Solved June 2010 General & Commercial Laws Paper

Ans. 1 (a) The Indian Constitution, though primarily federal in form,

contains a strong unitary bias. Exercise of the numerous powers given to the
Center by the Constitution gives it the unitary structure. Which features
predominate depends upon circumstances and the prevailing situations.
Ordinarily, it retains its federal features, but in times of emergencies like war
or political instability, it converts into the unitary structure.

The Indian Constitution has proclaimed India as a Union of States, i.e. a

federation. Let us examine both these features-

Federal features of the Constitution –

A federal system is one where the powers and duties are divided between a
unified central authority and the different states of the nation. Items of
national importance like defence, railways, post and telegraph, foreign
affairs, citizenship etc. are included in the Union list and items of regional or
local importance like agriculture, law and order, health etc are placed in the
State list. Both Union and State govern the items in the Concurrent list like
succession, transfer of property, education etc. This division of powers is
made concrete by inclusion in the Constitution (Seventh Schedule).

The features of a federal system as present in India are –

Governance at both state and center level.
Division of work into Union, State and Concurrent lists
Allowing individual states to make their own internal laws
Supremacy of the constitution, i.e. the Union and the State Governments
function well within the limits defined in the Constitution.
The authority of the Court in matters of conflict between states and Union,
or in matters of interpretation of the Constitution.

Unitary features of the Constitution –

A unitary system is one where the powers and functions are centralized. In
India, this happens in times of emergencies, when the Union can make rules
in relation to state matters also.
The features of a unitary system as present in India are –
a. To give directions to the States regarding how the matters in the State lists
are to be concluded.
b. Power to legislate regarding some matters contained in the State List
Taking over powers of state governance in emergencies.
The States cannot secede from the Union
Single citizenship
Unified judiciary and public services
Union can create new states by altering boundaries of existing states

Hence, it can safely be termed that the Constitution of India is both unitary
and federal. i.e. quasi-federal in nature. We could say that though federal in
structure, the Indian Constitution is unitary at the core.

1. (b) The writ jurisdiction of the High Courts and the Supreme Court
coincide at some points, but they are different in some key aspects.

Under Article 226 of the Constitution, the High Court has the power to issue
not only writs of certiorari, prohibition and mandamus, but also other writs,
directions and orders. The Indian High Court has jurisdiction to issue
necessary directions and orders to ensure justice and equity. Moreover, this
right is not restricted, but spreads to administrative action and judicial or
quasi-judicial action also.

When the Supreme Court issues writs under Article 32 of the Constitution,
they are mainly for the enforcement of fundamental rights mentioned in the
Constitution itself.

The Madras High Court held in Aditanar Educational Institution v.

Assistant Director of Income-tax (297 I.T.R. 376) that the relief under
Article 226 of the Constitution of India can be granted in spite of the
availability of alternate remedy under the statute, only based on undisputed
facts. When the High Court finds that factual disputes are involved, it would
not be desirable to deal with them in a writ petition. Under Article 32, a writ
is preferred in case there is no other recourse available.

1. (c) The Mischief Rule or the Heydon’s Rule –

According to this rule, when we interpret statutes, we need to consider some
facts –
- what was the rule pertaining to the subject matter before the current
statute was made
- what was the mischief or wrong that the common law did not cover
till then, so that need for a special law was felt
- the solution established by the new statute and the motive behind it.
 (i) These principles were established by Lord Coke in the famous case
of Sir John Heydon. It was decided that when the literal meaning
of the words of a statute is obscured, then seeking the mischief
which the act seeks to correct or mitigate would help in its
interpretation. Hence, following the Mischief Rule, one can easily
gain the intention of the statute, thus giving effect to its original
objective.

2. (i) As per Section 13 of the Transfer of Property Act, 1882, transfer of

property to an unborn person can only take place if before such a transfer; a
life estate is transferred to a person existing at the date of transfer. Moreover,
it should not be a partial interest, but the entire interest that is transferred to
the unborn. The vesting of absolute interest in favour of an unborn person
may be postponed until he attains full age. Such an unborn person should get
full rights to that property, and no further rights can be created to that
property after those of the unborn.

2. (ii) The Doctrine of ‘Lis Pendens’ asserts that while a suit is pending, a
property, which is the subject matter of the suit, cannot be transferred. If it is
transferred, then the transferee would acquire the property subject to the
decision of the suit (Section 52 of the Transfer of Property Act, 1882).
The important points to be kept in mind in this regard are –
- Only suits in Indian courts would operate as Lis Pendens, not those
filed or ongoing in foreign courts.
- It must not be a vexatious suit.
- It should relate to the immovable property in question.
- The subsequent transfer must be with regard to rights that might be
affected by the outcome of the pending suit.

