BUSINESS LAW

CH 5 RTI
https://www.youtube.com/watch?v=ncXmPO34QbI&t=19s

Right to Information
• Right to Information (RTI) is act of the Parliament of India to provide for setting out the practical regime of
the right to information for citizens and replaces the
• Previous Freedom of information Act, 2002. Under the provisions of the Act, any citizen of India may request
information from a "public authority" (a body of Government or "instrumentality of State") which is required
to reply immediately or within thirty days.
• The Act also requires every public authority to computerize their records for wide dissemination and to
proactively certain categories of information so that the citizens need minimum recourse to request for
information formally.
Objective
• Provides a legal framework of citizens' democratic right to access to information under the control of public
authorities:
• To promote transparency and accountability in the functioning of every public authority.

Object of the RTI Act?

• To promote transparent environment in Government department
• To reduce the corruption.
• Democracy will be in force.
• It helps the citizen to have knowledge about the working of the Government.

When the information can be denied?

• Any information which will affects the trade secret of Intellectual right of the person,
• Any sensitive information of the Foreign Government,
• Information which is restricted by Court,
• Information which will affects the peace, integrity, economic interest, relation with foreign states.

Rules of RTI?

• Within 30 days the information can be given to the Applicant.

• No person can ask information from Intellectual agency and security Agency.
• Indian citizen can file RTI.
• The Applicant should make the Application to correct Government Body. Otherwise the application will be
rejected.
• Fees should be paid.
• Information can be obtained by the Applicant from the Public Authority (Government Body).
Who is a Public Authority?
• Public Authority means any authority or body or institution established or constituted.
• By or under the constitution;
• By any other law made by Parliament;
• By any other law made by State Legislature;
• By notification issued or order made by the appropriate government and includes any
i) body owned, controlled or substantially financed
ii) non-Government organization substantially financed directly or indirectly by funds provided appropriate
Government; By the appropriate governments

Exempted Organizations
• IB, RAW of the Cabinet Secretariat
• DRI, Central Economic Intelligence Bureau Directorate of Enforcement
• Narcotic Control Bureau
• Aviation Research Centre, Special Frontier Force,
• BSF, CRPF, ITBP, CISF, NSG, Assam Rifles, Special Service Bureau .
• Special Branch (CID) Andaman & Nikobar
• The Crime Branch (CID-CB) Dadra and Nagar Haveli
• Special Branch, Lakshadweep Police.

Procedure for requesting information

• Apply in writing or through electronic means in English or Hindi or in the official language of the area, to the
Public Information Officer [PIO], specifying the particulars of the information sought for.
• Reason for seeking information are not required to be given;
• Pay fees as may be prescribed.

FEES AND CHARGES

• Application fee Rs. 10/-.
• If information is required in electronic media- floppy/CD, etc additional charges will be applicable.
• Photocopy charges of Rs. 2/- per page.
• Inspection charges of relevant files, documents and records:-

1. No fee for first hour of inspection.

2. Rs. 5/- for every subsequent hour or fraction thereof.

FEES AND CHARGES

• Processing expenses incurred by the Public Information officer to be intimated in writing.
• Applicant can seek review of the decision on fees. charged by the PIO by applying to the appropriate
Appellate Authority:
• No fees from people living below the poverty line.
• Free of cost if the PIO fails to comply within the time limit as prescribed under the RTI Act.
Time limits to get the information
• 30 days if application is filed with the PIO.
• 35 days in case it is filed with the Assistant PIO.
• 48 hours in case the matter to which the information pertains affects the life and liberty of an individual.

Appeal
• First appeal with senior in the Department.
• Second appeal with Information Commission.

What can I complain about?

• The Central Information Commission is an autonomous body set up to inquire into complaints received from
citizens ,You can complain that you have been refused access to information. You can also complain about
how the public authority has handled your request, for instance;
• failure to respond to your request within 30 working days (or failure to explain why an extension to the 45
days is needed) + failure to give you proper advice and help within the stipulated time
• failure to give information in the form in which you asked for it + failure to properly explain reasons for
refusing your request, for instance if the public authority believes that giving you information would harm a
criminal investigation.

Penalties
• For Refusal of application, providing ma lafide or false information, destruction of information, The penalty
levied under the RTI Act at the rate of Rs. 250/- a day, up to a maximum of Rs. 25,000/-, is recovered from
the salary of officials. (imposed by Information Commission on PIO or assistant PIO)
• Departmental action, However no criminal liability.
 Company act 2013
The 2013 Act has introduced several new concepts and has also tried to streamline many of the
requirements by introducing new definitions.
• One-person company: The 2013 Act introduces a new type of entity to the existing list i.e. apart from
forming a public or private limited company, the 2013 Act enables the formation of a new entity a ‘one-
person company’ (OPC). An OPC means a company with only one person as its member [section 3(1) of
2013 Act].

