STUDY MATERIAL
EXECUTIVE PROGRAMME
ECONOMIC AND ECONOMIC AND ECONOMIC AND ECONOMIC AND
COMMERCIALCOMMERCIALCOMMERCIALCOMMERCIAL LAWLAWLAWLAWSSSS
MODULE 1
PAPER 3
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Laser Typestting by Delhi Computer Services, Dwarka, New Delhi November, 2016
EXECUTIVE PROGRAMME
ECONOMIC AND COMMERCIAL LAWS
India has made considerable economic progress since its Independence. Over the years, the
various policy initiatives and economic reforms in India have made India one of the fastest growing
economies in the world today. The emerging economic environment involving rapid technology
changes, response in terms of change in methods, trade and services, globalisation of economy,
liberalisation of trade and industry and emphasis on international competitiveness and bringing the
existing laws in tune with the future market needs, the Government has also initiated legislative
reforms in the area of economic and commercial laws. The Government enacted Foreign Exchange
Management Act, The Competition Act, 2002 replacing the MRTP Act and amended the Consumer
Protection Act in the year 2002. The Legal Metrology Act, 2009 replacing Standards of Weights and
Measures Act, 1976 and Foreign Contribution (Regulation) Act, 2010 replacing Foreign Contribution
(Regulation) Act, 1976. In the area of Intellectual property, the Government has enacted Trade Marks
Act and Designs Act, and amended the Patents Act and the Copyright Act. In this regard the
Government has further amended the Patents Act in 2005 and Copyright Act in 2012. The Foreign
Trade Policy 2009-14 has also been announced in line with the reform agenda and amended from
time to time. Further, the Prevention of Money Laundering Act to deal with new categories of economic
offences, has also been made effective w.e.f. 1st July, 2005 and amended in 2009 and 2012.
Similarly, in the area of Environment Laws, the process of reforms is going on and Parliament enacted
National Green Tribunal Act, 2010.
In the light of above developments, this study material has been prepared to provide an
understanding of certain economic and commercial legislations which have direct bearing on the
functioning of companies. The study material has been divided into two parts consisting of fifteen study
lessons. Part A consists of Study Lessons I to IX, whereas Part B consists of Study Lessons X to XV.
This study material has been published to aid the students in preparing for the Economic and
Commercial Laws paper of the CS Executive Programme. It is part of the education kit and takes the
students step by step through each phase of preparation stressing key concepts, pointers and
procedures. Company Secretaryship being a professional course, the examination standards are set
very high, with emphasis on knowledge of concepts, applications, procedures and case laws, for which
sole reliance on the contents of this study material may not be enough. Besides, as per the Company
Secretaries Regulations, 1982, students are expected to be conversant with the amendments to the
laws made upto six months preceding the date of examination. The material may, therefore, be
regarded as the basic material and must be read alongwith the original Bare Acts, Rules, Regulations,
Case Law, as well as recommended readings given with each study lesson.
As the area of economic and commercial laws undergoes frequent changes, it becomes
necessary for every student to constantly update himself with the various legislative changes made as
well as judicial pronouncements rendered from time to time by referring to the Institute’s journal
‘Chartered Secretary’ as well as other law/professional journals.
(iv)
The legislative changes made upto October 30, 2016 have been incorporated in the study
material. However, it may so happen that some developments might have taken place during the
printing of the study material and its supply to the students. The students are therefore, advised to
refer to the e-bulletin and other publications for updation of the study material.
In the event of any doubt, students may write to the Directorate of Academics in the Institute for
clarification at [email protected]. Although due care has been taken in publishing this study
material yet the possibility of errors, omissions and/or discrepancies cannot be ruled out. This
publication is released with an understanding that the Institute shall not be responsible for any errors,
omissions and/or discrepancies or any action taken in that behalf.
Should there be any discrepancy, error or omission noted in the study material, the Institute shall be
obliged if the same are brought to its notice for issue of corrigendum in the `e-bulletin’.
(v)
EXECUTIVE PROGRAMME
SYLLABUS
FOR
PAPER 3: ECONOMIC AND COMMERCIAL LAWS (100 Marks)
Level of Knowledge: Part A-Advance Knowledge
Part B- Working Knowledge
Objective: To acquire knowledge and understanding of Economic and Commercial Laws.
Detail Contents:
PART A: (70 Marks) 1. Foreign Exchange Management
• Objectives and Definitions under FEMA, 1999
• Current Account Transactions and Capital Account Transactions
• FDI Policy
• Foreign Direct Investment in India and Abroad
• Acquisition and Transfer of Immovable Property in India and Abroad
• Establishment of Branch, Office etc. in India
• Export of Goods and Services
• Realization and Repatriation of Foreign Exchange
• Authorized Person
• Penalties and Enforcement
• Foreign Contribution ( Regulation )Act, 2010
• Foreign Contributions and Hospitality
• Exemptions
• Powers of Central Government
• Adjudication, Appeal and Compounding
• Offences and Penalties 2. Foreign Trade Policy and Procedures
• Main Features
• Special Focus Initiatives
• Served from India Scheme
• Export Promotion Council
• Vishesh Krishi and Gram Udyog Yojana
(vi)
• Focus Market Scheme; Focus Product Scheme; Duty Exemption and Remission Schemes;
Advance Authorization Scheme; DFRC; DEPB; EPCG, etc.
• EOUs, EHTPs, STPs, BPTs and SEZs
3. Competition and Consumer Protection
• Concept of Competition
• Development of Competition Law
• Competition Policy
• Competition Act, 2002 – Anti Competitive Agreements, Abuse of Dominant Position,
Combination, Regulation of Combinations, Competition Commission of India; Appearance
before Commission, Compliance of Competition Law
• Consumer Protection Act, 1986
• Consumer Protection in India
• Genesis of the Law and Objects
• Rights of Consumers
• Nature and Scope of Remedies
• Appearance before Consumer Dispute Redressal Forums
4. Intellectual Property Rights
• Introduction – GATT, WIPO and TRIPS
• Concept and Development of Intellectual Property Law in India
• Law and Procedure Relating to Patents, Trade Marks and Copyrights
• Geographical Indications
• Design Act
• Overview of Laws Relating to Other Intellectual Property Rights
• Intellectual Property Appellate Board 5. Law relating to Arbitration and Conciliation
• Introduction to UNCITRAL MODEL LAW
• Law of Arbitration in India
• Types of Arbitration
• Appointment of Arbitrators – Procedure
• Judicial Intervention
• Venue – Commencement
• Award – Time limit, Enforceability, Interest
• Recourse against Award – Appeals
• Conciliation and Compromise
• International Commercial Arbitration ; Foreign Awards
• Arbitration Agencies – ICADR, ICA, Chambers of Commerce, Professional Arbitrators
• Alternate Disputes Resolution 6. Law relating to Transfer of Property
• Important Definitions
• Types of Properties
(vii)
• Movable and Immovable Property
• Properties which cannot be Transferred
• Rule Against Perpetuities
• Lis Pendens
• Provisions Relating to Sale
• Mortgage, Charge, Lease, Gift and Actionable Claim 7. Law relating to Stamps
• Methods of Stamping
• Consequences of Non-Stamping and Under-Stamping
• Impounding of Instruments
• Construction of Instruments for Determination of Stamp Duty Payable
• Adjudication
• Allowance and Refund
• Penal Provisions
• Concept of E-Stamping
8. Law relating to Contract
• Contract – Introduction
• Legality of Objects
• Standard Form of Contract
• Multinational Agreement
• E-Contracts
• Strategies and Constraints to enforce Contractual Obligations
• Special Contracts: Indemnity and Guarantee; Bailment and Pledge; Law of Agency
9. Prevention of Money Laundering
• Genesis
• Prevention of Money Laundering Act, 2005
• Concept and Definitions, Various Transactions, etc.
• Obligations of Banks and Financial Institutions
• RBI Guidelines on KYC
PART B: (30 Marks)
10. Law relating to Essential Commodities, Weights and Measures
• Overview of Essential Commodities Act, 1955
• Objects
• Powers of Central Government
• Seizure and Confiscation of Essential Commodities
• Summary Trial
• The Legal Metrology Act, 2009
11. Law relating to Societies
• General Concept Relating to Registration of Societies
• Property of Societies
(viii)
• Suits by and against Societies
• Enforcement of Judgment against Societies
• Dissolution of Societies
12. Law relating to Trusts
• General Concept relating to Trusts
• Creation of Trust
• Duties and Liabilities of Trustees
• Rights and Powers of Trustees, Disabilities of Trustees
• Rights and Liabilities of the Beneficiary
13. Industries Development and Regulation
• Objects and Definitions
• An Overview of Industrial Policy
• Regulatory Mechanism under IDRA
• The Micro, Small and Medium Enterprises Development Act, 2006
14. Law relating to Pollution Control and Environmental Protection
• Concept of Sustainable Development and Bio Diversity
• Government Policy Regarding Environment
• Law Relating to Prevention and Control of Air Pollution and Water pollution
• Environment (Protection) Act, 1986
• National Green Tribunal
• Appearance before Environment Tribunal/Authority
• Public Liability Insurance Act, 1991
15. Law relating to Registration of Documents
• Registration of Documents – Compulsory and Optional
• Time and Place of Registration
• Consequences of Non-Registration
• Description of Property
• Miscellaneous Provisions
(ix)
LIST OF RECOMMENDED BOOKS
ECONOMIC AND LABOUR LAWS
Recommended Readings and References:
1. Vinod Dhall : Competition Law Today – Concepts, Issues and the
Law in Practice; Oxford University Press, New Delhi.