2. (iii) The cyber offences are described in Section 43 of Chapter IX titled

Penalties and Adjudication of the Information Technology Act, 2000.
Chapter XI (Section 65-78) mentions the offences related to cyber crimes,
i.e. crimes related with computers.

They are as under and are caused if anyone does the following acts with
reference to a computer, computer system or computer network in an
unauthorized manner, without permission of the relevant authority who
controls the resource –
- If someone hacks into a computer resource.
 - If the information contained in the resource is accessed without
permission, and copied or altered in any way.
- If the resource is infected with a computer virus or bug.
- If the resource or its functioning is disordered in any way, or it is
damaged in any way, either by altering the settings or programmes or
in any other manner.
- If the regular and authorized users are denied entry into or access to
the resource.
- If aid is provided to anyone for doing any of the above-mentioned
acts.
- If someone pays or hires someone to do any of the above-mentioned
works.
All of these offences are punishable with a maximum penalty to pay
damages upto rupees one crore.

2. (iv) The following instruments are to be compulsorily registered –

- Instruments that make a gift of immovable property.
- Any instrument that creates or alters any right in or to immovable
property, where the value involved is of more than hundred rupees.
- Receipts for sum paid for creation or alteration of any right in or to
immovable property, where the value involved is of more than
hundred rupees.

The effects of non-registration of documents that require registration are

detailed in Section 49 of The Registration Act, 1908. It provides for the
following effects –
- The document cannot cause any changes in the rights to or interest in
any immovable property.
- It will not be admitted as evidence of any transaction mentioned in the
document, as per the Indian Evidence Act, 1872.

Any document covered under Section 17, if not registered, will not have the
same effect as it would have had if it had been registered.

2. (v) Section 35 of the Indian Stamp Act, 1899 covers instruments not duly
stamped, whereas Chapter IV (Sections 35-48) gives the consequences in
case an instrument is not duly stamped. It provides the following –
- An instrument insufficiently stamped will not be admitted as evidence
or recognized as valid by any government official unless it is duly
stamped.
 - It can, subsequently, be stamped with stamps of proper amount, and
be rendered duly stamped according to the Indian Stamp Act, 1899.
- An agreement or contract that is made up of various parts contained in
separate letters would be deemed to be properly stamped if any one
part of all the documents bears stamps of proper description and
value.
- The exclusion of insufficiently stamped instruments shall not apply to
criminal proceedings.
- The Collector of Stamps can be presented with such an instrument and
the proper stamp duty paid on it, so that it becomes a proper and valid
instrument.

3. (i) A ‘summons case’ is one that is punishable with imprisonment upto and
including two years. The procedure for the trial of these cases is as per Chapter
XX of the Code of Criminal Procedure, 1973. They normally relate to minor
offences, and are heard or resolved not through the normal route but using the
summary procedure. This remains, as of today, the judge’s discretionary power
though.
‘Warrant cases’ are those punishable with an imprisonment of more than two
years or with a life sentence or a death sentence. Chapter XIX of the Code of
Criminal Procedure, 1973, covers the trial of warrant cases.

3. (ii) All the offences included in the list of bailable given in the First Schedule
of the Code of Criminal Procedure are termed as bailable. Other acts can also
provide for bailable offences. These are relatively non-serious offences, against
which an individual can be let off on bail. All bailable offences are non-
cognizable, i.e. no arrests can be made for such offences unless a warrant has
been issued for that purpose.

Non-bailable offences are those that are not included in the First Schedule of
the Code of Criminal Procedure. These are cognizable; arrest can be afforded
without a warrant. In this list are included all serious offences.

3. (iii) Battery - Battery implies the unlawful beating of another. It includes

every willful, angry, violent or negligent touching of another's person or
clothes, or anything attached to his person or held by him.

Assault – It is a threatened or attempted physical attack by someone who

appears to be able to cause bodily harm if not stopped. An assault is any
unlawful attempt or offer with force or violence to do a corporal hurt to
another, whether from malice or wantonness; for example, by striking at him
or even holding up the fist at him in a threatening or insulting manner, or
with other circumstances as denote at the time. It indicates an intention,
coupled with a present ability, of actual violence against his person, as by
pointing a weapon at him when he is within reach of it.

3. (iv) In the concept of contingent interest, the transferee is required to fulfil

some condition so that the transfer can be perfected. The condition can be a
condition precedent or a condition subsequent.

A condition precedent is one that needs to be fulfilled before the transfer of

interest can take place. For example, A asks B to marry C, then only he will
transfer some land to him. The marriage is a condition precedent, essential
for the transfer of interest to take place. The transfer itself is contingent on
B’s acceptance of the condition.

A condition subsequent is one that has to be followed even after the transfer
has taken place. For example, A transfers land to B subject to the condition
that if he cuts the trees on that land, it will revert back to A.