• Private company: The 2013 Act introduces a change in the definition for a private company, inter-alia, the
new requirement increases the limit of the number of members from 50 to 200. [section 2(68) of 2013 Act].

• Small company: A small company has been defined as a company, other than a public company.
(i) Paid-up share capital of which does not exceed 50 lakhs.

(ii) Turnover of which as per its last profit-and-loss account does not exceed two crore.

As set out in the 2013 Act, this section will not be applicable to the following:

• A holding company or a subsidiary company

• A company registered under section 8

• A company or body corporate governed by any special Act [section 2(85) of 2013 Act]

Definition of Company
• A company is an association of persons who contribute money or money’s worth for a common purpose of
trade or business and share profit or loss arising from them.

• Company is an artificial person created by law, having separate legal entity, perpetual succession and a
common seal.

• The money and the common stock contributed in the company is known as the Capital of the Company.

• The persons who contribute the capital in the Company are called as the Members of the Company or the
Shareholders.

• The portion of capital which is contributed by the members is called as Share.

• Section 2(10) – 1956

• Section2(20) – 2013

Features/Characteristics of Company
1. Voluntary Association – A company is a voluntary association of certain persons registered under
the Companies Act. Law cannot compel a person to become a member.

2. Separate legal entity - A company is regarded as an entity different/separate from its members. It
has independent corporate existence. It is an artificial person created by the law. It is different from
its owners and the managers.
Solomon vs Solomon & Co Ltd.
 3. Limited Liability – The company being separate person, is the owner of its assets and bound by its
liabilities . The liability of members is limited to the extent of amount unpaid on their
shareholdings.

4. Perpetual Succession – A company is a stable form of organisation and does not have any fixed
span of life. Its continuance is not affected by the death , insolvency, mental or physical incapacity
of its members. It is created by the law and only the law can dissolve it.
5. Artificial legal person – A company is an artificial person in the sense that it is created by law and
lacks the attributes possessed by natural persons. It is invisible, intangible, and exists only in the
contemplation of law.
6. Common Seal – Being artificial entity a company has to act through a collectivity of individuals
called the board. The board of directors are competent to exercise almost all the powers of the
company on its behalf. In order to signify the company’s consent to a contract or a document, the
board affixes a seal of the company on it. It signifies the common consent of all he members, and is
the official signature of the company.
7. Transferability of shares – Shares of public company are freely transferable without the permission
of the company but in manner as provided in the Articles of Association.

What are the different kinds of Companies?

• Unincorporated Companies – No longer under Companies Act.
• Incorporated Companies – Which are incorporated under the Companies Act.
➢ Chartered Companies – East India Company

➢ Statutory Companies – The companies created under the Special Act of parliament. Eg – Reserve
bank of India, Life Insurance Corporation.
➢ Registered Companies – Registered under registrar of joint stock companies.
• Unlimited Companies – Company not having any limit on the liability of its members.

• Company limited by guarantee

• Holding and Subsidiary Company
• Government and Non Government Company
• Foreign Company
 BASIS FOR MEMORANDUM OF ARTICLES OF
COMPARISON ASSOCIATION ASSOCIATION

Meaning Memorandum of Association Articles of Association

is a document that contains
all the fundamental
information which are
required for the incorporation
of the company.
is a document
containing all the rules
and regulations that
governs the company.

Type of Powers and objects of the Rules of the company.

Information company.
contained

Status It is subordinate to the It is subordinate to the

Companies Act. memorandum.

Retrospective The memorandum of The articles of

Effect association of the company association can be
cannot be amended amended
retrospectively. retrospectively.

Major contents A memorandum must The articles can be

contain six clauses. drafted as per the
choice of the company.

Obligatory Yes, for all companies. Only a private company

is required to frame its
articles while a public
company limited by
shares can adopt Table
F in place of articles.

Compulsory Required Not required at all.

filing at the time
of Registration
 BASIS FOR MEMORANDUM OF ARTICLES OF
COMPARISON ASSOCIATION ASSOCIATION

Alteration Alteration can be done, after Alteration can be done

passing Special Resolution in the Articles by
(SR) in Annual General passing Special
Meeting (AGM) and previous Resolution (SR) at
approval of Central Annual General
Government (CG) or Meeting (AGM)
Company Law Board (CLB)
is required.

