Legal Environment of

Business
GM 3103
BUSINESS LAWS
 Meaning
The word Law has been derived from the
Teutonic word Lag, which means definite. On
this basis Law can be defined as a definite rule of
conduct and human relations. It also means a
uniform rule of conduct which is applicable
equally to all the people of the State. Law
prescribes and regulates general conditions of
human activity in the state.
 Nature
1. Law is a general rule of human behaviour in
the state. It applies to all people of the state.
All are equally subject to the laws of their
State. Aliens living in the territory of the State
are also bound by the laws of the state.

2. Law is definite and it is the formulated will of

the State. It is a rule made and implemented
by the state.
 Nature
3. State always acts through Law. Laws are made
and enforced by the government of the State.

4. Law creates binding and authoritative values

or decisions or rules for all the people of state.

5. Sovereignty of State is the basis of law and its

binding character.
 Nature
6. Law is backed by the coercive power of the State.
Violations of laws are always punished.

7. Punishments are also prescribed by Law.

8. The courts settle all disputes among the people on

the basis of law.

9. In each State, there is only one body of Law.

 Nature
10. Legally, Law is a command of the sovereign. In
contemporary times laws are made by the
representatives of the people who constitute the
legislature of the State. Laws are backed by on public
opinion and public needs.
11. The purpose of Law is to provide peace,
protection, and security to the people and to ensure
conditions for their all round development. Law also
provides protection to the rights and freedoms of the
people.
 Nature
12. All disputes among the people are settled by
the courts on the basis of an interpretation and
application of the laws of the State.
13. Rule of law, equality before law and equal
protection of law for all without any
discrimination, are recognised as the salient
features of a modern legal system and liberal
democratic state.
 Importance of Law
Laws provide structure and rules for societies to
develop and operate, since the dawn of
civilisation. Since people dont always operate
with the same morals, ethics and level of
integrity, laws can help to regulate and shape
behaviour (generally) in a positive way with
consequences that may deter unacceptable
behaviour.
 Importance of Law
Serves as a norm of conduct for citizens
Acts as a guideline as to what is accepted in
society
Law plays an important indirect role in regard
to social change by shaping a direct impact on
society. For example: A law setting up a
compulsory educational system.
 Importance of Law

Defends from evil acts

Promotes the common good
Resolves disputes over limited resources
Encourages people to do the right thing
 Indian Legal System
Indian law refers to the system of law which
operates in India.
It is largely based on English common law.
Various Acts introduced by the British are still
in effect in modified form today.
Much of contemporary Indian law shows
substantial European and American influence.
 History of Indian law
Ancient India represented a distinct tradition
of law.
India had an historically independent school of
legal theory and practice.
The Arthashastra, dating from 400 BC, and
the Manusmrit, from 100 AD, were influential
treatises in India.
Manu's central philosophy was tolerance and
pluralism, and was cited across Southeast
Asia.
 Source of Law
Primary Source:
a. The primary source of law is in the
enactments passed by the Parliament or the
State Legislatures.
b. The President and the Governor have
limited powers to issue ordinances.
 Source of Law
Secondary Source:
a. Secondary source of law is the judgments of
the Supreme Court, High Courts and some of
the specialised Tribunals.
b. The Constitution provides that the law
declared by the Supreme Court shall be
binding on all courts within India.
 Sources of Law
Custom
Custom has been one of the oldest sources of law. In
ancient times, social relations gave rise to several usages,
traditions and customs. The State emerged as the organised
political institution of the people having the responsibility to
maintain peace, law and order; naturally, it also began
acting by making and enforcing rules based upon customs
and traditions. In fact, most of the laws had their birth when
the State began converting the customs into authoritative
and binding rules. Custom has been indeed a rich source of
Law.
 Sources of Law
Religion and Morality

The religious and moral codes of a society

provided to the State the necessary material for
regulating the actions of the people. The State
converted several moral and religious rules into
its laws. Hence Religion and Morality have also
been important sources of Law.
 Sources of Law
Legislation
Since the emergence of legislatures in 13th century,
legislation has emerged as the chief source of Law.
Traditionally, the State depended upon customs and
the decrees or orders of the King for regulating the
behaviour of the people. Later on, the legislature
emerged as an organ of the government. It began
transforming the customary rules of behaviour into
definite and enacted rules of behaviour of the people.
 Sources of Law
Delegated Legislation

