Business Law

Every great and commanding movement
in the annals of the world is the triumph

of enthusiasm . Nothing great was ever
achieved without it.
Ralph Waldo Emerson
Sebastian Tharakan, The Businesslawlecturer
Dear students of SIBM 2010-2012 MBA,

Welcome to the exciting study in the commercially
important and vibrant subject of Business Laws
As your Faculty Resource Person, I invite you to enjoy
and to actively participate in the learning of this vibrant
subject. I invite you to focus on enjoying the learning
process and I assure you that all our Sessions will be
exciting voyages of knowledge, discovery and good
innovative creative learning.
Sebastian Tharakan your friend
The Businesslawlecturer
Mr. Munish Bansal says =
This is my legal right
What is the meaning of a legal right ?

When can you say that you have a legal right ?
Copyright 2010, reserved with: Sebastian Tharakan, The Businesslawlecturer
Ubi jus, ibi remedium.

Where there is a right, there is a remedy.
Only when a right is enforceable by law, that right

becomes a legal right. If a right is not enforceable by
law, then the right is not / cannot be a legal right.
Classification of law & Legal Systems :

(a) Civil Law ;
(b) Criminal Law ;
(c) Constitutional & Administrative Law
The concept of jurisdiction of a court

Jurisdiction of a court refers to the power / authority of a
court to decide, determine and pass orders / judgment over
matters / cases that come before it.
Types of jurisdiction :
(1)
(2)
(3)
(4)
(5)
(6)
Jurisdiction over the subject matter;

Local / territorial jurisdiction;
Original jurisdiction;
Appellate jurisdiction;
Pecuniary jurisdiction;
Extra-ordinary Original jurisdiction
Why do we need appellate jurisdiction ?

Why do we need to have multiple courts /
a hierarchy of judiciary ?
For the advantages of time and convenience,
why not have only ONE court to decide all disputes ?
No extraordinary power should be lodged

in any one individual.
Thomas Paine
To lodge all power in one party and to keep it there

is to insure bad government.
Mark Twain
Distinction between civil law & criminal law
Let us look at a civil case .
Illustration No. 1 = A typical civil case :
Ms. Aparna Ramachandran, a wholesale dealer in

fruits, enters into contract with Ms. Rohita Sundru to
supply Ms. Rohita Sundru with one ton of mangoes.
Ms. Rohita Sundru pays the entire purchase price.
However, Ms. Aparna Ramachandran fails to make
supply / deliver the goods.
This is a case of breach of contract. It is a civil case,

as it raises a private dispute between Ms. Rohita Sundru
and Ms. Aparna Ramachandran, and so Ms. Rohita
files a suit for damages against Ms. Aparna, for the
non-supply of goods.
Ms. Rohita Sundru v. Ms. Aparna R.

( plaintiff v. defendant )
( petitioner v. respondent )
Let us now look at a criminal case .
Illustration No. 2 = A typical criminal case :

Mr. Violent Vimal V. Menon brutally hits and injures
Mr. Ritesh Chaddha. Thereafter, the victim: Mr. Ritesh
first makes / files a police complaint. This leads to the
filing of a criminal case. Since every crime is
considered as an offence committed against the State,
it will be the State of Karnataka that prosecutes
the accused (Mr. Vimal), even though the victim of
the crime may be a single individual (Mr. Ritesh)
State of Karnataka v. Mr. Vimal V. Menon

( State of Karnataka v. The defendant / accused )
(1) Civil law determines and decides private

disputes. Therefore civil law is also known as
the law of civil / private wrongs. On the other
hand, every crime is considered to be an
offence committed against the state, despite the
fact that the victim of the crime may be a
private individual. Criminal law is thus known
as the law of public wrongs.
(2) In a civil case, the court has to frame issues,

and based on the evidence, would decide as
to whether the civil rights are violated, and if
so, whether or not the plaintiff is entitled to any
remedy, and if so, what remedy / relief may be
awarded to the plaintiff.
(3) In a criminal case, the main question for
decision by the court is whether the accused
is guilty or innocent of the charge. Based on evidence
of the case, and on the facts and circumstances of
the case, a criminal case can only end either in an
acquittal (innocence) or in a conviction (guilty).
(4) In a civil case, the burden of proof is usually