2. T. Ramappa : Competition Law in India – Policies, Issues, and
Developments; Oxford University Press, New Delhi.
3. ICSI : Practitioner’s Guide to Consumer Protection Law.
4. Dr. K.R. Chandratre : Handbook on Consumer Protection Law; Vidhi
Publishing, New Delhi.
5. Dr. V.K. Aggarwal : Consumer Protection Law and Practice; Bharat Law
House, 22, Tarun Enclave, Pitampura, New Delhi -
110 034.
6. Dr. Gurbax Singh : Law of Consumer Protection; Bharat Law
Publications, 22, Tarun Enclave, Pitampura, New
Delhi - 110 034.
7. Kuldeep Saxena : Consumer Protection Act & Rules, Law Links.
8. Sumeet Malik : Environmental Law; Eastern Book Company,
Lucknow.
9. Dr. H.N. Tripathi : The Environment Pollution Control Manual; Hari Law
Agency, Allahabad.
10. Lall’s : Commentaries on Water and Air Pollution Laws; Delhi
Law House, Delhi.
11. Rajiv Jain : Guide to New Industrial Policy, with Procedure; India
Investment Publications, New Delhi.
12. Bare Act : Prevention of Money-Laundering Act.
13. Richard Parlour : International Guide to Money-Laundering Law and
Practice.
14. Bare Act : Foreign Exchange Management Act.
15. SnowWhite : Foreign Exchange Management Manual.
16. S.K. Roy Chaudhary & H.K.
Saharay
: The Law of Trademarks, Copyright, Patents and
Design.
17. B.L. Wadehra : Law Relating to Patents, Trademarks, Copyright,
Designs and Geographical Indications.
18. Aswani Kr. Bansal : Law of Trademarks in India.
19. Satyawrat Ponkse : The Management of Intellectual Property.
(x)
20. Ministry of Commerce &
Industry
: Foreign Trade Policy and Procedure.
21. A.M. Satarvad : Mulla on the Transfer of Property Act, 1882; N.M.
Tripathy Pvt. Ltd., Bombay
22. S.K. Roy Chowdhary & H.K.
Saharay
: Law of Arbitration and Conciliation; Eastern Law
House, Calcutta
Note:
(i) Students are advised to read the relevant Bare Acts.
(ii) The latest available editions of the books referred to above may be read.
(iii) Students may refer e-bulletin available on ICSI website www.icsi.edu regularly for academic guidance.
(xi)
ARRANGEMENT OF STUDY LESSONS
Lesson No. Subject
PAPER 3: ECONOMIC AND COMMERCIAL LAWS (100 Marks)
PART A
I. Foreign Exchange Management
II. Foreign Trade Policy and Procedures
III. Competition and Consumer Protection
IV. Intellectual Property Rights
V. Law relating to Arbitration and Conciliation
VI. Law relating to Transfer of Property
VII. Law relating to Stamps
VIII. Law relating to Contract
IX. Prevention of Money Laundering
PART B
X. Law relating to Essential Commodities, Weights and Measures
XI. Law relating to Societies
XII. Law relating to Trusts
XIII. Industries Development and Regulation
XIV. Law relating to Pollution Control and Environmental Protection
XV. Law relating to Registration of Documents
TEST PAPER
EXECUTIVE PROGRAMME
ECONOMIC AND COMMERCIAL LAWS
CONTENTS
PART A
LESSON I
FOREIGN EXCHANGE MANAGEMENT
Section I
Page
Learning Objectives … 1
Introduction … 2
Definitions … 2
Regulation and Management of Foreign Exchange … 4
Current Account Transactions … 4
Capital Account Transaction … 7
Foreign Direct Investment Policy 2016 … 9
Intent and Objective … 9
Definitions … 10
Eligible Investors … 14
Eligible Investee Entities … 15
Entry Routes for Investment … 16
Prohibited Sectors … 17
FDI – Permitted Sectors … 18
Types of Investments … 19
Provisions Relating to Issue/Transfer of Shares … 20
Prior Permission of RBI in Certain Cases for Transfer of Capital Instruments … 23
Conversion of ECB/Lumpsum Fee/Royalty etc. into Equity … 24
Issue of Rights/Bonus Shares … 25
Remittance and Repatriation … 28
Reporting of FDI … 29
Adherence to Guidelines/Orders and Consequences of Violation … 31
Penalties … 31
Adjudication and Appeals … 31
Compounding Proceedings … 32
Investment in Equity of Companies Registered Overseas/Rated Debt Instruments … 35
Acquisition and Transfer of Immovable Property Outside India … 39
Acquisition and Transfer of Immovable Property in India … 40
Establishment in India of Branch/Liaison/Project Office … 42
(xiii)
Page
Export of Goods and Services … 44
Realisation, Repatriation and Surrender of Foreign Currency … 47
Possession and Retention of Foreign Currency or Foreign Coins … 49
Authorised Person … 49
Contravention and Penalties … 51
Enforcement of the Orders of Adjudicating Authority … 51
Compounding of Contraventions … 52
Powers of Reserve Bank to Compound Contravention … 53
Powers of Enforcement Directorate to compound contravention … 53
Payment of Compounded Amount … 53
Adjudication and Appeal … 54
Appointment of Adjudicating Authority … 54
Appeal to Special Director (Appeals) … 54
Establishment of Appellate Tribunal … 54
Appeal to High Court … 55
Directorate of Enforcement … 55
Investigation … 55
Contravention by Companies … 56
LESSON ROUND-UP … 56
SELF-TEST QUESTIONS … 57
FOREIGN CONTRIBUTION (REGULATION) ACT, 2010
Section II
Learning Objectives … 59
Introduction … 60
Definitions … 60
Regulation of Foreign Contribution and Foreign Hospitality … 63
Prohibition to accept foreign contribution … 63
Person to whom section 3 does not apply … 63
Procedure to notify an organization of a political nature … 64
Restriction on acceptance of foreign hospitality … 64
Prohibition to transfer foreign contribution to other person … 65
Utilization of foreign contribution … 65
Power of Central Government to prohibit receipt of foreign contribution … 66
Power to prohibit payment of currency received in contravention of the Act … 66
Registration of certain persons with Central Government … 66
Grant of certificate of registration … 67
Suspension of certificate … 69
(xiv)
Page
Cancellation of certificate … 69
Management of foreign contribution of person whose certificate has been cancelled … 69
Renewal of certificate … 69
Application for Renewal … 70
Accounts, intimation, audit and Disposal of Assets … 70
Foreign contribution through scheduled bank … 70
Intimation … 70
Maintenance of accounts … 70
Order for Audit of accounts … 70
Intimation by candidate for election … 71
Disposal of assets created out of foreign contribution … 71
Inspection, Search and Seizure … 71
Seizure of accounts or records … 71
Adjudication of confiscation … 71
Appeal … 72
Penalty and Punishment … 72
Offences by companies … 72
Composition of certain offences … 72
LESSON ROUND-UP … 73
SELF TEST QUESTIONS … 73
Lesson 2
FOREIGN TRADE POLICY AND PROCEDURES
Section I
Learning Objectives … 75
Introduction … 76
Focus of the Foreign Trade Policy (FTP) … 76
Legal Basis of the Foreign Trade Policy (FTP) … 76
Amendment to Foreign Trade Policy (FTP) … 77
Transitional Arrangements … 77
Definitions … 77
General Provisions Regarding Imports and Exports … 81
Importer Exporter Code Number (IEC No) … 82
IEC No: Exempted Categories … 83
Principles of Restriction … 85
Export and Import of Restricted Goods/Services … 85
Export from India Schemes … 85
Merchandise Export from India Schemes (MEIS) … 86
Service Exports from India Schemes (SEIS) … 87
(xv)
Page
Status Holder … 89
Status Category … 89
Duty Exemption/Remission Schemes … 90
Advance Authorisation for Spices … 91
Eligible Applicant/Export/Supply … 91
Advance Authorisation for Annual Requirement … 91
Eligibility Condition to obtain Advance Authorisation for Annual Requirement … 91
Value Addition … 92
Admissibility of Drawback … 92
Validity Period for Import … 93
Importability/Exportability of items that are Prohibited/Restricted/
State Trading Enterprise … 93
Free of Cost Supply by Foreign Buyer … 93
Domestic sources of Inputs … 93
Currency for Realisation of Export Proceeds … 94
Export Obligation … 94
Export Obligation Period (EOP) Extension for units under Board of
Industrial and Financial Reconstruction (BIFR)/ Rehabilitation … 94
Duty Free Import Authorisation Scheme (DFIA) … 95
Duty Exempted and Admissibility of CENVAT and Drawback … 95
Eligibility … 95
Minimum Value Addition … 95
Validity and Transferability of DFIA … 95
Sensitive Items under Duty Free Import Authorisation ... 96
Schemes for Exporters of Gems and Jewellary … 96
Items of Export … 96
Export Promotion Capital Goods (EPCG) Scheme … 97
Export Obligation … 98
Export Oriented Units (EOUs), Electronics Hardware Technology Parks (EHTPs)
Software Technology Parks (STPs) and Bio-Technology Parks (BTPs) … 100
Introduction and Objective … 100
Export and Import of Goods … 100
Second hand Capital Goods … 102
Leasing of Capital Goods … 102
Net Foreign Exchange Earnings … 102
Letter of Permission/Letter of Intent and Legal Undertaking … 102
Investment Criteria … 103
Applications and Approvals … 103
DTA sale of Finished Products/Rejects/Waste/Scrap/Remnants and By-products … 103
(xvi)
Page
Other Supplies … 105
Export through others … 105