3. (v) ‘Primary evidence’ as per the Indian Evidence Act, 1872 means the
very document itself, not a copy of it. The provision of primary evidence is
based on the ‘Best Evidence’ principle, i.e. if there is better evidence
available, then that must be provided. If the person capable of providing
superior evidence supplies an inferior one, it creates an unfavorable stance
against him. (Section 62)
‘Secondary evidence’ means certified or compared copies of, or counterparts
of, or oral accounts of documents. (Section 63)

According to Section 65 of the Act, where primary evidence can be

provided, secondary evidence should not be used. It should only be given
where the original document is not available because it has been lost or
destroyed, or it is otherwise unavailable because it cannot easily be moved
because of bulk, or because it is under the control of some public authority’s
control.

4. (i) Under Section 16 of the Information Technology Act, 2000, the

Central Government has been given the responsibility to provide for a
procedure for assuring the security of electronic records. Accordingly, it has
prescribed the usage of digital signatures for verification of electronic
records.

The digital signature ensures that the record cannot be created by a spurious
source, as without the signature being attached to a document, it cannot be
said to be created by an authorized source. Moreover, since the authorized
person can use the digital signature only after getting it registered with the
Certifying Authority established under the Act, it is safe to presume that any
document having the signature is secure.

The Act prescribes the appointment of an adjudicating officer for deciding

on cases that come under the Information Technology Act. He has the right
to decide on matters like the occurrence of offences, amount of penalty or
compensation to be paid by the wrongdoer, the corrective actins required etc.

4. (ii) An arbitral award can be set-aside on application to the High Court

having jurisdiction, and any civil court of an inferior grade. This has been
provided under Section 34 of the Arbitration and Conciliation Act, 1996.
The grounds based on which an application under this section can be
filed are as follow –
o Invalid or unacceptable arbitration agreement
o Incapacity of parties
o Improper notice of arbitration proceedings
o Inability in presenting a proper case to the arbitral authority
o Award not according to the terms of reference
o Improperly constituted arbitral tribunal
o Proceedings not as per agreement
o Award against the public policy of India
o Matter of dispute not capable of being the subject matter of
arbitration
The application for setting aside an award has to be made within three
months of receiving the award. If there is a previous application for
correction or interpretation of the award already pending, the time
would be counted from the date of disposal of that application. This
period can be extended on proof of sufficient cause for not presenting
the application being evident.

4. (iii) ‘Preventive Relief’ implies the issue of an injunction to stop a person

from doing something that he should not be doing. It is contained in Part III
of the Specific Relief Act, 1963. Specific relief being a discretionary
remedy, it depends upon the judgment of the Court.
Section 36 under this part provides for both temporary and perpetual
injunctions. Temporary injunctions are for stopping the person for a short
duration of time specified in the order, for example, when the suit is pending
or yet to be decided. They are provided under Order 39 of the Code of Civil
Procedure, 1908. These can be dissolved at sufficient cause being proven by
the defendant. Alternatively, these will terminate at the final decision
regarding the suit being passed by the Court.
Permanent injunctions, on the other hand, are covered under Section 38 of
the Specific Relief Act. These are passed to uphold the plaintiff’s right
arising from a contract. A ‘perpetual injunction’, often a ‘permanent
injunction’, is a relief available to the plaintiff only at the conclusion of the
trial. This type of injunction would be granted when the conditions that
necessitated the injunction in the first place continue and are proved to be of a
permanent nature. It is ordered using the final judgment.

4. (iv) Rectification of an instrument means removing the apparent mistakes or

errors. This is covered under Section 26 of the Specific Relief Act, 1963. It is to
be done with the permission of the Registrar. The purpose of rectification of
instruments is to give effect to the real intention of the parties to the contract
that is represented by the instrument.

If the error is formal in nature, it can be rectified with the Registrar’s

permission, who gives sufficient time to do the needful. The guiding principle
here is that the parties should be placed in the positions they would have been
in had the error not occurred.

4. (v) Specific Performance implies the enforcement of a contract in its

exact and pre-determined terms, by way of a court order or injunction. It is
used when no other relief would suffice to provide relief to the aggrieved.

The principles on which courts may grant specific performance

The principles on which courts may grant specific performance are as
defined in Section 10 of the Specific Relief Act, 1963, and are as under –
(i) If damages can better address the harm to the plaintiff by the
wrong committed, specific performance will not be ordered.
(ii) Both the parties will be bound by it, i.e. irrespective of which party
files a suit, if specific performance is ordered by the court in
 response to the suit by one party, it will be the same if the other
files a suit.
(iii) Specific relief is a discretionary power and the courts will also see
whether it is a type of contract that can be brought within this Act
or not.

5. (a) Since the instrument is made out of India and presented for registration
after four months, it may not be accepted for registration.

Section 26 of The Registration Act, 1908 provides that an instrument made

out of India may be presented for registration in India within four months of
it having reached India. If it is not so presented, the Registrar has the right to
refuse registration.