on the plaintiff. By bringing in evidence, the
plaintiffs lawyers will have to prove the case
of the plaintiff. In a criminal case however,
the burden of proof is on the prosecution.
The prosecution will have to prove the guilt of
the accused. Besides, the standard of proof
required in a criminal case is very high due to
the principle of criminal law that: an accused
is presumed to be innocent unless and until proved guilty
beyond reasonable doubt.
(5) In a civil case, the parties bear the expense of

litigation. In a criminal case, it is the state through
its public prosecutors, who will prosecute the case.
The exceptions in criminal law are offences relating
to adultery and cheque bouncing.
(6) The case-title of civil cases differ from those of
criminal cases.
Mr. ABC (plaintiff) v. Mr. XYZ (defendant)
(civil case)
State of Madhya Pradesh v. Mr. XXX defendant

(accused)
(criminal case)
According to Salmond, the distinction between civil

and criminal law cannot always be maintained
because some acts are considered both as crimes as
well as civil wrongs. Examples: defamation, adultery,
etc. Further, it is not always true that crimes are
more harmful than civil wrongs. Example: the
negligence of a builder (which is a civil wrong) which
results in widespread loss of lives and property, may
entail more harmful consequences then, say, a simple
assault (which is a crime).
Who can file a case / complaint in a court of law ?
The Doctrine of Locus standi

The Doctrine of Locus standi , states that only a
person whose legal right has been violated /
infringed, or whose legal right is threatened / is
likely to be violated / infringed, can file a case /
petition / complaint before the court.
Kesavan v. State of TN (1979) Madras HC
Maganbhai v. Union of India (1969) Gujarat HC
J. M. Desai v. Roshan Kumar (1976) SC ...
An exception to the rigid Doctrine of Locus

Standi = PIL
What is the meaning of PIL ?
The advent & growth of PIL :

The case of Sunil Batra II v. Delhi Administration
(1980) SC
The Doctrine of pro bona publicio ; for the public good
The cases of : (1) Municipal Council, Ratlam v.
Vardichand (1980) SC
(2) MC Mehta v. UOI (1997) (the Taj Trapezium Case) SC
(3) Common Cause (Petrol Pump Matter) v. UOI (1996) SC
(4) Peoples Union for Democratic Rights v. UOI (1982) SC
Ms. Aparna Ramachandran has committed breach of

contract, by her failure to supply Ms. Rohita Sundru
one ton of mangoes as per their contract. This gives the
buyer / purchaser: Ms. Rohita Sundru = the right to file a
case against the supplier: Ms. Aparna Ramachandran.
Let us suppose that Ms. Rohita Sundru, for some reason
or the other, chooses to wait for six years before she
decides to file a civil case against Ms. Aparna R.
Can Ms. Rohita Sundru file a case after six years since the
cause of action (breach of contract) / dispute arose?
The Law of Limitation
The Limitation Act, 1963 .

interest republicae, ut sit fing litium ;
it is to the interest to the state,
that there shall be an end to litigation.
The Limitation Act, 1963 states that the limitation

period for contractual disputes / contractual
matters, shall be = 3 (three) years from the date of
the dispute.
Why do we have the Law of Limitation ?

OR
What purpose does the Law of Limitation serve ?
Substantive & Procedural Law

The Constitution of India; the Indian Penal Code, 1860; the
Indian Contract Act, 1872, .etc., lay down substantive law ;

while, the Code of Civil Procedure, 1908; (regulates civil courts)
and the Code of Criminal Procedure, 1973; (regulates criminal
courts) lay down / prescribe the procedural law which is to
be followed by courts. The Indian Evidence Act, 1872,
regulates matters of evidence concerning both civil as well as
criminal courts.
The Principles of Natural Justice
The Department of Roads & Surface Transport, Government of India,