Entitlement for Supplies from the DTA … 105
Other Entitlements … 106
Inter Unit Transfer … 107
Sub-Contracting … 107
Sale of Unutilized Material … 108
Reconditioning/Repair and Re-engineering … 108
Replacement/Repair of Imported/Indigenous Goods … 108
Exit from EOU Scheme ... 109
Conversion … 110
Monitoring of NFE … 110
Export through Exhibitions/Export Promotion Tours/Showrooms
Abroad/Duty Free Shops … 110
Personal Carriage of Import/Export Parcels including through
Export/Import by Post/Courier … 110
Revival of Sick Units … 110
Approval of EHTP/STP … 110
Approval of BTP … 110
Warehousing Facilities … 111
Quality Complaints and Trade Disputes … 111
Quality Complaints/Trade Disputes … 111
Provisions in FT (D&R) Act & FT (Regulation) Rules for necessary
Action against Erring Exporter/Importer … 111
Mechanism for handling of Complaints/Disputes … 112
Proceedings under CQCTD … 113
Procedures to deal with Complaints and Trade Disputes … 113
Corrective Measures … 113
Nodal Officer … 113
LESSON ROUND-UP … 113
SELF TEST QUESTIONS … 114
SPECIAL ECONOMIC ZONES ACT, 2005
Section II
Learning Objectives … 115
Introduction … 116
Definitions … 116
Establishment of Special Economic Zone … 117
(xvii)
Page
Establishment, Approval and Authorization to Operate
Special Economic Zone … 118
Guidelines for notifying Special Economic Zone … 119
The Processing and Non-Processing areas … 119
Exemption from taxes, duties or cess … 119
Constitution of Board of Approval … 119
Duties, powers and functions of Board of Approval … 119
Suspension of letter of approval and transfer of Special Economic
Zone in certain cases … 120
Development Commissioner … 121
Functions of the Development Commissioner … 121
Constitution of Approval Committee … 121
Powers and Functions of Approval Committee … 122
Setting up of Unit … 122
Cancellation of letter of approval granted to entrepreneur … 122
Setting up and operation of Offshore Banking Unit … 123
Setting up of International Financial Services Centre … 123
Single application form, return, etc. … 123
Agency to inspect … 123
Single enforcement officer or agency for notified offences … 124
Investigation, Inspection, Search or Seizure … 124
Designated Courts to try suits and notified offences … 124
Appeal to High Court … 124
Offences by Companies … 124
Exemptions, drawbacks and concessions to every Developer
and entrepreneur … 125
Application of the provisions of the Income Tax Act, 1961 with certain
modifications in relation to Developers and entrepreneurs … 125
Duration of goods & services in Special Economic Zones … 125
Transfer of ownership and removal of goods … 125
Domestic clearance by Units … 125
Special Economic Zone Authority … 125
Functions of Authority … 126
Directions by the Central Government … 126
Returns and reports by the Authority … 126
Power of the Central Government to Supersede Authority … 126
Reference of Dispute and Limitation … 127
Person to whom a communication to be sent … 127
Identity card … 127
Power of the Central Government to modify provisions of the Act
or other enactments in relation to Special Economic Zones … 127
Power of State Government to grant exemption … 128
(xviii)
Page
SEZ Act to have overriding effect … 128
Special Economic Zones to be ports, airports inland container depots,
land stations etc. in certain cases … 128
Special Economic Zones Rules, 2006 … 128
LESSON ROUND-UP … 128
SELF-TEST QUESTIONS … 129
Lesson 3
COMPETITION AND CONSUMER PROTECTION
(THE COMPETITION ACT, 2002)
Section I
Learning Objectives … 131
Introduction ... 132
Definition of Competition … 133
Competition and Economic Efficiency ... 133
Competition Law and Policy … 134
Competition Regime in India … 135
Economic Reforms and Competition … 136
Competition Law—Evaluation and Development ... 136
Background to the MRTP Act, 1969 ... 136
MRTP (Amendment) Act, 1991 ... 138
Scope and Applicability of the MRTP Act ... 139
Monopolistic Trade Practices … 140
Restrictive Trade Practices … 141
Unfair Trade Practices … 142
Consumer Protection Law in India … 142
Recommendations of Sachar Committee … 143
Competition Act, 2002 ... 144
Definitions ... 145
Anti Competitive Agreements ... 150
Prohibition of abuse of Dominant Position ... 153
Combinations ... 154
Regulation of Combinations … 158
Competition Commission of India ... 159
Inquiry into certain agreements and dominant position of enterprise ... 162
Inquiry into Combination by Commission ... 164
Reference by a statutory authority ... 165
Meetings of Commission ... 166
Procedure for inquiry on complaints under section 19 ... 166
(xix)
Page
Orders by Commission after inquiry into Agreements or
Abuse of Dominant Position … 167
Division of Enterprise Enjoying Dominant Position … 167
Procedure for investigation of combination ... 168
Inquiry into disclosures under Section 6(2) ... 168
Orders of Commission on certain combinations … 169
Appearance before Commission ... 170
Power of Commission to regulate its own procedure ... 171
Rectification of orders ... 172
Execution of orders of the Commission Imposing Monetary Penalty ... 172
Duties of Director General ... 173
Penalties ... 173
Compensation in case of Contravention of Orders of Commission … 174
Contravention by companies ... 175
Competition Advocacy ... 175
Finance, Accounts and Audit ... 176
Competition Appellate Tribunal … 177
Appeal to Appellate Tribunal … 177
Composition of Appellate Tribunal … 178
Procedures and Powers of Appellate Tribunal … 179
Appeal to Supreme Court … 181
Miscellaneous … 181
LESSON ROUND-UP … 188
SELF-TEST QUESTIONS ... 188
CONSUMER PROTECTION - LAW AND PRACTICE
Section II
Learning Objectives … 191
Introduction … 192
Genesis of Consumer Protection Laws ... 192
Basic Rights of Consumers ... 193
Definitions ... 193
Consumer Protection Councils ... 198
Redressal Machinery under the Act ... 199
District Forum ... 199
State Commission ... 201
National Commission ... 203
Complaints before the District Forum and State Commission ... 204
(xx)
Page
Limitation period for filing of complaint ... 205
Powers of the Redressal Agencies ... 206
Nature and scope of remedies under the Act ... 207
Appeal ... 208
Penalties ... 208
Gist of Important Consumer Cases ... 209
LESSON ROUND-UP … 214
SELF-TEST QUESTIONS ... 215
Lesson 4
INTELLECTUAL PROPERTY RIGHTS
Section I
Learning Objectives … 217
General Agreement on Tariffs and Trade … 218
General Agreement on Trade and Services … 218
World Intellectual Property Organization … 219
Trade-Related Aspects of Intellectual Property Rights … 219
Concept and development of Intellectual property Law in India … 220
Concept of patent … 222
Concept of Trade Mark … 222
Concept of Copy Right … 223
Concept of Design … 222
Concept of Geographical Indication … 224
LESSON ROUND-UP … 227
SELF-TEST QUESTIONS ... 227
THE PATENTS ACT, 1970
Section II
Learning Objectives … 229
Introduction … 230
Definitions … 230
What are not inventions … 231
Persons Entitled to make Application for Patent … 232
Form of Application and Provisional & Complete Specification … 232
Contents of Specifications … 233
Publication of Applications … 234
Request for Examination … 235
Examination of Application … 235
Search for Anticipation by Previous Publication and by Prior Claim … 235
(xxi)
Page
Consideration of the Report of Examiner by Controller … 236
Power of Controller to Refuse or Require Amended Application in
Certain matters … 236
Power of Controller to make Orders Respecting Dating of Application
and Cases of Anticipation … 236
Potential infringement … 237
Substitution of applicants etc. … 237
Time for Putting Application in Order for Grant … 238
Opposition to the Patent … 238
Controller to Treat Application as Application of Opponent … 240
Constitution of Opposition Board and its proceeding … 240
Secrecy of Certain Inventions … 241
Secrecy Directions for Defence Purposes … 241
Review of Secrecy directions … 241
Residents not to Apply for Patents Outside India Without Prior
Permission … 242
Grant of Patents … 242
Grant of patents subject to conditions … 242
Term of Patent … 243
Patents of Addition … 243
Restoration of Lapsed Patents … 244
Procedure for disposal of applications for restoration of lapsed patents … 244
Rights of patentees of lapsed patents which have been restored … 244
Surrender and Revocation of Patents … 244
Working of Patented Inventions – General Principles … 245
Compulsory Licences … 245
Revocation of Patents by the Controller for Non-Working … 247
Procedure for dealing with applications … 247
Powers of Controller in granting compulsory licences … 247
Terms and conditions of compulsory licences … 248
Licensing of Related Patents … 249