Because of several pressing reasons like paucity of time, lack

of expertise and increased demand for law-making, the
legislature of a State finds it essential to delegate some of its
law-making powers to the executive. The executive then
makes laws/rules under this system. It is known as
Delegated Legislation. Currently, Delegated Legislation has
come to be a big source of Law. However, Delegated
Legislation always works under the superior law-making
power of the Legislature.
 Sources of Law
Judicial Decisions

In contemporary times, Judicial Decision has come to

be an important source of Law. It is the responsibility
of the courts to interpret and apply laws to specific
cases. The courts settle the disputes of the people in
cases that come before them. The decisions of the
courts the judicial decisions, are binding on the
parties to the case. These also get accepted as laws for
future cases. But not all judicial decisions are laws.
 Sources of Law
Equity

Equity means fairness and sense of justice. It is also a source

of Law. For deciding cases, the judges interpret and apply
laws to the specific cases. But laws cannot fully fit in each
case and these can be silent in some respects. In all such
cases, the judges depend on equity and act in accordance
with their sense of fair play and justice. Equity is used to
provide relief to the aggrieved parties and such decisions
perform the function of laying down rules for the future. As
such equity acts as a source of law.
 Sources of Law
Scientific Commentaries

The works of eminent jurists always include scientific commentaries on

the Constitution and the laws of each state. These are used by the courts
for determining the meaning of law. It helps the courts to interpret and
apply laws. The jurists not only discuss and explain the existing law but
also suggest the future possible rules of behaviour. They also highlight
the weaknesses of the existing laws as well as the ways to overcome
these. Interpretations given by them help the judges to interpret and
apply Laws to specific cases. The works of jurists like, Blackstone, Dicey,
Wade, Phillips, Seeravai, B.Pi. Rau, D.D. Basu and others have been
always held in high esteem by the judges in India. Scientific
commentaries jurists always help the development and evolution of law.
 Constitution of India
The Constitution declares India to be a
sovereign socialist democratic republic,
assuring its citizens of justice, equality, and
liberty.
It is the longest written constitution of any
independent nation in the world.
It contains 395 articles and 12 schedules, as
well as numerous amendments, for a total of
1,17,369 words in the English language
version.
 Preamble of the Constitution
We, the people of india,
Having solemnly resolved to constitute India into a
sovereign socialist secular democratic republic and to
secure to all its citizens:
Justice, social, economic and political;
Liberty of thought, expression, belief, faith and worship;
Equality of status and of opportunity;
And to promote among them all:
Fraternity assuring the dignity of the individual and the
unity and integrity of the nation.
 Fundamental Rights
Equality before the law.
Freedom from discrimination on grounds of religion, race,
caste, sex or place of birth.
Equality of opportunity in matters of public employment.
Freedom of speech and expression.
Right to assembly peacefully without arms.
Protection against deprivation of life and personal liberty.
Freedom of conscience and the profession, practice and
propagation of religion.
To move freely through India, to reside and settle in any
part of India.
 Fundamental Duties
Added to the Constitution in 1977.
To abide by the Constitution.
Respect its ideals and institutions, the National Flag and the
National Anthem.
To value and preserve the rich heritage of our composite
culture.
To protect and improve the national environment including
forests, lakes, rivers and wild life.
To have compassion for living creations.
To strive towards excellence in all spheres of individual and
collective activity.
 Criminal law
Indian Penal Code (IPC) provides a penal code for all
of India including Jammu and Kashmir, where it was
renamed the Ranbir Penal Code (RPC).
The code applies to any offence committed by an
Indian Citizen anywhere and on any Indian
registered ship or aircraft.
Indian Penal Code came into force in 1862 (during
the British Raj) and is regularly amended, such as to
include section 498-A.
 Civil Procedure Code
The Civil Procedure Code (C.P.C.) regulate the functioning of
Civil courts.
It lays down the:
- Procedure of filing the civil case.
- Powers of court to pass various orders.
- Court fees and stamps involved in filing of case.
- Rights of the parties to case (plaintiff & defendant)
- Jurisdiction & parameters of civil courts functioning.
- Specific rules for proceedings of a case.
- Right of Appeals, review or reference.
 Family law
Indian civil law is complex, with each religion
having its own specific laws which they adhere
to.
After independence Indian laws have adapted
to the changing world.
The most recent being the Domestic Violence
Act[2005].
 Industrial and Labour Laws
The most notable laws are as follows:
Industrial Dispute Act, 1947
Wages Act, 1948
Employees State Insurance Act, 1948
Employees Provident Fund and Miscellaneous Provisions
Act, 1952
Beedi and Cigar workers Act, 1974
Equal Remuneration Act, 1976
Contract Labour Act, 1970
Child Labour Act, 1986
Bonded Labour System Act, 1976
 The Employees Provident Funds Act, 1952
The Act shall apply to:
every establishment which is a factory
engaged in any industry mentioned in
schedule I of the Act and
employing 20 or more persons or
any other establishment employing twenty or
more persons or
such other establishment as the Central
Government may notify.
 Right To Information Act, 2003
The Right to Information emerges out of the umbrella of
Right to Freedom of Speech and Expression and Right to
Life.
Right to Information is also the centrifugal point for access
to myriad other basic human rights such as environment,
health, food, livelihood etc.
The most direct transformation that the right to
information effects is in the governance system.
From the perspective of citizenship, right to information is
the primary tool in the hands of the citizen.
 Writs
The Writs are issued by the Supreme Court under
Article 32 and by the High Courts under Article 226
of the Constitution of India.

