BUSINESS LAW--

INTRODUCTION
 OBJECTIVES OF BUSINESS
LAW

• To strike a balance between all stakeholders, community and society at

large (essentials of a valid contract, void contracts, quasi contract,
provisions for legal remedies in case of breach of contract, definition of
industry as interpreted in Bangalore Water supply case, workmen,
contract labour section 10, Factories act sections 11 to 49 to ensure
health, safety and welfare of employees; evident through judicial
interventions in cases of Nestle, Novartis)
• To check unlawful practices (Related Party Transactions, restrictions
on audit firms)
• To create discrimination free and healthy environment at workplace
(Sexual Harassment at Workplace Act, 2013)
• To protect rights of consumers (defects and deficiencies; Consumer
Protection Act, 1986 evident through SC decision in Spring Meadows
case)
• To create forums which are focused towards adjudicating specific kinds
of disputes (District Forum, State Commission, National Commission,
Labour Courts, Industrial Tribunals, IPAB, NCLT, NCLAT, NGT)
 OBJECTIVES OF BUSINESS
LAW

• To promote healthy competition Competition Act came

into existence;
Competition Act is an Act to provide, keeping in view of the economic
development of the country, for the establishment of a Commission to
prevent practices having adverse effect on competition, to promote and
sustain competition in markets, to protect the interests of consumers and to
ensure freedom of trade carried on by other participants in markets, in
India, and for matters connected therewith or incidental thereto"
 FOR EFFECTIVELY DEALING WITH SEXUAL
HARASSMENT COMPLAINTS SHWW ACT PROVIDED
FOR INTERNAL COMPLAINTS COMMITTEE & TIME
BOUND DISPOSAL OF COMPLAINTS

Presiding Officer – Senior woman

employee from the workplace/other
admin units/office/organisations.

2 Members – Committed to the

ICC

cause of women/experience in
social work/legal knowledge

One member from an NGO/other

women’s organisation/familiar with
issues relating to sexual
harassment.
 OBJECTIVES OF BUSINESS
LAW

IPR laws provide protection to inventors or creators of

intellectual products
The objectives of IPR laws are to provide incentives to
create and serve the interests of the public by promoting
economic growth.
It seeks to protect the rights of IPR owners to enable them
to reap the rewards of their creativity. Intellectual
Property Appellate Board (IPAB) was constituted by a
Gazette notification of the Central Government in the
Ministry of Commerce and Industry on 15th September
2003 to hear appeals against the decisions of the Registrar
under the Trade Marks Act, 1999
 OBJECTIVES OF BUSINESS
LAW

Companies Act 2013 came into existence to remedy needs of the

changing times—
Max number of persons in private limited company increased to
200--section 2(68)
Provision made for one person company which means private limited
company with one person as member carrying on business with limited
liability- It's a Private Company having only one Member and at least One
Director.
S.149(1) CA 2013 read with Rule 3 of The Companies (Appointment and
Qualification of directors) Rules, 2014 the following class of companies are
required to appoint at least one Woman Director- (i) every listed company;
 (ii) every other public company having –
 (a) paid–up share capital of 100 crore rupees or more; or
 (b) turnover of 300 crore rupees or more.
 OBJECTIVES OF BUSINESS
LAW

On June 1, 2016, the Ministry of Corporate Affairs, notified

section 245 of the Companies Act, 2013 (“CA 2013”),
enlisting the provisions of class action suits in India.

Internal audit mandated; Maximum tenure of auditors and

independent directors specified (Section 139(2) & 149(11);

Time limit of 18 months for holding first AGM by a company

other than OPC from date of its incorporation curtailed

Every listed company or having 1000 or more shareholders

will have to mandatorily provide an e-voting facility
 OBJECTIVES OF BUSINESS
LAW

Company Law Board gave way to NCLT and NCLAT to

broaden the scope of dealing with matters as well as to
reduce response time in case of mergers/amalgamation
proceedings, winding up of companies;

The NCLT or “Tribunal” was created as a quasi-judicial

authority under the Companies Act, 2013 to handle
corporate civil disputes arising under the Act.
 OBJECTIVES OF BUSINESS
LAW

NCLT is an entity that has powers and procedures like those vested in a
court of law or judge. NCLT is obliged to objectively determine facts,
decide cases in accordance with the principles of natural justice and draw
conclusions from them in the form of orders.

Such orders can remedy a situation, correct a wrong or impose legal

penalties/costs and may affect the legal rights, duties or privileges of the
specific parties.

NCLAT or “Appellate Tribunal” is an authority provided for dealing with

appeals arising out of the decisions of the Tribunal.

