under Section 80C:

Section 80 C provides deduction in respect of specified

qualifying amounts (investments/ contributions/deposits/ payments) made by the tax payer during the



p / p y ) y p y gprevious year. For example-

y Life insurance premium

y Subscription to National Saving Certificatesy Subscription towards notified units of Mutual Funds

The maximum amount deductible is Rs.1,00,000.

Rates of Income Tax (Assessment Y ear 2010-11):

(For individuals)

NET INCOME RANGE RATES

Upto Rs 1 60 000 Nil*



Upto Rs.1,60,000 Nil

Next Rs.1,60,000-Rs.3,00,000 10%

Next Rs.3,00,000-Rs.5,00,000 20%

Next Above Rs.5,00,000 30%

Educ ation cess: 3% of income tax

* Women - Net Income upto Rs.1,90,000 is exempt from tax.

*Senior citizens (65yrs or more) - Net Income upto Rs.2,40,000 is

exempt from tax.

For Domestic Companies:

y Income-tax: 30% of total income.

y Surcharge: 10% of such income tax, provided that thetotal income exceeds Rs 1 crore



total income exceeds Rs. 1 crore.

y Education Cess: 3% of the total of Income-tax andSurcharge.

Return Of Income:

It is a prescribed form through which the particulars of income

earned by a person in a f inancial y ear and taxes paid on suchincome is communicated to the Income tax department af ter



pthe end of the Financial y ear. Diff erent forms are prescribed forf iling of returns fordiff erent Status and Nature of income.

Last dates for filing of return:

STATUS LAST DATE

Companies 30th September

Other Entities that require auditof their accounts

30th September

Other cases 31st July

Calculation of tax:

Basic salary xxx

Commission xxx

Allowances (minus exemptions) xxx



( p )

Gr oss salar y xxx

Other income xxx

Gr oss T otal income xxxLess: Deduction u/s 80C xxx

N et I ncome xxx

Income tax on net income xxx

Add: Surcharge xxx Add: Education Cess xxx

Add: Secondary and higher edu. Cess xxx

T a x payabl e xxx

INCOME TAX A CT, 1961

It is a tax imposed by the Government of India on any body who earns income in India.



Who is supposed to pay Income Tax?

Any Individual or group of Individual or artificial bodies who/which have earned income during the previous yearsare required to pay Income tax on it. The Act recognizesthe earners of income under seven categories. Eachcategory is called a Status. These are Individuals, Hindu

Undivided Family [HUF], Association of Persons [AOP],Body of individuals [BOI], Firms, Companies, Localauthority, Artificial juridical person.

Previous Y ear:

Income earned in the twelve months contained in the

period from 1st April to 31st March (commonly calledFinancial Y ear) is taken into account for purposes of



p pcalculating Income Tax. Under the income tax Act thisperiod is called a Previous year.

Assessment Y ear:

It is the twelve-month period 1st April to 31st Marchimmediately following the previous year. In the

Assessment year a person files his return for the incomeearned in the previous year.

Applicability of Income Tax:

The Income tax Act applies to all persons who earn

income in India. Whether they are resident or non-resident.



Resident:

If an individual stays in India for 182 days or more in a year, he is treated as resident in that year regardless of hiscitizenship. If the stay is less than 182 days he is a non-resident.

Taxable Income:

Under the Act, all incomes earned by persons are

classified into 5 different heads, such as:y Income from Salary



y

y Income from House property

y Income from Business or Profession

y Income fromCapital gainsy Income from other sources

Exempt Income (Section 10):

Section 10 grants certain exemptions on incomes earned by theassessees. Some of which arAgricultural income

1) Leave Travel Concession received from employer.2) Gratuity (As per conditions mentioned in the Act)) C t d i (A diti )



3) Commuted pension (As per conditions)4) Leave Encashment (As per conditions)5) Compensation received for voluntary retirement- upto maximum

of Rs.5 lacs.6) House Rent Allowance (As per conditions)7) Payments received from recognized provident fund.8) Prescribed allowances.

Meaning of salary:

Salary under the Act is defined U/s 17(1), which includesthe following:-

y Wages



Wages

y Annuity or Pension

y Gratuity

y Fees, commission, perquisites, profit in lieu of salary

y Any advance of salary

y Leave Travel Concession

y

Transferred balance in a recognized Provident Fund, tothe extent it is taxable.