Types of Writs:
Writ of prohibition
Writ of habeas corpus
Writ of certiorari
Writ of mandamus
Writ of quo warranto
 Indian Judicial System
The three-tiered system of Indian judiciary
comprises of Supreme Court (New Delhi) at its
helm;
High Courts standing at the head of state judicial
system;
Followed by district and sessions courts in the
judicial districts, into which the states are divided.
The lower rung of the system then comprises of
courts of civil (civil judges) & criminal
(judicial/metropolitan magistrates) jurisdiction.
 The Supreme Court
On the 28th of January, 1950, the Supreme Court
came into being.
The judges of the Supreme Court at the time of
inauguration were Chief Justice Harilal J. Kania and
Justices Saiyid Fazl Ali, M. Patanjali Sastri, Mehr
Chand Mahajan, Bijan Kumar Mukherjea and S. R.
Das.
The first Attorney General for India was Mr. M.C.
Setalvad.
 The Supreme Court
The Supreme Court of India comprises the Chief Justice and
not more than 25 (30) other Judges appointed by the
President of India.
The proceedings of the Supreme Court are conducted in
English only.
The Registry of the Supreme Court is headed by the
Registrar General.
The Attorney General for India is appointed by the
President of India under Article 76 of the Constitution.
Three types of Advocates: SENIOR ADVOCATES,
ADVOCATES-ON-RECORD &OTHER ADVOCATES .
 The High Courts
The High Courts are generally the last court of
regular appeal.
Besides, for invoking writ jurisdiction, the High
Courts can be approached for enforcement of other
rights.
It has the power to supervise the subordinate
courts falling within its territorial jurisdiction.
The High Courts are Courts of Record.
The High Courts also exercises original jurisdiction
under the Companies Act.
 The High Courts Cont
The High Court hears First Appeals from the decisions of
the District Courts.
Section 100 of the Code of Civil Procedure provides for a
Second Appeal from Appellate decrees.
Under Section 115 of the Code, the High Court is conferred
wish revisional jurisdiction.
Under Article 227 of the Constitution also, the High Court in
the exercise of its powers of superintendence entertains
revision petitions to correct errors on the part of lower
Courts and Tribunals in Judicial & Quasi Judicial matters.
 The High Courts Cont
On the Criminal side, the High Court has to confirm all
sentences of death passed by Courts of Sessions and hear
References in this behalf.
High Court hears Criminal Appeals from convictions
awarded by Sessions Judges and Additional Sessions Judges
or from the judgment of any other Court, where a sentence
for more than seven years imprisonment has been passed.
The High Court is also empowered to entertain appeals
from orders of acquittal passed by any Court.
High Court has also been conferred with Criminal
Revisional Jurisdiction.
 The Subordinate Courts
This subordinate Courts are:
(a) District Courts, empowered to hear appeals from
courts of original civil jurisdiction besides having
original civil jurisdiction
(b) Sessions Court is courts of criminal jurisdiction,
having the similar scope of powers.
The courts of specific original jurisdiction are courts
of Civil Judges, of Judicial Magistrates; Small Causes
courts & Courts of Metropolitan Magistrates.
 Quasi - Judicial System
This appendage to the Indian judicial system is a
recent & sincere attempt on the part of the
government to expedite the judicial process
through dilution of procedural formalities &
avoidance of litigation.
Tribunals form an indispensable part of this system,
which are appointed by the government and
comprise of judges & experts on the particular field,
for which the tribunal has been constituted.
 NEW TRENDS IN JUDICIARY