announces a large and lucrative tender contract for the construction of
the Golden Quadrilateral. Mr. Saurabh Agarwal is the CEO of L & T
Construction Co. Ltd, which company is one of the tender applicants.
The tender is finally awarded to Mr. Aniruddha Dasgupta, the MD of
Dasgupta Constructions , even though the tender quotation of L & T
Construction Co. Ltd., was the lowest quotation.
It is later found that Mr. Politician T. M. Prakash, the Minister
of Roads & Surface Transport, is one of the partners of Dasgupta
Constructions. On what legal grounds can Mr. Saurabh Agarwal
challenge the grant of tender contract to Dasgupta Constructions ?
Mr. Gautam Kumar is a manufacturer of edible

oils, who enters into contracts regularly with the
Government to supply edible oils. While some of his
contracts are still pending, the Government issues order
abruptly canceling all contracts with Mr. Gautam Kumar,
and also by the same order, declaring Mr. Gautam
Kumar as a Blacklisted contractor.
On what legal grounds can Mr. Gautam Kumar
challenge this Government order ?
(1) Nemo judex in causa sua.

No one should be a judge in his own cause.
Or
The Rule against bias.
(1) The Rule against bias.

Kinds of bias:
(i) Personal bias
Meenglas Tea Estate v. Workmen (1963) SC
Mineral Development Ltd. v. State of Bihar (1960) SC..
(ii) Pecuniary bias

J. Mohapatra & Co. v. State of Orissa (1984) SC
(2) Audi alteram partem.

Hear the other side.
Or
The Rule of Fair Hearing.
Or
The Rule that no one
should be condemned unheard.

(2) The Rule of Fair Hearing.

The story of Adam & Eve
Olga Tellis v. Bombay Municipal Corpn. (1985) SC
Requirements / Facets of the Rule of Fair Hearing :

(i) Proper Notice:
Hotel Ganam v. State of Kerala (1997) Kerala HC
Joseph Vilangadan v. Executive Engineer, PWD
(1978) SC
Union of India v. Narayanbhai (1985) Gujarat HC

GSFC v. Lotus Hotels (1983) SC
Board of High School v. Ghanshyam (1962) SC
(ii) Right to know the evidence against him / her:

Maneka Gandhi v. Union of India (1978) SC
(iii) Right to present case and evidence:
(iv) Right to rebut adverse evidence / crossexamination:
Let me test you!
Hira Nath Mishra v. The Principal,

Rajendra Medical College
(1973 ) SC
Exclusions of the Rule of audi alteram partem :

(i) Exclusion in cases of emergency / necessity:
Nathubhai v. Municipal Corpn., Bombay (1959)
Bombay HC
Hyderabad Vansapati Ltd. v. AP State Electricity
Roard (1998) SC
Luga Bay Shipping Corpn. v. The Cochin Port Trust

(1998) SC
(ii) Exclusion in cases of confidentiality:

Malak Singh v. State of Punjab (1981) SC
(iii) Exclusion based on impracticability:

R. Radhakrishnan v. Osmania University
(1974) AP HC
Which are the sources of law ?
(1) The Constitution
(2) Acts / statutes, enacted by

Parliament & State Legislatures
(3) Delegated Legislation
Two examples of delegated legislation :

The Reserve Bank, created & facilitated by the
Reserve Bank of India Act, 1934
The SEBI, created and facilitated by the

Securities and Exchange Board of India Act, 1992
(4) Contracts
(their terms and conditions)
(5) Customs & Traditions
Some examples of customs & traditions :
A Hindu acquires a share in

ancestral property ex factum ;
Law of primogeniture ;
The lex mercatoria / the law merchant ;
The Devadasi system, .etc.
The relation between law and morality

Are all laws morally correct ? ;
Should law uphold morality ? ;
Should all laws be just, fair
and morally correct ?
Legal requirements for a valid custom :

(1) The custom must have been practiced from time
immemorial ;
(2) The custom must have been practiced
uninterrupted ;
(3) The custom must be reasonable, and it should not
be opposed to morality or public policy ;
(4) The custom must not be expressly forbidden by
the legislature.
(6) Judicial Precedents
Few examples of Judicial Precedents :

M. C. Mehta v. Union of India (2001) SC
Communist Party of India(M) v. Bharat Kumar
(1998) Kerala HC
Ozair Hussain v. Union of India (2001) Delhi HC
Vishaka v. State of Rajasthan (1997) SC
(7) Law laid down by international

treaties & international conventions
The need for International Law.