Compulsory licences on Notifications by Central Government … 249
Compulsory Licence for Export of Patented Pharmaceutical Products
in Certain Exceptional Circumstances … 249
Termination of compulsory licence … 250
International Arrangements … 250
Patent Agent … 251
Qualifications for Registration as Patent Agent … 251
Rights and Powers of the Patent Agent … 252
LESSON ROUND UP … 250
SELF TEST QUESTIONS … 253
(xxii)
Page
THE TRADE MARKS ACT, 1999
Section III
Learning Objectives … 255
Introduction ... 256
Definitions and interpretations ... 256
Appointment of Registrar and Trade Mark Registry ... 258
Absolute Grounds for Refusal of Registration ... 258
Procedure for Registration ... 259
Duration, Renewal, Removal and Restoration of Registration ... 259
Infringement of Registered Trade Marks ... 259
Limits on Effect of Registered Trade Mark ... 260
Assignment and Transmission ... 262
Proposed Use of Trade Mark by Company to be formed etc. ... 262
Removal of Trade Mark for Non-Use ... 262
Registered User ... 262
Collective Marks ... 263
Certification Trade Mark ... 263
Intellectual Property Appellate Board ... 263
Offences and Penalties ... 264
Offences by Companies ... 265
Trade Mark Agent ... 265
LESSON ROUND-UP … 265
SELF TEST QUESTIONS … 266
COPYRIGHT LAW AND ENFORCEMENT
Section IV
Learning Objectives … 267
Introduction … 268
Definitions ... 269
Meaning of copyright ... 271
Term of copyright ... 273
Copyright board ... 273
Functions of the copyright board ... 273
Assignment of copyright ... 274
Licences ... 275
Copyright Societies ... 278
Rights of broadcasting organisation and performers ... 279
(xxiii)
Page
International copyright ... 281
Registration of copyright ... 283
Infringement of copyright ... 283
Statutory exceptions ... 284
Remedies against infringement of copyright ... 288
Author's special rights ... 288
Offences and penalties ... 288
Power of police to seize infringing copies ... 288
LESSON ROUND-UP … 290
SELF-TEST QUESTIONS ... 290
GEOGRAPHICAL INDICATION OF GOODS
(REGISTRATION AND PROTECTION) ACT, 199
Section V
Learning Objectives … 291
Geographical Indication … 292
Registration of GI … 292
Prohibits registration of certain geographical indications … 293
Application for Registration … 293
Infringement of GI … 294
Assignment or Transmission … 295
LESSON ROUND-UP … 296
SELF-TEST QUESTIONS ... 296
DESIGN ACT, 2000
Section VI
Learning Objectives … 297
Introduction … 298
Definition … 298
Application and Registration of Design … 298
Piracy of Registered Design … 299
LESSON ROUND-UP … 300
SELF-TEST QUESTIONS ... 300
Lesson 5
LAW RELATING TO ARBITRATION AND CONCILIATION
Learning Objectives … 301
Introduction ... 302
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Arbitration and Conciliation Act, 1996 ... 302
Important Definitions ... 303
Appointment of Arbitrators ... 307
Power of Central Government to Amend Fourth Schedule … 308
Grounds for Challenge … 309
Challenge Procedure … 309
Failure or Impossibility to Act as an Arbitrator … 310
Interim Measures Ordered by Arbitral Tribunal … 311
Equal Treatment of Parties … 311
Determination of Rules of Procedure … 311
Place of Arbitration … 312
Commencement of Arbitral Proceedings … 312
Language … 312
Statements of Claim and Defence … 312
Hearings and Written Proceedings … 313
Default of a Party … 313
Expert Appointment by Arbitral Tribunal … 313
Court Assistance in taking Evidence … 314
Rules Applicable to Substance of Dispute … 314
Decision Making by Penal of Arbitrators … 315
Time Limit for Arbitral Award … 315
Fast Track Procedures … 316
Settlement … 316
Form and Contents of Arbitral Awards … 316
Termination of Proceedings … 318
Correction and Interpretation of Awards; Additional Award … 319
Application for Setting Aside Arbitral Award … 319
Finality of Arbitral Award … 321
Enforcement … 321
Appealable Orders … 321
Deposits … 321
Lien on Arbitral Award and Deposits as to Costs … 322
Enforcement of Certain Foreign Arbitral Awards ... 323
Awards made under New York Convention or Geneva Convention … 323
Conciliation ... 327
Alternative Dispute Resolution (ADR) … 333
LESSON ROUND-UP … 333
SELF-TEST QUESTIONS ... 334
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Lesson 6
LAW RELATING TO TRANSFER OF PROPERTY
Learning Objectives … 335
Introduction ... 336
Important Definitions ... 336
Moveable and Immovable Property ... 338
Rules relating to Transfer of Property (Whether moveable or immovable) ... 341
Who can transfer the Property ... 342
Subject Matter of Transfer ... 342
Formalities of Transfer ... 342
Restraint on Transfers or Rule against Inalienability ... 345
Transfer for benefit of Unborn Person ... 346
Conditional Transfer ... 347
Doctrine of Election ... 348
Transfer by Ostensible Owner or Doctrine of Holding Out ... 350
Doctrine of Feeding the Grant by Estoppel ... 350
Doctrine of Fraudulent Transfer ... 351
Doctrine of Part-Performance ... 352
Properties which cannot be Transferred ... 353
Rule against Perpetuity ... 356
Accumulation of Income ... 357
Doctrine of Lis Pendens ... 358
Provisions relating to Specific Transfers ... 358
Sale ... 359
Exchange ... 359
Gift ... 360
Leases ... 362
Meaning and Nature of Lease ... 362
Lease and Licence ... 362
Formalities ... 362
Types of Tenancies ... 362
Requirements of a valid Notice ... 363
Determination of Leases ... 363
Duties of the Lessor ... 364
Duties of the Lessee ... 365
Rights of the Lessee ... 365
Actionable Claims ... 366
Definition ... 366
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Non-actionable Claims ... 367
Mortgages ... 367
Definition and nature of Mortgage ... 367
Essentials of a Mortgage ... 367
Form of a Mortgage Contract ... 368
Kinds of Mortgages ... 368
Sub-Mortgage ... 372
Puisne Mortgage ... 372
Rights of Mortgagor ... 372
Implied Contract by Mortgagor ... 373
Rights of Mortgagee and his Remedies ... 373
Charges ... 373
Meaning of Charge ... 373
Charge by Act of Parties ... 373
Charge by Operation of Law ... 374
Floating Charge ... 374
Distinction between Mortgage and Charge ... 375
LESSON ROUND-UP … 375
SELF-TEST QUESTIONS ... 376
Lesson 7
LAW RELATING TO STAMPS
Learning Objectives … 379
Introduction ... 380
Important Definitions ... 380
Instruments chargeable with Duty ... 386
Extent of liability of Instruments to Duty ... 387
Section 4 not applicable ... 388
Instruments coming within several descriptions in Schedule-I ... 390
Bonds, Debentures issued under the Local Authorities 272
Loan Act 1879 ... 390
Securities dealt in depository not liable to stamp duty … 390
Corporatisation and demutulisation schemes and related
instruments not liable to duty … 391
Reduction, Remission and Compounding of Duties ... 392
Valuation for Duty under the Act ... 392
Consideration to be Set Out ... 394
Apportionment ... 395
Persons liable to pay Duty ... 395
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Receipts ... 396
Party liable to Pay ... 397
Methods of Stamping ... 397
Use of Adhesive Stamps ... 397
Cancellation of Adhesive Stamps ... 398
Mode of cancellation of Adhesive Stamps ... 398
Instruments stamped with impressed Stamps how to be Written ... 399
Denoting Duty ... 399
Time of Stamping Instruments ... 400
Adjudication as to Stamps ... 401
Instruments not duly Stamped - Treatment and Consequences ... 402
Unstamped Receipts ... 403
Instruments not duly Stamped inadmissible in Evidence ... 403
Admission of Instruments ... 404
Admission of Improperly Stamped Instruments ... 405
Dealing with Instruments Impounded ... 405
Collector's power to Stamp Instrument Impounded ... 405
Instruments unduly stamped by Accident ... 406
Endorsement of Instrument on which duty has been paid under 366
Sections 35, 40 and 41 ... 406
Prosecution for offences against Stamp Law ... 406
Recovery of Duty or Penalty in certain Cases ... 407
Refund of Duty or Penalty in certain cases by Revenue Authority ... 407
Non-liability for loss of Instruments sent under Section 38 ... 408
Power to Stamp in Certain Cases ... 408
Recovery of Duties and Penalties ... 408
Allowance and Refund ... 408
Time Limits ... 409
Unused Forms ... 410
Misused Stamps ... 410
Debentures ... 411
Reference and Revision ... 411
Prosecution ... 412
Criminal Offences ... 412
Taking Cognizance ... 414
Miscellaneous Provisions ... 414
Schedule ... 414
E-Stamping … 414
LESSON ROUND-UP … 415
SELF-TEST QUESTIONS ... 416
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Lesson 8
LAW RELATING TO CONTRACT
Learning Objectives … 417
Meaning and Nature of Contract ... 418
Essential Elements of a Valid Contract ... 419
Offer or Proposal and Acceptance ... 420
Intention to Create Legal Relations ... 423