Computerisation of Courts
Scope of PIL is being limited
Judiciary has become more open
Concept of Justice at Door-Step encouraged
Lok Adalats
Special Courts to dispose off Petty Cases
Evening Courts started in many States
 Function of Law
1.National Law i.e. the body of rules which regulates
the actions of the people in society and it is backed by
the coercive power of the State.

2. International Law i.e. the body of rules which guides

and directs the behaviour of the states in international
relations. It is backed by their willingness and consent
that the states obey rules of International Law. It is a
law among nations and is not backed by any coercive
power.
 Function of Law
3. Constitutional Law: Constitutional Law is the supreme
law of the country. It stands written in the Constitution of
the State. The Constitutional Law lays down the
organisation, powers, functions and inter-relationship of
the three organs of government. It also lays down the
relationship between the people and the government as
well as the rights, freedoms (fundamental rights) and
duties of the citizens. It can be called the Law of the laws in
the sense all law-making in the State is done on the basis
of powers granted by the Constitutional Law i.e. the
Constitution.
 Function of Law
4. Statute Law or Ordinary Law

It is also called the national law or the municipal law. It

is made by the government (legislature) and it
determines and regulates the conduct and behaviour
of the people. It lays down the relations among the
people and their associations, organisations, groups
and institutions. The legislature makes laws, the
executive implements these and judiciary interprets
and applies these to specific cases.
 Function of Law
5. Private Law

Private Law regulates the relations among

individuals. It lays down rules regarding the
conduct of the individual in society and his
relations with other persons. It guarantees the
enjoyment of his rights. It is through this law that
the State acts as the arbiter of disputes between
any two individuals or their groups.
 Function of Law
6. Public Law

The law which regulates the relations between

the individual and the State is Public Law. It is
made and enforced by the State on behalf of the
community.
 Broad Functions of Law
1. Establishing Standards

The law is a guidepost for minimally acceptable

behavior in society. Some activities, for instance, are
crimes because society (through a legislative body) has
determined that it will not tolerate certain behaviors
that injure or damage persons or their property. For
example, under a typical state law, it is a crime to cause
physical injury to another person without justification
doing so generally constitutes the crime of assault.
 Broad Functions of Law
2. Maintaining Order

This is an offshoot of establishing standards.

Some semblance of order is necessary in a civil
society and is therefore reflected in the law. The
lawwhen enforcedprovides order consistent
with societys guidelines.
 Broad Functions of Law
3. Resolving Disputes

Disputes are unavoidable in a society made of persons

with different needs, wants, values, and views. The
law provides a formal means for resolving disputes
the court system. There is a federal court system and
each state has its own separate court system. There
are also various less formal means for resolving
disputescollectively called alternative dispute
resolution (ADR).
 Broad Functions of Law
4. Protecting Liberties and Rights

The law provides for various liberties and rights. A purpose and
function of the law is to protect these various liberties and
rights from violations or unreasonable intrusions by persons,
organizations, or government. For example, subject to certain
exceptions, the First Amendment to the Constitution prohibits
the government from making a law that prohibits the freedom
of speech. Someone who believes that his free speech rights
have been prohibited by the government may pursue a
remedy by bringing a case in the courts.