Relation Defines the relation between Regulates the

company and outsider. relationship between
company and its
members and also
between the members
inter se.

Acts done Absolutely void Can be ratified by

beyond the shareholders.
scope

Lifting of Corporate Veil

• Solomon vs Solomon & Co. – It was considered that a company is a separate legal
entity, distinct from its members. It regarded as a curtain (but not a wall between
company and the members).
• The effect to this principle is that there is a financial veil and its not permitted to look
at the persons behind the veil.
• According to this principle, when company has been formed and registered under the
Companies Act, all dealings with the company will be in the name of the company
and the persons behind the company will be disregarded or will not be looked at.
This principle was considered as a shield. This veil was used for fraud and improper
conduct.
 • Therefore it became necessary for the courts to break through the veil and look at
the persons behind the company who were the real beneficiaries.
• Only in appropriate circumstances the courts are allowed to lift the corporate veil
and in exceptional cases -
• UNDER STATUTORY PROVISIONS – Eg: reduction of members below the statutory
minimum, failure to refund application fee, misdiscription of company’s name,
fraudulent trading.
• UNDER JUDICIAL INTERPETATION – Eg: Protecting the revenue, Public policy’
SIR DINSHAW PETIT CASE – sham company to evade taxes

WINDING UP OF A COMPANY
• Winding up is a process by which the management of the companies affairs is taken
out from its directors, the assets are realized and liabilities are discharged out of
proceeds of realization and any surplus of assets is returned to its members or
shareholders.
• The main purpose of winding up of a company is to realize the assets and pay the
debts of the company.
• On dissolution the company ceases to exist.
• A company may be wound up even when it is perfectly solvent.
• A company can never be declared bankrupt although its unable to pay debts, it can
only be adjudged insolvent.
• Winding up and dissolution – Difference

• Compulsory winding up / Winding up by Court

➢ The company has passed special resolution to wind up by the Court.
➢ Default in holding Statutory meeting
➢ Company does not commence its business within 1 year of its incorporation or
suspends its business for a whole year.
➢ The number of its members came down below 2 and 7 incase of private and public
company respectively.
➢ Court is of the opinion of just and equitable grounds.
➢ The company has defaulted in filing balance sheet and P&L A/c with the registrar for
5 consecutive years.
Meaning of the word ‘consumer’
A consumer is an individual or group of individuals who purchase goods and services for their own personal
use and not for the purpose of manufacturing or resale. Section 2(7) of the Consumer Protection Act, 2019
defines a consumer as any person who buys goods or services in exchange for consideration and utilises
such goods and services for personal use and for the purpose of resale or commercial use. In the explanation
of the definition of consumer, it has been distinctly stated that the term ‘buys any goods’ and ‘hires or avails
any services’ also includes all online transactions conducted through electronic means or direct selling or
teleshopping or multi-level marketing.
Need for the Consumer Protection Act, 2019
The Consumer Protection Act, 2019 was enacted by the Indian legislature to deal with matters relating to
violation of consumer’s rights, unfair trade practices, misleading advertisements, and all those circumstances
which are prejudicial to the consumer’s rights. The intention of the Parliament behind enacting the Act was
to include provisions for e-consumers due to the development of technology, buying and selling of goods
and services online have considerably increased during the last few years.

The Act seeks to provide better protection of the rights and interests of the consumers by establishing
Consumer Protection Councils to settle disputes in case any dispute arises and to provide adequate
compensation to the consumers in case their rights have been infringed. It further provides speedy and
effective disposal of consumer complaints through alternate dispute resolution mechanisms. The Act also
promotes consumer education in order to educate the consumer about their rights, responsibilities and also
redressing their grievances.
 CH 2 SALE OF GOODS
SALE OF GOODS ACT, 1930
• Contracts for sale of goods subject to the general legal principles applicable to all contracts, such as
offer and acceptance , capacity of the parties, free consent, consideration and legality of the object.

• The general provisions of ICA continue to apply to contracts for sale of goods act so far as they are
not inconsistent with the express provisions of the Sale of Goods Act.
• Eg – If there is a breach of contract of Sale, the measure of damages is prescribed in section 73 and
74 of the Indian Contract Act (Damages for breach)

Contract Of Sale of Goods

• It is contract whereby the seller transfers or agrees to transfer the property in goods to the buyer
for a price.
• A contract of Sale may be absolute or conditional.

• Only moveable goods are covered under sale of goods Act, 1930
• Contract of Services are not covered under Sale of Goods but are covered under The Indian
Contract Act, 1872.
• Goods includes stock and shares, growing crops, grass, and things attached to or forming part of
the land which are agreed to be severed before sale or under the contract of sale excludes money /
currency in exchange.