It is formed for correcting the errors made by the Tribunal. It is an

intermediate appellate forum where the appeals lie after order of the
Tribunal.
 LEGAL TERMS

Affidavit
This is a sworn statement made by a party, in writing, made in
the presence of an oath commissioner or a notary public which
is used either in support of applications to the Court or as
evidence in court proceedings.
In writ jurisdiction, cases are generally disposed of on the
basis of affidavits.
An affidavit in reply to a petition, filed by a respondent, is
called a counter affidavit.
The petitioner’s response to this counter, is called a rejoinder
affidavit. All affidavits are verified as to the truth of their
contents.
 LEGAL TERMS

Caveat
Where it is apprehended that an opposite party may file a case, a
party may file a document requesting the court that no order be
made in the case without hearing the caveator.

Caveator
A party who files a caveat.

Infructuous
A petition or application to the court becomes infructuous when the
fundamental premises upon which a petition is based no longer exist
or where the relief sought has already been granted to the
petitioner
 LEGAL TERMS

Issue Notice
When a Court decides to consider a case it asks the
respondents to explain why the case should not be admitted
(show cause).
This is done by a notice sent to the respondents which gives
the details of the case and the next date of hearing alongwith a
copy of the petition.
If the respondent does not appear on this date, the court may
proceed ex parte
 LEGAL TERMS

Suo Motu

The Court may take action on its own when facts requiring legal
intervention reach its notice. The Court is then said to be acting suo moto.

Sixteen high courts across the country have initiated petitions on their
own to deal with the issue of custodial deaths in jails; The apex court
asked all high courts to register a petition on their own (suo motu) to
identify the kin of prisoners who admittedly died an unnatural death after
2012 and award suitable compensation to them, unless adequate
compensation has already been awarded (2017)

Clipping the wings of the southern bench of the National Green Tribunal
Madras High Court said that NGT has been suo motu taking cognizance of
issues at will and restrained forum from issuing such proceedings (2014)
 APPELLATE JURISDICTION
OF SUPREME COURT

Article 132 provides for an appeal to the Supreme

Court from any judgment, decree or final order of a
High Court, whether in civil, criminal or other
proceedings, if the High Court certifies that the case
involves a substantial question of law as to the
interpretation of the Constitution.
 APPELLATE JURISDICTION
OF SUPREME COURT

Article 133 provides for an appeal to the

Supreme Court from any judgment, decree or
final order in a civil proceeding of a High
Court if the High Court certifies that the case
involves a substantial question of law of
general importance and in its opinion the
said question needs to be decided by the
Supreme Court.
 APPELLATE JURISDICTION
OF SUPREME COURT

Article 134 provides for an appeal to the Supreme

Court from any judgment, final order or sentence in
a criminal proceeding of a High Court if
(a) it has on appeal reversed an order of acquittal of
an accused person and sentenced him to death or
(b) has withdrawn for trial before itself, any case
from any Court subordinate to it and has in such trial
convicted the accused and sentenced him to death or
(c) it certifies that the case is a fit one for appeal to
the Supreme Court.
 APPELLATE JURISDICTION
OF SUPREME COURT

Appeal by Special Leave Article 136 provides

that the Supreme Court may in its discretion
grant special leave to appeal from any
judgment, decree, determination, sentence or
order in any case or matter passed or made
by any Court or tribunal in the territory of
India except the Court or tribunal constituted
by or under any law relating to armed forces.
 KESAVANANDA BHARATI V
STATE OF KERALA

In 1967, the Supreme Court took an extreme view, in the Golak Nath
case, that Parliament could not amend or alter any fundamental right.

On April 24, 1973, Chief Justice Sikri and 12 judges of the Supreme
Court assembled to deliver the most important judgment in its history.

The case of Kesavananda Bharati v State of Kerala had been heard for
68 days, the arguments commencing on October 31, 1972, and ending
on March 23, 1973.

Commitment that had gone into the preparation of this case was
amazing; hundreds of cases were cited and the then Attorney-General
had made a comparative chart analysing the provisions of the
Constitutions of 71 different countries!
 KESAVANANDA BHARATI V
STATE OF KERALA

Core question
All this effort was to answer just one main question: was the power of
Parliament to amend the Constitution unlimited? In other words, could
Parliament alter, amend any part of the Constitution even to the extent of
taking away all fundamental rights?

Article 368, on a plain reading, did not contain any limitation on the
power of Parliament to amend any part of the Constitution (Article
368(1):Notwithstanding anything in this Constitution, Parliament may in
exercise of its constituent power amend by way of addition, variation or
repeal any provision of this Constitution in accordance with the
procedure laid down in this article)

There was nothing that prevented Parliament from taking away a citizen’s
right to freedom of speech or his religious freedom. But the repeated
amendments made to the Constitution raised a doubt: was there any
inherent or implied limitation on the amending power of Parliament?
 KESAVANANDA BHARATI V
STATE OF KERALA

The 703-page judgment revealed a sharply divided court

and, by a wafer-thin majority of 7:6, it was held that
Parliament could amend any part of the Constitution so
long as it did not alter or amend “the basic structure or
essential features of the Constitution.”