The need for harmonization of laws.
International treaty-making Organisations:
The UNO; The WTO; The WIPO;
The ILO,.etc.

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Every great and commanding movement

in the annals of the world is the triumph

Sebastian Tharakan, The Businesslawlecturer

Dear students of SIBM 2010-2012 MBA,

Mr. Munish Bansal says =

This is my legal right

What is the meaning of a legal right ?

Copyright 2010, reserved with: Sebastian Tharakan, The Businesslawlecturer

Ubi jus, ibi remedium.

Only when a right is enforceable by law, that right

Copyright 2010, reserved with: Sebastian Tharakan, The Businesslawlecturer

Classification of law & Legal Systems :

The concept of jurisdiction of a court

Jurisdiction over the subject matter;

Copyright 2010, reserved with: Sebastian Tharakan, The Businesslawlecturer

Why do we need appellate jurisdiction ?

No extraordinary power should be lodged

To lodge all power in one party and to keep it there

Distinction between civil law & criminal law

Copyright 2010, reserved with: Sebastian Tharakan, The Businesslawlecturer

Let us look at a civil case .

Illustration No. 1 = A typical civil case :

Ms. Aparna Ramachandran, a wholesale dealer in

This is a case of breach of contract. It is a civil case,

Ms. Rohita Sundru v. Ms. Aparna R.

Copyright 2010, reserved with: Sebastian Tharakan, The Businesslawlecturer

Let us now look at a criminal case .

Illustration No. 2 = A typical criminal case :

State of Karnataka v. Mr. Vimal V. Menon

(1) Civil law determines and decides private

Copyright 2010, reserved with: Sebastian Tharakan, The Businesslawlecturer

(2) In a civil case, the court has to frame issues,

(4) In a civil case, the burden of proof is usually

(5) In a civil case, the parties bear the expense of

State of Madhya Pradesh v. Mr. XXX defendant

Copyright 2010, reserved with: Sebastian Tharakan, The Businesslawlecturer

According to Salmond, the distinction between civil

Who can file a case / complaint in a court of law ?

Copyright 2010, reserved with: Sebastian Tharakan, The Businesslawlecturer

The Doctrine of Locus standi

An exception to the rigid Doctrine of Locus

What is the meaning of PIL ?

Copyright 2010, reserved with: Sebastian Tharakan, The Businesslawlecturer

The advent & growth of PIL :

Copyright 2010, reserved with: Sebastian Tharakan, The Businesslawlecturer

Ms. Aparna Ramachandran has committed breach of

The Law of Limitation

The Limitation Act, 1963 .

Copyright 2010, reserved with: Sebastian Tharakan, The Businesslawlecturer

The Limitation Act, 1963 states that the limitation

Copyright 2010, reserved with: Sebastian Tharakan, The Businesslawlecturer

Why do we have the Law of Limitation ?

Copyright 2010, reserved with: Sebastian Tharakan, The Businesslawlecturer

Substantive & Procedural Law

Indian Contract Act, 1872, .etc., lay down substantive law ;

Copyright 2010, reserved with: Sebastian Tharakan, The Businesslawlecturer

The Principles of Natural Justice

Copyright 2010, reserved with: Sebastian Tharakan, The Businesslawlecturer

The Department of Roads & Surface Transport, Government of India,

Copyright 2010, reserved with: Sebastian Tharakan, The Businesslawlecturer

Mr. Gautam Kumar is a manufacturer of edible

(1) Nemo judex in causa sua.

Copyright 2010, reserved with: Sebastian Tharakan, The Businesslawlecturer