Allowances:

i. Entertainment Allowance - Exempt only forGovt. employees.

ii C All E t t th t t



ii. Conveyance Allowance - Exempt to the extentof expenditure incurred.

iii. Children Education allowance - Exempt uptoRs.100 p.m. per child to a maximum of 2children.

iv. Transport Allowance- Exempt upto Rs.800

p.m.

v. House Rent Allowance (HRA)- exempt upto minimumof the following:

y 50% of salary, if residential house is situated atMumbai, Kolkata, Delhi or Chennai and 40% in other



cases.

y HRA received

y Rent paid minus 10% of salary.(Salary here means basic salary+DA+Commission)

Deduction under Section 80C:

Section 80 C provides deduction in respect of specified

qualifying amounts (investments/ contributions/deposits/ payments) made by the tax payer during the



previous year. For example-

y Life insurance premium

y Subscription to National Saving Certificatesy Subscription towards notified units of Mutual Funds

The maximum amount deductible is Rs.1,00,000.

Rates of Income Tax (Assessment Y ear 2010-11):

(For individuals)

NET INCOME RANGE RATES

Upto Rs.1,60,000 Nil*



p , ,

Next Rs.1,60,000-Rs.3,00,000 10%

Next Rs.3,00,000-Rs.5,00,000 20%

Next Above Rs.5,00,000 30%

Educ ation cess: 3% of income tax

* Women - Net Income upto Rs.1,90,000 is exempt from tax.*Senior citizens (65yrs or more) - Net Income upto Rs.2,40,000 is

exempt from tax.

For Domestic Companies:

y Income-tax: 30% of total income.

y Surcharge: 10% of such income tax, provided that thetotal income exceeds Rs. 1 crore.



y Education Cess: 3% of the total of Income-tax andSurcharge.

Return Of Income:

It is a prescribed form through which the particulars of income

earned by a person in a f inancial y ear and taxes paid on suchincome is communicated to the Income tax department af terh d f h Fi i l Diff f ib d f



the end of the Financial y ear. Diff erent forms are prescribed forf iling of returns fordiff erent Status and Nature of income.

Last dates for filing of return:

STATUS LAST DATE

Companies 30th September

Other Entities that require auditof their accounts

30th September

Other cases 31st July

Calculation of tax:

Basic salary xxx

Commission xxx

Allowances (minus exemptions) xxx



Gr oss salar y xxx

Other income xxx

Gr oss T otal income xxxLess: Deduction u/s 80C xxx

N et I ncome xxx

Income tax on net income xxx

Add: Surcharge xxx Add: Education Cess xxx

Add: Secondary and higher edu. Cess xxx

T a x payabl e xxx

DIRECT AND INDIRECT TAXES:

Direct Tax is the tax, which is paid directl ybypeople to thegov ernment, while indirect tax is paid indirectly by people



to the gov ernment through registered gov ernmentrepresentati v es.

Income Tax is paid directly to the gov ernment therefore it isa direct tax while excise dut y is paid by people to themanuf acturer who pa y s it to the gov ernment, therefore it isan indirect tax.

CENTRA L EX CISE :

Central Excise is an indirect tax; which is le v ied andcollected on t h e goods/commodities manufactured inIndia.



This indirect taxation is administered through an

enactment of the CentralG

ov ernment v iz., the CentralExcise Act, 1944 and other connected rules.

The rates at which the excise dut y is to be collected arestipulated in the Central Excise Tariff Act, 1985.

Dutiability:

A s per section 3 of Central Excise A ct (CEA ) excise dut y is



p 3 ( ) yle v ied only if the follo wing all conditions are satisf ied: -

y There should be goods.

y Goods must be mov eable

y Goods are marketable

y Goods are mentioned in the Central Excise Tariff A ct

y Goods are manuf actured in India.

Chargeability of Excise Duty:

Excise dut y is le v ied on production of goods butthe liabilit y of excise dut y arises only on remov al of goods from the place of storage i e factory or



goods from the place of storage, i.e., f actory or warehouse.

A s Excise dut y is le v ied at the time of remov al of goods. Hence the date of its actual production isnot rele v ant. The date of remov al is rele v ant andthe rate of excise dut y applicable on the date of

remov al shall be actual rate of excise dut y to bepaid.

V AT ( V alue Added Tax):

V alue A dded Tax means tax on v alue addition. V alueaddition means the v alue of output as reduced by v alue of



inputs. Under v alue added tax all taxes borne in respect of inputs is allo wed to be set off against the taxes paid on f inal

product in order to sub ject only v alue addition, at each stageto taxation.