5. (b) (i) (d)

5. (b) (ii) (c)
5. (b) (iii) (d)
5. (b) (iv) (d)
5. (b) (v) (d)

5. (c) (i) Section 38

5. (c) (ii) cognizable offences.
5. (c) (iii)imprisonment upto three years or with fine or with both.
5. (c) (iv)dependants unable to maintain themselves (spouse, children both
legitimate and illegitimate and parents).
5. (c) (v) the High Court.

6. (i) Correct. When the states refer the matter to the Union or when in a
state of emergency.
6. (ii) Correct. This happens when the state Assembly is unable to function
properly.
6. (iii) Correct. As per the RTI Act, subject to certain provisions.
6. (iv) Correct. According to Section 8 of the RTI Act.
6. (v) Correct. In the cases of vicarious liability.
6. (vi) Correct. As per Sections 10, 11, 12 of the Code of Civil Procedure.
6. (vii) Correct. As per the definitions given in Sections 2(2) and 2(14) of the
Code of Civil Procedure.
6. (viii) Correct. As per Section 4 of the Code of Civil Procedure.
7. (a) Any document covered under Section 17, if not registered, will not
have the same effect as it would have had if it had been registered.

However, under Section 53A of the Transfer of Property Act, 1882, an

unregistered document may be admitted as evidence in a case where the
document is proof of part performance of a contract, and a proof also of the
fact that the plaintiff has performed or is willing to perform his part of the
deal.

Hence, Ashok will not succeed.

7. (b) ‘One cannot approbate and reprobate at the same time.’ This is the
main theme of the Doctrine of Election covered under Section 35 of the
Transfer of Property Act, 1882. This doctrine is based upon the principle
that anyone taking over some benefit has to shoulder the responsibilities
coming with it too; he cannot just choose to take the benefit and reject the
rest of the contract.

‘Election’ implies choice. As per Section 35 of the Transfer of Property Act,

1882, if a person is given a property by a deed, and asked to transfer another
property to a third party by the same deed, he is to choose either to accept
both the transactions or to reject both. This implies that a person cannot
choose just a benefit; he has to bear the burden that goes along with it.

If suppose the third party who was promised something under the deed is not
given the property, the original transferor has to compensate him for his
distress or disappointment. Hence the heirs of Kamal have to compensate
Manoj for his loss.

7. (c) According to Section 12 of this Act, specific performance of a part of a

contract shall not normally be ordered. The section, however, contains some
exceptions as laid down in sub-sections 2 to 4. These are as follows –
- When the part of the contract that is left unperformed is comparatively
a smaller portion as compared to the part that is performed, then part
performance is ordered. For the leftover part, compensation is deemed
to be adequate relief.
- When the party has done some portion of the work desired, and the
leftover portion cannot be done, then the other party will pay an
amount as reduced by the consideration for the non- performed part.
 Another alternative could be that the party pays the entire sum and
relinquishes all rights to the balance work left.
- When the contract is such which has two portions: one that can be
specifically performed and another that cannot, the court can order
one portion to be specifically performed. For example, if A promised
to sell two houses, X and Y to B, but before the date of the transaction
being completed, house Y got destroyed, the court can orer A to hand
over house X to B.
Here, 50 bighas are a substantial part of the contract. So, instead of Alok,
Vimal can demand specific performance of the contract by paying the entire
consideration of Rupees ten lakhs.

8. (a) ‘The Doctrine of Constructive Res Judicata’ has been provided in

Section 11 of the Code of Civil Procedure, 1908. It prevents further suits being
filed for a matter that is at the core of a former suit. The reasons are as below –

• The same party should not be troubled with the same matter again and
again.
• There should be a limit to the number of cases filed in a court, i.e.
vexatious cases should not be entertained.
• The same matter should not be used for wasting valuable court time
repeatedly.

The basic requirement for applying this doctrine is that the matter that is at the
core of the former suit should also be the main essence of the latter suit(s).

In this case, the two suits are filed by Chandan in two different capacities.
Hence, the second suit is not barred.

8. (b) This case is covered by Rule 2 (Order 2) of the CPC, which provides
that in a previous suit filed by the plaintiff, the entire claim which he is
desirous of obtaining should be included. If it is not so done, inclusion of the
claims left out in the previous plaint will not be allowed in a second plaint
filed by the same party against the same defendant.

Hence, the second suit filed by Mohan against Sohan and Rohan is not to be
allowed.

8. (c) As pr Section 122 of the Indian Evidence Act, there are certain facts of
which evidence cannot be given. It includes communications between
husband and wife during marriage private and unbreachable. The intention is
to prevent domestic concord being disrupted.

In this case, Kamini gave the information to Ajay in 2001, but they got
married in 2002. Hence, Ajay can give evidence and disclose the
communication made to him by Kamini.