Essentials of a contract of sale

I. Two parties

II. Transfer of property

III. Goods
IV. Price
V. Sale Includes “Sale” and “Agreement to Sell”
SALE
The property in the goods is transferred from
seller to buyer, the contract is called ‘Sale’.
Sale may be in case of Specific or existing goods
only.
In sale, if the buyer fails to pay the price of the
goods or there is breach of contract, the seller
can sue for the price even though goods are still
in his possession.
A sale is a contract plus conveyance, and creates
jus in rem i.e. gives right to the buyer to enjoy
the goods as against the world at large including
the seller.
SALE
INSOLVENCY OF BUYER - If the buyer becomes
insolvent before he pays for the seller, in the
absence of a lien over the goods must return
them to the official receiver.
INSOLVENCY OF SELLER – If seller becomes
insolvent, the buyer being the owner, is entitled
to recover the goods from the Official Receiver.
AGREEMENT TO SELL
Transfer of property in goods takes place at a future time or
subject to some conditions which need to
be fulfilled, it is an ‘Agreement to Sell’.
In case of future or Contingent goods.
If there is a breach of contract by buyer, the seller can
only sue for damages and not for price, even
though the goods are in the possession of the buyer.
An agreement to sell is merely a simple and a pure
contract and creates jus in personam i.e. gives a
right to the buyer against the seller to sue for damages.
AGREEMENT TO SELL
If the buyer becomes insolvent and has not yet paid
the price, the seller is not bound to part with goods until
he is paid for.
In agreement to sell, if the buyer who has paid the price,
finds that the seller has became insolvent, he can only
claim a rateables dividend and not the goods because
property in them has not yet passed to him.
Conditions and Warranties
• Condition is a stipulation which is essential to the main purpose of the contract.
• Its non-fulfillment upsets the very basis of the contract.

• It goes directly to the substance of the contract.

• Its non performance may fairly be considered by the other party as a substantial failure to perform
the contract at all.
• If there is a breach of condition, the aggrieved party can treat the contract as repudiated or stand
cancelled.
• Warranty is a stipulated condition which is collateral to the main purpose of the contract.
• It is not of vital importance as compared to the condition.

Difference between Condition & Warranty

1. A condition is a stipulation which is essential to the main purpose of the contract.
A warranty is a stipulation which is collateral to the main purpose of the contract.
2. If there is a breach of condition the aggrieved party can cancel or repudiate the contract of sale.
In breach of warranty the aggrieved party can only claim for damages.
3. A breach of condition may be treated as breach of warranty. This would happen when the aggrieved
party would claim damages only.
A breach of warranty cannot be treated as breach of condition.

When condition to be treated as warranty

• Voluntary waiver of condition
• Acceptance of goods by the buyer.

Implied Condition
• Condition as to title
• Sale by description
• Sale by description as well as sample
 • Condition as to quality and fitness
• Condition as to merchantability
• Condition as to wholesomeness

Implied Warranties
• Warranty of quiet possession
• Warranty from freedom from encumbrances

• Warranty to disclose dangerous nature of goods

Performance of Contract
Performance of contract of sale means as regards the seller, delivery of goods to the buyer, and as regards
to the buyer, acceptance of the delivery of the goods and payment for them, in accordance with the terms
of the contract of sale

Rights of Unpaid Seller

• A seller of the goods is deemed to be unpaid seller when –
❖ The whole of the price has not been paid
❖ A bill of exchange/cheque has been received as a conditional payment, and the condition on which
it was received has not been fulfilled by reasons of dishonour of the instrument.
• The following conditions must be fulfilled before a seller can be deemed to be an unpaid seller –
❖ He must be unpaid and the price must be due
or

❖ He must have an immediate right of action for the price

or
❖ A bill of exchange/cheque was received but the same has been dishonoured.
• Rights of Unpaid seller

➢ Rights against the Goods

• Where the property in the goods has not passed
✓ Right of Lien

✓ Right of Stoppage of goods in transit

✓ Resale
➢ Rights against the buyer personally
• Suit for price
• Suit for damages

• Repudiation of contract
• Suit for interest
DISCHARGE OF CONTRACT
• Discharge means termination of the contractual relationship between the parties.
• A contract is said to be discharged when it ceases to operate.
• When the rights and obligations created by it come to an end.
MODES
1. By performance
2. By agreement or mutual consent
3. By impossibility of performance
4. By lapse of time (Limitation Act)
5. By operation of law
6. By breach of contract.