Consideration ... 424
Whether Gratuitous Promise can be Enforced ... 427
Flaws in Contract ... 428
Flaw in capacity - Capacity and Persons ... 429
Mistake ... 433
Misrepresentation ... 435
Wilful Misrepresentation or Fraud ... 436
Coercion … 437
Undue Influence ... 437
Legality of Object ... 439
Agreements in Restraint of Trade Void ... 441
Wagering Agreements ... 442
Void Agreements ... 443
Restitution ... 444
Contingent Contract ... 444
Certain Relations Resembling Those of Contracts (Quasi-Contracts) ... 445
Discharge or Termination of Contracts … 447
Performance of Contracts ... 447
Discharge by Mutual Agreement or Consent ... 449
Discharge by Lapse of Time ... 449
Discharge by Operation of the Law ... 449
Discharge by Impossibility or Frustration ... 450
Discharge by Breach ... 451
Remedies for Breach ... 452
Contract of Indemnity and Guarantee ... 455
Contract of Bailment and Pledge ... 458
Bailment ... 458
Pledge ... 462
Law of Agency ... 463
LESSON ROUND UP … 471
SELF-TEST QUESTIONS ... 472
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Lesson 9
PREVENTION OF MONEY LAUNDERING
Learning Objectives … 473
Introduction ... 474
Process of Money Laundering ... 474
Impact of Money laundering on the Development ... 474
Prevention of Money laundering—Global Initiatives ... 475
Prevention of Money laundering—Indian Initiatives ... 478
Prevention of Money laundering Act, 2002 ... 478
Major Provisions of the Act ... 479
Definitions ... 479
Adjudicating Authority ... 480
Obligation of Banking Companies, Financial Institution
and Intermediaries ... 480
Summon, Searches and Seizures etc. … 481
Retention of Property … 481
Presumption in inter-connected transactions ... 482
Appellate Tribunal ... 483
Special Courts ... 483
Offences triable by Special Courts ... 483
Offences to be cognizable and non-bailable ... 483
Power of Central Government to issue directions … 483
Agreement with Foreign Countries ... 484
Assistance to a Contracting state in Certain Cases ... 484
Reciprocal arrangements for Processes and assistance
for transfer of accused Persons ... 484
Know Your Customer Guidelines … 485
Objective of KYC Guidelines … 485
LESSON ROUND-UP … 487
SELF-TEST QUESTIONS ... 488
PART B
Lesson 10
LAW RELATING TO
ESSENTIAL COMMODITIES, WEIGHTS AND MEASURES
ESSENTIAL COMMODITIES ACT, 1955
Section I
Learning Objectives … 489
Introduction … 490
(xxx)
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Object and scope of the Act ... 490
Definitions … 490
Essential Commodities … 490
Authorities responsible to administer the Act … 492
Powers of the Central Government to control production,
supply and distribution etc., of essential commodities ... 492
- Power to issue orders … 492
- Fixing the price of essential commodities being sold to
Government … 494
- Fixing the price of essential commodities during emergency ... 494
- Payment of procurement price for food grains and edible oils ... 494
- Fixing price for sugar to be paid to producer ... 495
- Power to appoint Authorised Controller ... 496
- Imposition of duties on State Government ... 496
Delegation of powers ... 496
Nature of Order passed under the Act … 496
Effect of the Order ... 497
Presumption as to Orders ... 497
Burden of proof in certain cases ... 497
Protection for acts done in pursuance of order … 497
Confiscation of essential commodities ... 498
Seizure and confiscation of essential commodities ... 498
Sale of the confiscated commodity … 500
Disposal of sale proceeds of confiscated goods ... 500
Issue of show cause notice before confiscation
of essential commodity ... 500
Appeal against confiscation order ... 500
Confiscation and punishment … 501
Bar of Jurisdiction in the matters of confiscation ... 501
Offences and Penalties ... 501
Cognizance of Offences ... 501
Prosecution of Public Servants ... 501
Penalties ... 501
Mens rea (Sections 6A and 7) ... 502
Attempt and Abetment ... 503
False Statement ... 503
Offences by Companies … 503
Publication of names of convicted companies by Court ... 503
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Grant of Injunction by Civil Courts ... 503
LESSON ROUND-UP … 504
SELF-TEST QUESTIONS … 504
THE LEGAL METROLOGY ACT, 2009
Section II
Learning Objectives … 505
Introduction … 506
Legal Metrology … 506
International Organization of Legal Metrology (OIML) … 506
OIML Certificate System for Measuring Instruments … 506
Definitions … 507
Standard weights and measures … 509
Power of inspection, seizure … 511
Forfeiture … 512
Manufacturers. etc., to maintain records and registers … 512
Declarations on pre-packaged commodities … 512
Approval of model … 512
Prohibition manufacture, repair or sale of weight or
measure without licence … 513
Offences and penalties … 513
Penalty for counterfeiting or seals … 514
Compounding of offence … 515
Offences by companies … 515
Power of the Central Government to make rules … 516
Power of State Government to make rules … 517
LESSON ROUND-UP … 517
SELF TEST QUESTIONS … 518
Lesson 11
LAW RELATING TO SOCIETIES
Learning Objectives … 519
Introduction ... 520
Registration ... 520
Procedure for Registration ... 520
Rules and Regulations ... 521
Society May Make Bye-laws ... 522
Members –Their Rights and Liabilities ... 523
When Members Treated as Strangers ... 523
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Property of Society: Where it vests? ... 524
Working and Management of Society ... 525
Amendment or Alteration ... 526
Suits by and Against Society ... 526
Enforcement of Judgement Against Society ... 527
Amalgamation or Division of the Society ... 527
Dissolution of Society ... 527
Consequences of Dissolution ... 529
Registrar of Societies – Powers & Duties ... 529
Offences and Penalties ... 529
LESSON ROUND-UP … 530
SELF TEST QUESTIONS … 530
Lesson 12
LAW RELATING TO TRUSTS
Learning Objectives … 531
Introduction ... 532
Indian Trust Act ... 532
Scope ... 532
Definition of Trust ... 533
Trust and Contract ... 533
Difference Between Trust and Bailment, Trust and Agency ... 533
Classification of Trusts ... 534
Creation of Trusts ... 536
Certainties of a Trust ... 536
Who Can Create a Trust ... 537
Who May be a Trustee ... 537
Duties of Trustee ... 537
Liabilities of Trustees ... 539
Rights, Powers and Disabilities of Trustees ... 540
Meaning of a Beneficiary ... 541
Who may be a Beneficiary ... 541
Doctrine of Cypres ... 542
Rights and Liabilities of Beneficiaries ... 542
Extinction of a Trust ... 543
Revocation of a Trust ... 543
LESSON ROUND-UP … 543
SELF TEST QUESTIONS ... 544
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Lesson 13
INDUSTRIES DEVELOPMENT AND REGULATION
Section I
Learning Objectives … 545
Introduction ... 546
Industrial Policy Resolution, 1948 ... 546
Industrial Policy Resolution, 1956 ... 547
New Industrial Policy, 1991 ... 547
The Industries (Development and Regulation) Act, 1951 ... 548
Definitions ... 550
Central Advisory Council ... 552
Development Council ... 552
Regulation of Scheduled Industries ... 554
Registration of existing industrial undertakings ... 554
Issue of Certificate of Registration ... 554
Circumstances when registration is not necessary ... 555
Penalty for failure to register ... 555
Power to revoke registration ... 555
Licensing of industrial undertakings ... 555
What is an industrial licence ... 555
Power of the Central Government to revoke/amend
licences in certain cases ... 557
Investigation ... 557
Investigation into Scheduled Industries/Industrial Undertakings ... 557
Investigation into the affairs of a company in liquidation ... 558
Directions after investigation ... 559
Takeover of Industrial Undertakings ... 560
Take over after investigation ... 560
Effect of notified order ... 560
Contracts in bad faith to be cancelled or varied ... 561
Take-over without investigation ... 562
Sections 18A and 18AA - Comparison ... 563
Notice before passing an order under Section 18AA – whether
necessary ... 563
Take-over of industrial undertaking owned by company in liquidation ... 565
Cancellation of the notified order ... 566
Preparation of inventory of assets and liabilities, List of Members etc. ... 566
Power to provide relief to certain industrial undertakings ... 567
Liquidation or reconstruction of companies ... 567
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Sale of industrial undertaking as running concern ... 568
Reconstruction of the company owning the industrial undertaking ... 569
Power to control supply, distribution, price, etc. of certain Articles ... 571
General prohibition of taking over management or control
of industrial undertakings by State Government ... 572