This was the inherent and implied limitation on the

amending power of Parliament.
 NOVARTIS V. UNION OF
INDIA

In 1997, Novartis, a Swiss based pharmaceutical giant filed

an application to grant patent to an anticancer
drug Glivec which is used to treat Chronic Myeloid
Leukemia (CML) and Gastrointestinal Stromal Tumours
(GIST) on the basis that it invented the beta crystalline salt
form (imatinib mesylate) of the free base, imatinib.. 

It is a critical drug which is patented in about 35 countries

of the world.
 NOVARTIS V. UNION OF
INDIA

However during those days, India did not grant patent to

pharmaceutical products and agrochemical products.  

It was in the year 2005 in India; the drug products became the
subject of patent in compliance with the TRIPS agreement.

India thereon revised its patent law and started granting

patents on pharmaceutical drugs.

Subsequently in 2006, the Madras Patent Office refused the

patent application of Novartis for its drug Glivec stating that
the said drug did not exhibit any major changes in therapeutic
effectiveness over its pre-existing form, which was already
patented outside India.
 NOVARTIS V. UNION OF
INDIA

The said decision was based on Section 3(d) of the Indian Patents
(Amendment) Act, 2005 which provides  a known substance can
only be patented if its new forms exhibit “enhanced efficacy”.

The Patent Office did not find any enhanced efficacy in the drug
Glivec and, therefore, considered it incapable of patentable under
Section 3(d) of 2005 Act.

In May 2006, Novartis filed two writ petitions under Article 226 of
the Indian Constitution before the High Court of Madras – one
appealing against the order of Madras Patent Office rejecting its
patent request and the other contesting that Section 3(d) of the
Indian Patents Act is not in compliance with TRIPS and is vague,
arbitrary and violative of Article 14 of the Constitution.
 NOVARTIS V. UNION OF
INDIA

The Madras High Court refused the Writ Petitions of

Novartis holding that it did not have jurisdiction to
determine whether a domestic law is in contrary to
international treaty, so it  cannot decide whether Section
3(d) is in compliance with TRIPS.  

As far as Section 3(d) is considered, the objective of the

Amending Act was to make easy  the access to life-saving
drugs to the citizens.

Therefore, it cannot be considered to be vague and

arbitrary.
 NOVARTIS V. UNION OF
INDIA

The new phase of litigation started in Intellectual Property

Appellate Board, which is an appellate body of  patent
controller.

IPAB considered the beta-crystalline form of imatinib

mesylate as new and an inventive step but refused to grant
a patent to the drug of Novartis since it was hit by Section
3(d) of the Act.

Novartis challenged the said order by filing Special Leave

Petition before the Supreme Court.
 NOVARTIS V. UNION OF
INDIA

The main issues that came before the Supreme Court were-

Whether the invention is in consistent with Section 3(d) of

the patent act?

Interpretation of Section 3(d) of the patent act?

Whether the invention qualifies for the test of novelty and

inventive for the alleged product?
 NOVARTIS V. UNION OF
INDIA

The Supreme Court adopted the following approach-

Court observed that the product was one of the new forms
of the substance and not the whole substance. It has always
existed in the original amorphous form. 

The product thus has to qualify the test laid down in

Section 3(d) of the Patent Act.

The Section clearly specifies that a new form of the

substance in not patentable under Indian law unless it
enhances its “known efficacy”.
 MAGGI CASE: NESTLE INDIA LTD. V.
THE FOOD SAFETY AND STANDARDS
AUTHORITY OF INDIA

Justice VM Kanade and Justice BP Collabawala (DB)

Date of pronouncing the judgment: 13/8/2015 
Nestle was seeking an appropriate writ, order and direction
for quashing and setting aside the order passed by the
Chief Executive Officer - The Food Safety and Standards
Authority of India dated 05/06/2015 whereby Company was
directed to stop manufacture, sale and distribution of nine
types of variants of noodles manufactured by them
 MAGGI CASE: NESTLE INDIA LTD. V.
THE FOOD SAFETY AND STANDARDS
AUTHORITY OF INDIA

Nestle had challenged impugned orders principally on the

following grounds:-
It was contended that the orders have been passed in
complete violation of principles of natural justice since
Authorities had not issued any show cause notice to the
Company and had not given any particulars on the basis of
which they proposed to pass the impugned orders.