1. By agreement or mutual consent

2. Novation – It takes place when a contract is substituted with an existing contract between
the same parties or a contract is rescinded in consideration of a new contract being entered
into same terms between one of the parties and third party.
3. Eg – E owes Rs. 10000 to V. He enters into agreement with V and gives V a mortgage of his
(E’s ) estate for Rs. 6000. This is new contract of balance Rs 4000 is formed which
extinguishes the old contract of Rs 10000.
• Rescission – It takes place when all or some of the terms of the contract are cancelled.
• It may occur –
1. By mutual consent of the parties or
2. Where one of the party fails in the performance of his obligation. In such case the other
party may rescind the contract and has right to claim compensation for breach of contract.
• Eg – J induces H to enter into a contract by fraud. In this case the contract is voidable at the
option of H. He (H) may rescind the contract.
• Alteration - When one or more terms of the contract are changed (Altered) by mutual
consent of the parties to the contract.
• In such case the old contract stands discharged
• Eg – G enters into contract on 1st November with K for supply of 100 kg of sugar by or on
16th November. G and K may alter / change the terms of contract my mutual consent , by
deciding to deliver the goods on 20th November.
• Remission – It means acceptance of a lesser fulfilment of the promise made.
 • Eg – Acceptance of lesser amount than what was contracted for, in discharge of the whole
debt.
• Eg – A owes to B Rs. 5000. A pays to B Rs. 2000, in satisfaction of the whole debt of Rs.
5000. The entire debt is discharged.
• Waiver - Waiver takes place when parties to the contract agree that they shall no longer be
bound by the contract.
• Consideration is not necessary for waiver.
• Merger – It takes place when an inferior right accruing to a party under the contract
merges into a superior right accruing to the same party under the same or some other
contract.
• Eg – P holds a property under a lease. He later buys the property. His rights as lessee merge
into his rights as an owner.

By Lapse of Time
The Limitation Act lays down that in case of breach of a contract legal action should be taken
within specified time which is called as the period of limitation, otherwise the promisee is
debarred/ not entertained from instituting a suit in a court of law and the contract stands
discharged.

Discharge by Operation of Law

➢ Death of a person – When Contract is personal in nature, the death of promisor discharges
the contract. In other impersonal contracts rights and liabilities of the deceased person pass
on to the legal representatives of the dead person.
• Eg – A promised to draw a painting for B, A died before drawing the painting, here the
contract stands discharged after the A’s death as this contract is personal in nature. His
representatives do not have the skill to draw like him.
• Insolvency – Contract stands discharged by insolvency of any one party, the court passes
order of discharge.
• Unauthorised Material Alteration – Any alteration made by any party without the consent
of other party, then the contract will stand discharged.

Discharge by Breach of Contract

• Breach of contract means breaking of the obligation which a contract imposes.
• It occurs when a party to the contract without lawful excuse does not fulfill his contractual
obligation or by his own act makes it impossible that he should perform his obligation under
it.
 • It confers a right if action for damages on the injured party/aggrieved party.

Actual Breach of Contract

• At time when performance is due. Eg – A agrees to deliver B 5 bags of wheat on 1st January,
A does not deliver the same on the same day, there is breach of contract.
• During performance of the contract. Eg – C contracted with a railway company to supply it
3000 tons of railway chairs at a certain price, to be delivered in installments. After 1787
tons had been supplied, the railway company asked C not to deliver any more. C could bring
an action for breach of contract.

Anticipatory breach of contract

It occurs when a party to an executory contract declares his intention of not performing the
contract before the performance is due.
It may be done either by –
• Expressly renouncing his obligation under the contract. Eg – Amar undertakes to supply 100
TV sets to Raj on 1st March. Before this date he informs Raj that he is not going to supply the
goods. This is anticipatory breach of contract by express repudiation.
• 2) By doing some act so that the performance of his promise becomes impossible.
• Eg – Baban promised to assign to Ravi , within 7 years from the date of his promise, all his
interest in a lease for the sum of Rs 10 lakhs. Before the end of 7 years he assigned his
interest to another person. It was an anticipatory breach by implied repudiation.

Remedies for Breach of Contract

1. Rescission
2. Damages
➢ Ordinary damages
➢ Special damages
➢ Exemplary damages
➢ Nominal damages
➢ Mitigation of damages
➢ Liquidated damages / penalty
➢ Payment of interest
3. Quantum Meruit – As much as earned.
➢ Where a contract is partly performed by one party has became discharged by the breach of
contract by the other party. The right is exercised for what the party has performed and not
the entire contract.

➢ 4. Specific performance – Where damages are not adequate remedy, the injured party can
ask for Specific Performance. It may be at the discretion of the court.