Power to exempt in special cases ... 572
Constitution of Advisory Committee ... 572
Penalties ... 573
Penalty for False Statements … 574
Cognizance of Offences ... 574
Certain other important provisions ... 574
Registration and Licensing of Industrial Undertakings Rules, 1952 ... 574
LESSON ROUND-UP … 577
SELF-TEST QUESTIONS … 577
THE MICRO, SMALL AND MEDIUM ENTERPRISES
DEVELOPMENT ACT, 2006
Section II
Learning Objectives … 579
Introduction ... 580
Definitions ... 580
National Board for Micro, Small and Medium Enterprises ... 581
Measures for Promotion, Development and Enhancement of
Competitiveness ... 585
Delayed Payments to Micro and Small Enterprises ... 585
LESSON ROUND-UP … 588
SELF-TEST QUESTIONS … 589
Lesson 14
LAW RELATING TO POLLUTION CONTROL AND ENVIRONMENTAL PROTECTION
Section I
Learning Objectives ... 591
Introduction … 592
Concept of Sustainable Development ... 592
Principles of Sustainable Living ... 592
Bio-Diversity … 594
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Carbon Credit … 595
Environmental Protection in India – Regulatory Framework … 596
The Environment (Protection) Act, 1986 … 597
Scope and scheme of the Act ... 598
Definitions ... 598
General powers of the Central Government ... 598
Nature and type of regulation ... 601
Power to enter, inspect, take samples, etc. ... 601
Environmental Laboratories ... 602
Functions of Environmental Laboratories … 602
Offences and penalties ... 603
Environmental clearance and location of industries ... 603
Environmental Audit ... 604
Liability for pollution … 604
LESSON ROUND UP … 607
SELF TEST QUESTION … 608
PUBLIC LIABILITY INSURANCE ACT, 1991
Section II
Learning Objectives ... 609
Definitions ... 610
Compulsory Insurance ... 611
Application for claim for Relief ... 611
Establishment of Environmental Relief fund ... 612
Offences and Penalties … 613
LESSON ROUND UP … 613
SELF TEST QUESTIONS … 613
THE NATIONAL GREEN TRIBUNAL ACT, 2010
Section III
Learning Objectives … 615
Definition … 616
Establishment of the tribunal … 618
Composition of the tribunal … 618
Jurisdiction, Powers and Proceedings of the Tribunal … 618
Tribunal to Settle Dispute … 618
Relief, Compensation and Reconstitution … 619
(xxxvi)
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Tribunal to have Appellate Jurisdiction … 620
Liability to pay relief or compensation … 621
Application or Appeal to the Tribunal … 621
Procedure and Powers of Tribunal … 621
Tribunal to Apply Certain Principle … 622
Appeal to the Supreme Court … 622
Penalty for failure to comply with order of the Tribunal … 622
Offence by Companies … 623
Offence by Government Department … 623
LESSON ROUND-UP … 623
SELF-TEST QUESTIONS ... 624
PREVENTION AND CONTROL OF AIR POLLUTION
Section IV
Learning Objectives … 625
Introduction ... 626
Definitions ... 626
Central and State Pollution Control Boards ... 627
Composition of State Board ... 628
Powers and functions of Central Board ... 629
Functions of State Board ... 630
Prevention and control of Air Pollution ... 631
Restrictions on use of certain industrial plants ... 632
Furnishing of information to State Board and other agencies
in certain cases ... 633
Power of entry and inspection ... 634
Power to obtain information ... 634
Power to take samples ... 634
Report of analysis ... 635
State Air Laboratory ... 635
Appeals ... 635
Power to give directions ... 636
Penalties and procedure ... 636
Cognizance of offences ... 637
State Government to Supersede State Board ... 637
Control of Noise Pollution ... 638
LESSON ROUND UP … 638
SELF TEST QUESTIONS … 639
(xxxvii)
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PREVENTION AND CONTROL OF WATER POLLUTION
Section V
Learning Objectives … 641
Definitions ... 642
Constitution of Central Pollution Control Board ... 643
Constitution of State Pollution Control Board ... 643
Disqualifications ... 644
Constitution of Joint Board ... 644
Special provisions relating to giving of directions ... 646
Functions of Central Board ... 646
Functions of State Board ... 647
Prevention and Control of Water Pollution ... 648
Power to obtain Information ... 648
Power to take Samples of Effluents ... 649
Reports of analysis of samples ... 649
Powers of entry and inspection ... 650
Prohibition on use of Stream or Well for disposal of polluting matter ... 650
Restriction on New Outlets and New Discharges ... 651
Refusal or Withdrawal of consent by a State Board ... 652
Appeal ... 652
Power of the State Boards to carry out certain works ... 652
Furnishing of Information to State Board and other Agencies ... 652
Emergency measures in case of pollution of Stream or Well ... 653
Board's Power to make application to Courts ... 653
Power to give directions ... 653
Penalties and Procedure ... 654
Offences by companies ... 655
Power to Supersede the Board ... 655
Water (Prevention and Control of Pollution) Cess Act, 1977 ... 655
LESSON ROUND-UP … 655
SELF-TEST QUESTIONS … 656
STUDY XV
LAW RELATING TO REGISTRATION OF DOCUMENTS
Learning Objectives … 657
Introduction ... 658
Registrable Documents ... 658
Documents whose registration is Compulsory ... 658
Documents of which registration is Optional ... 661
(xxxviii)
Time-Limit for Presentation ... 661
Re-registration ... 662
Several Executants ... 662
Documents executed out of India ... 662
Presentation of a Will ... 662
Place of Registration ... 662
Copy of a Decree or Order ... 663
Registration in certain Cities ... 663
Presenting of documents for Registration ... 663
Enquiry before registration by Registering Officer ... 664
Presenting Wills and Authorities to Adopt ... 664
Deposit of Wills ... 664
Registered document when Operative ... 665
Registered document relating to priority when to take effect
against oral Agreement ... 665
Effect of non-registration of documents required
to be Registered ... 665
Registered documents relating to property when to take
effect against oral Agreement ... 666
Certain registered documents relating to land which will take
effect against unregistered Documents ... 666
Miscellaneous Provisions ... 667
Procedure on admission to Registration ... 667
Certificate of Registration ... 668
Procedure after registration of documents relating to Land ... 668
Procedure after Registration ... 668
Refusal to register by the Sub Registrar ... 668
Appeal to Registrar ... 669
Application to Registrar ... 669
Procedure before the Registrar ... 669
Order by Registrar to register and procedure thereon ... 669
Institution of suit in case of order of refusal by Registrar ... 670
Exemption of certain documents executed by or in
favour of Government ... 670
LESSON ROUND-UP … 670
SELF-TEST QUESTIONS ... 671
TEST PAPER
Test Paper … 674
Lesson 1 Foreign Exchange Management
Section I
Objective of FEMA, 1999
Foreign Exchange
Foreign Securities
FDI Policy
Current Account Transactions
Capital Account Transactions
Foreign Direct Investment in India
Direct Investment outside India
Acquisition & Transfer of immovable property in India.
Acquisition & Transfer of immovable property outside India.
Establishment of Branch office in India
Export of Goods and services
Realisation & Repatriation of foreign exchange
Authorised Person
Compounding of offences
Penalties and Enforcement
Adjudication and Appeal
Appointment of Adjudicating Authority
Appeal to Special Director
Establishment of Appellate Tribunal
Appeal to High Court
Directorate of Enforcement
LEARNING OBJECTIVES
As per Article 246 of the Constitution of India, the
Parliament has exclusive power to make laws with
respect to any of the matters enumerated in the Union
List in the Seventh Schedule. The Foreign Exchange
Management Act, 1999 can be traced to various
entries in the Union List. Entry 16 of the Union List
deals with Foreign jurisdiction. Entry 36 of the Union
List deals with Currency, coinage and legal tender;
foreign exchange. Entry 37 of the Union List deals
with Foreign loans and Entry 41 of the Union List
deals with Trade and commerce with foreign
countries; import and export across customs frontiers;
definition of customs frontiers.
When a business enterprise imports goods from other
countries, exports its products to them or makes
investments abroad, it deals in foreign exchange.
Foreign exchange means 'foreign currency' and
includes deposits, credits and balances payable in
any foreign currency; drafts, travellers' cheques,
letters of credit or bills of exchange, expressed or
drawn in Indian currency but payable in any foreign
currency; and drafts, travellers' cheques, letters of
credit or bills of exchange drawn by banks, institutions
or persons outside India, but payable in Indian
currency.