It was contended that Nestle’s representatives were called

by Authorities on 05/06/2015 and they were  informed
about the result of analysis made by the Food Laboratories
 MAGGI CASE: NESTLE INDIA LTD. V.
THE FOOD SAFETY AND STANDARDS
AUTHORITY OF INDIA

It was contended that the reports of the Food Laboratories

on the basis of which the impugned order was passed were
either not accredited by National Biodiversity Authority
Lab(NBAL) or notified under relevant section of the Food
Safety and Standards Act, 2006 ("the Act") and even if some
Food Laboratories were accredited, they did not have
accreditation for the purpose of testing lead in the product.

The Company contended that it had tested the samples of

batches in its own accredited laboratory and the results
showed that the lead contained in the product was well
within the permissible limits.
 MAGGI CASE: NESTLE INDIA LTD. V.
THE FOOD SAFETY AND STANDARDS
AUTHORITY OF INDIA

Nestle (India) challenged the nationwide ban imposed by

the Food Authority on its popular product Maggi Instant
Noodles.

The Food Authority and Commissioner of Pune claimed that

in public interest and to ensure food safety, the impugned
orders were passed after the Food Laboratory Reports
indicated the presence of lead in excess of the permissible
limits and monosodium glutamate (MSG) being found in the
product against the declaration of the Petitioner that there
was "No added MSG" in the product.
 MAGGI CASE: NESTLE INDIA LTD. V.
THE FOOD SAFETY AND STANDARDS
AUTHORITY OF INDIA

After examining the rival contentions in great detail, Court came to the
conclusion that -
Principles of natural justice were not followed before passing the
impugned orders and on that ground alone the impugned orders were
liable to be set aside, particularly when Nestle, one day prior to the
impugned orders, had given a Press Release that it had recalled the
product till the authorities were satisfied about safety of its product.

the Food Laboratories where the samples were tested were not
accredited and recognized Laboratories as provided under the Act and
Regulations for testing presence of lead WPL/1688/2015 and therefore
no reliance could be placed on the said results.

The impugned orders were held to be violative of Articles 14, 19(1)(g) of

the Constitution of India (freedom to practise any profession or to carry
on any occupation, trade or business).
 MAGGI CASE: NESTLE INDIA LTD. V.
THE FOOD SAFETY AND STANDARDS
AUTHORITY OF INDIA

Impugned orders were set aside in public interest and in order to give an
opportunity to Nestle to satisfy the Food Authority, court directed five
samples from each batch cases out of 750 to be tested in three
laboratories mentioned and if the lead was found within permissible limits
then the Company would be permitted to manufacture all the Variants of
the Noodles for which product approval had been granted by the Food
Authority.

These in turn were to be tested again in the said three Laboratories and if
the lead was found within permissible limits then the Company was to be
permitted to sell its product.

Since the Nestle has already made a statement that it will delete the
declaration made by it viz "No added MSG" on its product, no prejudice
would be caused to the public at large and the allegation that product is
misbranded also will not survive.
 MAGGI CASE: NESTLE INDIA LTD. V.
THE FOOD SAFETY AND STANDARDS
AUTHORITY OF INDIA 2015

Petition was accordingly disposed of that samples of 9

Variants of Maggi Noodles should be tested, Variants which
were available with the Petitioner may be tested. Those
Variants which were not available with the Petitioner, they
may be manufactured after positive report was given in
respect of the Variants which are available.
In November 2015, Maggi was relaunched after court-
mandated tests.
 A.K.GOPALAN V STATE OF
MADRAS AIR 1950 SC 27

AKG who was detained under the Preventive Detention Act,

1950 applied under Art. 32 of the Constitution for a writ of
habeas corpus and for his release from detention, on the ground
that the said Act contravened the provisions of Arts. 13, 19, 21
and 22 of the Constitution and was consequently ultra rites and
that his detention was therefore illegal:

Held, that the Preventive Detention Act, 1950, with the

exception of Sec. 14 thereof did not contravene any of the
Articles of the Constitution and even though Sec. 14
contravened the provisions of the Constitution, as this section
was severable from the remaining sections of the Act, the
invalidity of Sec. 14 did not affect the validity of the Act as a
whole, and the detention of the petitioner was not illegal.
 A.K.GOPALAN V STATE OF
MADRAS AIR 1950 SC 27

Section 14 of the Preventive Detention Act, 1950,

contravenes the provisions of the Constitution in so far as it
prohibits a person detained from disclosing to the Court the
grounds on which a detention order has been made or the
representation made by him against the order of detention,
and is to that extent ultra vires and void
In words of Kania, Hiralal J.  “the impugned Act is a valid
law except as to section 14 in so far as it prevents the
grounds being disclosed to the Court”.