CEN V AT underCentral Excise:

CEN V A T stands for "Central V alue A dded Tax". This scheme was introduced with a v iew to remov e the eff ect of thedouble taxation.



Under this scheme, a manuf acturer can take credit of excise

dut y paid on raw materials and components used by him inhis manuf acture. Since it amounts to excise dut y only onadditions in v alue by each manuf acturer at each stage, it iscalled v alue-added-tax (V A T).

The CEN V A T credit can be utilized to wards pa yment of

excise dut y on the f inal product.

Duty payment:

Excise Dut y is pa y able on monthly basis by 5th of thenext month in which dut y pa yment becomes due, i.e.,the month in which goods are cleared from the factory



the month in which goods are cleared from the f actory .

Small Scale Industry (SSI) is required to pa y the dut y by

15th of the next month. Ho we v er, the dut y for themonth of March is paid by 31st March itself .

CENTRA L SA LES TAX:

Central Sales Tax A ct,1956 (CST A ct) prov ides for le vy,

collection and distribution of taxes on sales of goods in thecourse of inter-state trade or commerce.



Inter State Sale (Section 3)

Sale is Inter-State when:

(a) sale occasions mov ement of goods from one State toanother or

(b) is eff ected by a transf er of documents of title to the goodsduring their mov ement from one State to another.

Goods under CST A ct [Sec 2(d)]:

Sales tax liabilit y is on Ǯgoodsǯ. The CST A ct def ines thatǮgoodsǯ includes all materials, articles, commodities and all



kinds of mov able propert y, but does not includenewspapers, actionable claims, stocks, shares and securities.

Transactions which are not sales:

i. Charge/ mortgage/ h ypothecation/ pledge

ii. Job work/ processing



J p g

iii. Consignment/ branch transf er/ depot transf er

i v .Barter or exchange

v . Free Gif t

Person liable to pay CST:

The A ct specif ies that e v ery dealer who in the course of inter

State trade or commerce sells the goods shall be liable to pa y tax under the A ct. Thus, liabilit y is on the dealer who 'sells' thegoods [Section 8(1)]



goods [Section 8(1)].

Registered Dealer: A 'register dealer' means a dealer who is registered under CST A ct. [section 2(f )]. Section 9 A specif ies that only a registereddealer can collect taxes in respect of sales made by him in Inter

State Trade.

State relevant to a dealer:

Normally, State from which mov ement of goods commences is

entitled to collect CST [Section 9(1)].



Form C:

The purchasing dealer can issue ǮCǯ form to the seller and

purchase goods at concessional rate. Submission of C form ismandatory and unless C form is submitted, concessional rateof sales tax will not apply .

The blank C form has to be obtained by purchasing dealer from

Sales Tax authorit y in the State where purchasing dealer isregistered.

Rate of CST:

The current rate of CST is 2% w.e.f . 1st June , 2008.



Customs Act, 1962:

This Act provides for levy and collection of duty,

import/export procedures, prohibitions on importationand exportation of goods, penalties, offences etc. Importduty is levied on almost all items while export duty is



duty is levied on almost all items, while export duty islevied only on a few limited products, where Indian goods

are in commanding position.

Customs Act is used to :

(a) regulate imports and exports

(b) protect Indian industry from dumping(c) collect revenue of customs duty.

Dutiable goods:Goods become liable to import duty or export duty whenthere is Ǯimport into, or export from India'.

Taxable Event:In case of Imports:



In case of Imports:The import of the goods commences when they enter intoterritorial waters but taxable event occurs when goods

cross customs barrier.

In case of Exports:Export is complete only when goods cross territorial waters of India.

* Territorial waters of India extend upto 12 nautical milesfrom the baseline on the coast of India.

Methods of V aluation:

The methods of valuation for customs are as follows -

Transaction V alue of Imported goods

Transaction V alue of Identical Goods



Transaction V alue of Similar Goods

Deductive V alue which is based on identical or similarim por ted goods sold in India

Computed value which is based on cost of manufactureof goods plus profits

Residual method based on reasonable means and data

available.

Types of Custom Duties:

i. Basic Custom Duty

ii. Additional Duty or Countervailing Duty

iii. Anti-dumping Duty



iv. Safeguard Duty

v. National Calamity Contingent Duty (NCCD of customs)

vi. Export Duty

_________x________x_________