The management of foreign exchange is very
important in the present day business. This lesson
deals with how FEMA facilitates external trade and
payments and promotes the orderly development and
maintenance of foreign exchange market. The Act has
assigned an important role to the Reserve Bank of
India (RBI) in the administration of FEMA. The rules,
regulations and norms pertaining to several sections
of the Act are laid down by the Reserve Bank of India,
in consultation with the Central Government.
Foreign Exchange Management Act, 1999 is an Act to facilitate external trade and payments and for promoting the
orderly development and maintenance of foreign exchange market in India.
LESSON OUTLINE
EP-ECL 2
INTRODUCTION
The Foreign Exchange Regulation Act, 1973, which was enacted to consolidate and amend the law in
several respects encompassing the experience gained over few decades of implementation of the earlier
enactment of 1947, outlived its purpose in the light of the liberalization policies introduced in 1991.
The Foreign Exchange Regulation Act, since then had been reviewed and amendments were made as part
of the on going process of economic liberalization relating to foreign investment and foreign trade for closer
interaction with the world economy. During the subsequent period, the Central Government decided further
review of the Foreign Exchange Regulation Act in the light of developments and experience in relation to
foreign trade and investment. It was at that time felt, that a better course would be to repeal the Foreign
Exchange Regulation Act and enact a new legislation.
Taking into consideration the developments such as substantial increase in foreign exchanges reserves,
growth in foreign trade, rationalization of tariffs, current account convertibility etc., the Foreign Exchange
Management Bill, to repeal and replace the Foreign Exchange Regulation Act was introduced in the Lok
Sabha. But before the Bill came up for discussion and approval, the Lok Sabha was dissolved.
Subsequently, certain modifications were made to the original Bill and a modified Bill was presented and
passed by both the Houses of Parliament. The Foreign Exchange Management Act received the assent of
the President on 9th December, 1999 and brought into force with effect from 1.6.2000.
DEFINITIONS
Section 2 of the Foreign Exchange Management Act defines various terms used in the Act, as given below:
Adjudicating Authority [Section 2(a)]
According to clause (a) of Section 2 ‘Adjudicating Authority’ means an officer authorised under Sub-section
(1) of Section 16 for the purposes of adjudication in respect of penalties under Section 13. Section 16
empowers the Central Government, to appoint, by an order published in the Official Gazette, as many
officers as it may think fit as the adjudicating authorities for holding an enquiry in the manner prescribed after
giving the person alleged to have committed any contravention, an opportunity of being heard.
Appellate Tribunal [Section 2(b)]
‘Appellate Tribunal’ means Appellate Tribunal for Foreign Exchange to hear appeals against the orders of the
adjudicating authorities and Special Directors (Appeals) under the Act.
Authorised Person [Section 2(c)]
The term authorised person is defined to include an authorised dealer, money changer, offshore banking unit
or any other person for the time being authorised to deal in foreign exchange or foreign securities.
Capital Account Transaction [Section 2(e)]
‘Capital account transaction’ has been defined to mean any transaction which alters the assets or liabilities
including contingent liabilities, outside India of persons resident in India or assets or liabilities in India of
person resident outside India and includes the transactions specified in Sub-section (3) of Section 6 of the
Act.
Lesson 1 Foreign Exchange Management 3
Currency Notes [Section 2(i)]
‘Currency Notes’ means and includes cash in the form of coins and bank notes. In fact, it means money and
such bank notes or other paper money as are authorised by law and circulate from hand to hand as a
medium of exchange.
Current Account Transaction [Section 2(j)]
The term current account transaction has been defined to mean a transaction other than a capital account
transaction and includes payments due in connection with foreign trade, other current business, services and
short term banking and credit facilities in the ordinary course of business; payments due as interest on loan
and as net income from investments; remittances for living expenses of parents, spouse and children
residing abroad and expenses in connection with foreign travel, education and medical care of parents,
spouse and children.
Under the Act freedom has been granted for selling and drawing of foreign exchange to or from an
authorized person for undertaking current account transactions. However, the Central Government has been
vested with powers in consultation with Reserve Bank to impose reasonable restrictions on current account
transactions. The Central Government has framed Foreign Exchange Management (Current Account
Transactions) Rules, 2000 dealing with various aspects of current account transactions.
Foreign Exchange [Section 2(n)]
The term ‘foreign exchange has been defined to mean foreign currency and includes deposits, credits,
balance payable in foreign currency, drafts, travellers cheques, letters of credit, bills of exchange expressed
or drawn in Indian currency but payable in any foreign currency. Any draft, travellers cheque, letters of credit
or bills of exchange drawn by banks, institutions or persons outside India but payable in Indian currency has
also been included in the definition of foreign exchange.
Foreign Security [Section 2(o)]
The term Foreign Security has been defined to mean any security, in the form of shares, stocks, bonds,
debentures or any other instrument denominated or expressed in foreign currency and includes securities
expressed in foreign currency but where redemption or any form of return such as interest or dividend is
payable in Indian currency.
Transfer or issue of a foreign security is a capital account transaction within the meaning of Section 6(3)(a) of
the Act. The Reserve Bank of India has made Foreign Exchange Management (Transfer or Issue of Any
Foreign Security) Regulations, 2000 for regulation, acquisition and transfer of a foreign security by a person
resident in India i.e. investment by Indian entities in overseas joint ventures and wholly owned subsidiaries
as also investment by a person resident in India in shares and securities issued outside India.
Person [Section 2(u)]
The definition of the term ‘person includes, an individual, a Hindu Undivided Family, a company, a firm, an
association of persons or body of individuals whether incorporated or not; any agency, office or branch
owned or controlled by such persons. Even every artificial juridical person not falling within the above
definition has been treated as person as per clause (u) of Section 2.
Person Resident in India [Section 2(v)]
The expression ‘Person resident in India has been defined to mean a person residing in India for more than
182 days during the course of the preceding financial year. However, two categories of persons are excluded
from the purview of definition.
EP-ECL 4
The first category includes any person who has gone out of India or who stays outside India for or on taking
up employment outside India, or for carrying on outside India a business or vocation. The definition also
includes person who stays outside India for any other purpose in such circumstances as would indicate his
intention to stay outside India for an uncertain period. The second category of persons which have been
excluded from the definition of person resident in India include:
A person who has come to stay or stays in India, in either case otherwise than—
(i) for or taking up employment in India; or
(ii) for carrying on in India a business or vocation in India; or
(iii) for any other purpose, in such circumstances as would indicate his intention to stay in India for an
uncertain period.
REGULATION AND MANAGEMENT OF FOREIGN EXCHANGE
Chapter II of the Act containing Sections 3-9 deals with Regulation and Management of Foreign Exchange.
Section 3 prohibits any person other than an authorised person from dealing in or transferring any foreign
exchange or foreign security to any person or making any payment to or for the credit of any person resident
outside India in any manner or receiving otherwise through an authorised person any payment by order or on
behalf of any person resident outside India in any manner except as provided in the Act, rules or regulations
made thereunder or with the general or special permission of the Reserve Bank of India.
Section 3(d) prohibits a person to enter into any financial transaction in India as consideration for or in
association with acquisition or creation or transfer of a right to acquire, any asset outside India by any
person, except as otherwise provided in the Act and rules or regulations made thereunder. For this purpose,
financial transaction has been defined to mean making any payment to or for the credit of any person or
receiving any payment for, by order or on behalf of any person. Financial transaction also includes drawing,
issuing or negotiating any bill of exchange or promissory note or transferring any security or acknowledging
any debt.
CURRENT ACCOUNT TRANSACTIONS
Section 5 of the Act allows any person to sell or draw foreign exchange to or from an authorised person if
such sale or drawl is a current account transaction as defined under Section 2(j) of the Act. However, the
Central Government may, in the public interest and in consultation with the Reserve Bank impose
reasonable restrictions for current account transactions.
Foreign Exchange Management (Current Account Transactions) Rules, 2000 defines the term ‘Drawal as to
mean drawal of foreign exchange from an authorised person and includes opening of Letter of Credit or use
of International Credit Card or International Debit Card or ATM Card or any other thing by whatever name
called which has the effect of creating foreign exchange liability.
Prohibition on drawal of foreign exchange for certain transactions
Rule 3 prohibits the drawal of foreign exchange for the purposes of transactions specified in the Schedule I
or a travel to Nepal and/or Bhutan or a transaction with a person resident in Nepal or Bhutan. However, in
the case of transaction with a person resident in Nepal and Bhutan, the prohibition may be exempted by RBI
subject to such terms and conditions as it may consider necessary. Schedule I to the Rules enumerate the
situations in which the drawal of foreign exchange is prohibited. These are as follows:
(a) Remittance out of lottery winnings;
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(b) Remittance of income from racing/riding etc. or any other hobby;
(c) Remittance for purchase of lottery tickets, banned/prescribed magazine, football pools, sweep
stakes etc.
(d) Payment of commission on exports made towards equity investment in joint ventures/wholly owned
subsidiaries abroad of Indian Companies.
(e) Payment of Commission on exports under Rupee State Credit Route, except commission upto 10%
of invoice value of exports of tea and tobacco.
(f) Payment related to ‘call back service’ of telephone.
(g) Remittance of interest income on funds held in Non-resident Special Rupee Scheme Account.
Prior approval of Government of India for certain transactions
Rule 4 requires prior approval of the Government of India for the transactions as specified in Schedule II.
However, this does not apply to the cases where the payment is made out of funds held in Resident Foreign
Currency Account (RFC) of the remitter.
Prior approval of Reserve Bank for certain transaction
As per Rule 5 of the Foreign Exchange Management (Current Account Transactions) Amendment Rules,
2015, every drawal of foreign exchange for transactions included in Schedule III shall be governed as
provided therein:
Provided that this rule shall not apply where the payment is made out of funds held in Resident Foreign
Currency (RFC) Account of the remitter.
Transactions included in Schedule III
1. Facilities for individuals—
1. Individuals can avail of foreign exchange facility for the following purposes within the limit of USD 2,50,000
only. Any additional remittance in excess of the said limit for the following purposes shall require prior
approval of the Reserve Bank of India.
(i) Private visits to any country (except Nepal and Bhutan)
(ii) Gift or donation.
(iii) Going abroad for employment
(iv) Emigration
(v) Maintenance of close relatives abroad
(vi) Travel for business, or attending a conference or specialised training or for meeting expenses for
meeting medical expenses, or check-up abroad, or for accompanying as attendant to a patient
going abroad for medical treatment/ check-up.
(vii) Expenses in connection with medical treatment abroad
(viii) Studies abroad
(ix) Any other current account transaction
Provided that for the purposes mentioned at item numbers (iv), (vii) and (viii), the individual may avail of
exchange facility for an amount in excess of the limit prescribed under the Liberalised Remittance Scheme
as provided in regulation 4 to FEMA Notification 1/2000-RB, dated the 3rd May, 2000 (here in after referred
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to as the said Liberalised Remittance Scheme) if it is so required by a country of emigration, medical institute
offering treatment or the university, respectively:
Provided further that if an individual remits any amount under the said Liberalised Remittance Scheme in a
financial year, then the applicable limit for such individual would be reduced from USD 250,000 (US Dollars
Two Hundred and Fifty Thousand Only) by the amount so remitted:
Provided also that for a person who is resident but not permanently resident in India and
(a) is a citizen of a foreign State other than Pakistan; or
(b) is a citizen of India, who is on deputation to the office or branch of a foreign company or subsidiary
or joint venture in India of such foreign company,
may make remittance up to his net salary (after deduction of taxes, contribution to provident fund and other
deductions).
Explanation: For the purpose of this item, a person resident in India on account of his employment or
deputation of a specified duration (irrespective of length thereof) or for a specific job or assignments, the
duration of which does not exceed three years, is a resident but not permanently resident:
Provided also that a person other than an individual may also avail of foreign exchange facility, mutatis
mutandis, within the limit prescribed under the said Liberalised Remittance Scheme for the purposes
mentioned herein above.
2. Facilities for persons other than individual
The following remittances by persons other than individuals shall require prior approval of the Reserve Bank
of India.
(i) Donations exceeding one per cent. of their foreign exchange earnings during the previous three
financial years or USD 5,000,000, whichever is less, for-
(a) creation of Chairs in reputed educational institutes,
(b) contribution to funds (not being an investment fund) promoted by educational institutes; and
(c) contribution to a technical institution or body or association in the field of activity of the donor
Company.
(ii) Commission, per transaction, to agents abroad for sale of residential flats or commercial plots in
India exceeding USD 25,000 or five percent of the inward remittance whichever is more.
(iii) Remittances exceeding USD 10,000,000 per project for any consultancy services in respect of
infrastructure projects and USD 1,000,000 per project, for other consultancy services procured from
outside India.
(iv) Remittances exceeding five per cent of investment brought into India or USD 100,000 whichever is
higher, by an entity in India by way of reimbursement of pre-incorporation expenses.”
3. Procedure
The procedure for drawal or remit of any foreign exchange under this schedule shall be the same as
applicable for remitting any amount under the said Liberalised Remittance Scheme.
Liberalised Remittance Scheme (LRS)
Under Liberalised Remittance Scheme allow remittances by a resident individual up to USD 250,000 per
financial year for any permitted current or capital account transaction or a combination of both. If an
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individual has already remitted any amount under the LRS, then the applicable limit for such an individual
would be reduced from the present limit of USD 250,000 for the financial year by the amount already
remitted. The permissible capital account transactions by an individual under LRS are:
(i) opening of foreign currency account abroad with a bank;
(ii) purchase of property abroad;
(iii) making investments abroad;
(iv) setting up Wholly owned subsidiaries and Joint Ventures abroad;
(v) extending loans including loans in Indian Rupees to Non-resident Indians (NRIs) who are relatives
as defined in Companies Act, 2013.
The Scheme cannot be made use for making remittances for any prohibited or illegal activities such as
margin trading, lottery, etc.
Requirements to be complied with by the remitter under LRS
The resident individual seeking to make the remittances should furnish an application cum declaration in the
prescribed format to the Authorised Dealer / full fledged money changer (FFMC) concerned regarding the
purpose of the remittances and declaration to the effect that the funds belong to the remitter and will not be
used for the prohibited purposes. Resident individuals can also purchase foreign exchange from a full
fledged money changer (FFMC) for private/business visits. Foreign exchange thus purchased from an FFMC
should also be reckoned within the overall LRS limit USD 250,000 and declared accordingly in the
application-cum-declaration form submitted to the Authorise Dealer bank.
CAPITAL ACCOUNT TRANSACTION
Section 6 allows capital account transactions subject however to certain conditions. This section empowers
the Reserve Bank of India to specify, in consultation with the Central Government, any class or classes of
capital account transactions permissible and the limit upto which foreign exchange shall be admissible for
such transactions. However, Reserve Bank shall not impose any restrictions on the drawal of foreign
exchange for payments due on account of amortization of loans or for depreciation of direct investments in
the ordinary course of business.
The Reserve Bank of India may, by regulations, prohibit, restrict or regulate the transfer or issue of any
foreign security by a person resident in India or by a person resident outside India. Reserve Bank of India
may also regulate, prohibit or restrict transfer or issue of any security or foreign security through any branch
office, or agency in India of a person resident outside India. Any borrowing or lending in foreign exchange in
whatever form or by whatever name called may also be regulated or prohibited by the Reserve Bank.
Similarly, RBI may also prohibit or restrict any borrowing or lending in rupees in whatever form or by
whatever name called between a person resident in India and a person resident outside India. Deposits
between persons resident in India and persons resident outside India may be regulated or prohibited by the
Reserve Bank of India. RBI may also regulate the export, import or holding of currency or currency notes.
Acquisition or transfer of immovable property other than on lease not exceeding five years in India by person
resident in India or a person resident outside India may be prohibited or regulated by the Reserve Bank of
India. RBI has also been empowered to prohibit or regulate giving of guarantee or surety in respect of any
debt, obligation or other liability incurred by a person resident in India and owed to a person resident outside
India or by a person resident outside India.
Sub-section (4) allows a person resident in India to hold, own, transfer or invest in foreign currency, foreign
EP-ECL 8
security or any immovable property situated outside India, if such currency, security or property was
acquired, held or owned by such person when he was resident outside India or inherited from a person who
was resident outside India. Similarly, a person resident outside India is permitted to hold, own, transfer or
invest in Indian currency, security, or any immovable property situated in India if such currency, security or
property was acquired, held or owned by such person when he was resident in India or inherited from a
person who was resident in India.
Reserve Bank of India under sub-section (6) has been empowered to regulate, prohibit, restrict
establishment in India of a branch, office or other place of business by a person resident outside India for
carrying on any activity relating to such branch, office or other place of business.
Permissible Capital Account Transactions
Schedule I & II to Foreign Exchange Management (Permissible Capital Account Transactions) Regulations,
2000 classifies the capital account transactions of a person under the following two heads viz.
1. Classes of capital account transactions of persons resident in India.
2. Classes of capital account transactions of persons resident outside India.
Classes of Capital Account Transactions of Persons Resident in India
(i) investment by a person resident in India in foreign securities.
(ii) foreign currency loans raised in India and abroad by a person resident in India;
(iii) transfer of immovable property outside India by a person resident in India;
(iv) guarantees issued by a person resident in India in favour of a person resident outside India;
(v) export, import and holding of currency/currency notes;
(vi) loans and overdrafts by a person resident in India from a person resident outside India;
(vii) maintenance of foreign currency accounts in India and outside India by a person resident in India;
(viii) taking out of insurance policy by a person resident in India from an insurance company outside
India;
(ix) loans and overdrafts by a person resident in India to a person resident outside India;
(x) remittance outside India of capital assets of a person resident in India;
(xi) sale and purchase of foreign exchange derivatives in India and abroad and commodity derivatives
abroad by a person resident in India.
However, Notific