BABU BANARASI DAS

NORTHERN INDIA INSTITUTE OF TECHNOLOGY,

LUCKNOW
MBA 1st YEAR 2nd Sem. – Model Paper
ACADEMIC SESSION 2021-22(EVENSEMESTER)

Subject Name- Business Environment &Legal Aspects of Business Code- KMBN 201
Time-3 hours Max.
Marks-100

SECTION A
Q01. Attempt ALL parts in brief: Each question is of 2 marks [02x10= 20]
Write Course Outcome for each question
CO BT

1A What is SWOT Analysis? CO1 II

1B1. What do you understand by Business Policy? CO2 II
1C2. Write in short Natural environment CO1 II
1D3. Define Globalization CO2 II
1E What is contract? CO3 II
1F Differentiate between Valid contract and Void contract. CO3 II
1G4. Define Unpaid Seller CO3 II
1H Write in short Articles of Association CO4 II
1I Define Electronic Signature CO5 II
1J What is Consumer Forum? Co5 II
SECTION B
Q 02 Attempt any Three Questions from this section
(10X3=30)
Write Course Outcome for each question CO BT
2A What is a valid contract? Bring out the essentials of a Valid Contract? CO3 II
2B What is prospectus? Discuss the different types of prospectus. CO4 II
2C Discuss the powers of “Controller of certifying Authorities” under the CO5 II
informationTechnology Act, 2000.
2D Discuss the main components of business environment. CO1 II
2E Explain Cultural environment CO2 II
SECTION C
Attempt all questions from this section [10 x 05 =50]
Q 03 Attempt any one Part of the Following [10x 01=10]
Write Course Outcome for each question CO BT
3A Discuss the types of business organization. CO1 II
3B Describe Michael Porter’s Five Forces of Competitive Position Analysis.. CO1 II

Q 04 Attempt any one Part of the Following [10x 01=10]

Write Course Outcome for each question CO BT
4A “The economy of India had undergone significant policy shifts in the beginning of the 1990s.This new CO2 II
model of economic reforms is commonly known as the LPG model” explain the above statement.

4B Discuss the impact of technology on the growth of business. CO2 II

Q 04 Attempt any one Part of the Following [10x

01=10]
5A What is Quasi Contract? Bring out the various forms of Quasi Contract CO3 II
5B Discuss the various ways in which contract is discharged? CO3 II
Q05 Attempt any one Part of the Following [10x 01=10]
6A What are various modes of winding up of a company? Explain in brief the CO4 II
provisionsrelating to the compulsory winding up of a company under an order of the
court.
6B How a company director Is appointed and in what he will be removed under the provisions of CO4 II
companies Act2013?
Q 06 Attempt any one Part of the Following [10x 01=10]
7A Discuss the grounds on which a compliant can be made under the Consumer CO5 II
ProtectionAct, 1986.
7B What is a digital signature? Discuss the provisions relating to digital signature under CO5 II
Information technology act, 2000.

\
 SOLUTION OF BUSINESS ENVIORNMENT AND LEGAL ASPECTS OF BUSINESS(KMBN201)

SECTION A

1(A) A SWOT analysis helps you assess internal factors that might affect your business
(strengths and weaknesses) and external factors (opportunities and threats).

(B) Business Policy defines the scope or spheres within which decisions can be taken by
the subordinates in an organization. It permits the lower level management to deal with the
problems and issues without consulting top level management every time for decisions.
Business policies are the guidelines developed by an organization to govern its actions.
They define the limits within which decisions must be made. Business policy also deals
with acquisition of resources with which organizational goals can be achieved. Business
policy is the study of the roles and responsibilities of top level management, the significant
issues affecting organizational success and the decisions affecting organization in the long-
run.

(C) Natural Environment: Natural environments refer to places that occur naturally,
without human interference. Some examples of natural environments include rivers,
mountains, forests and beaches. Features of these environments are also developed
naturally, such as soil, vegetation and rocks.

(D) Globalization is the word used to describe the growing interdependence of the world's
economies, cultures, and populations, brought about by cross-border trade in goods and
services, technology, and flows of investment, people, and information.
(E) A legally binding contract requires consent and the legal definition of consent under the
Indian contract act, 1871 is “when two parties entered into the contract there should
agreement upon the same thing in the same manner”
(F) A valid contract is one that was entered into legally and is fully enforceable. This
means that it includes all of the required elements of a contract. A void contract, however,
is one that a court will deem invalid for a number of reasons, whether it be due to the
inability to meet all required elements or any other potential issue that might deem the
contract void and therefore, unenforceable.
(G) Unpaid Seller: When the whole of the price has not been paid or tendered; When a bill
of exchange or other negotiable instrument has been received as conditional payment and
the condition on which it was received has not been fulfilled by reason of the dishonour of
the instrument or otherwise.
(H) Articles of association form a document that specifies the regulations for a company's
operations and defines the company's purpose. The document lays out how tasks are to be
accomplished within the organization, including the process for appointing directors and
the handling of financial records.
(I) A digital signature is defined in Section 2(1)(p) of the Information Technology
Act,2000. A digital signature is a mathematical algorithm that is regularly used to validate
the originality and if the message is true and genuine.
(J) Consumer forums are type of local organization who make aware consumers about
their right and services for buying a product and achieve maximum satisfaction. If they are
not happy with the desired services they are guided in the procedure for lodging complaints
against such producers

SECTION B

2(A) Valid Contract: A valid contract is a written or expressed agreement between

two parties to provide a product or service. It is also defined as a contract which
is enforceable at the court of law.
Essentials of Valid Contract
 Offer and Acceptance
Basically, a contract unfolds when an offer by one party is accepted by the
other party . The accepted offer should be without any qualification and be
definite. An offer needs tobe clear, definite, complete and final. It should be
communicated to the offeree. A proposal when accepted becomes a promise
or agreement. The offer and acceptance must be ‘consensus ad idem’
which means that both the parties must agree on the same thing in the
same sense i.e. identity of wills or uniformity of minds.

 Intention to Create Legal Relationship

The intention of the parties to a contract must be to create a legal relationship
 between them. Agreements of social nature, as they do not contemplate
legal relationship, are not contracts. For instance, if a father fails to give his
daughter the promised pocket money, the daughter cannot sue the father,
because it was purely a domestic arrangement. Thus, it is clear that all
agreements, which do not result in legal relations, are not contracts.
 Capacity to Contract
If an agreement is entered between parties who are competent enough to
contract, then the agreement becomes a contract.
 Genuine and Free Consent
Free consent is another essential element of a valid contract. An agreement
must have been made by free consent of the parties. The contract would be
void in case of mutual mistakes. When consent is obtained by unfair means,
the contract would be voidable.

 Lawful Object
Objectives of an agreement should be lawful. It must not be illegal or
immoral or opposed to public policy. It is lawful unless it is forbidden by
law. When the object of a contract is not lawful, the contract is void

 Lawful Consideration
Something in return is Consideration. In every contract, agreement must be
supported by consideration. It must be lawful and real.

 Certainty and Possibility of Performance

The agreements, in which the meaning is uncertain or if the agreement is not
capable ofbeing made certain, it is deemed void. T&C of the contract should
always be certain and cannot be vague. Any contracts that are uncertain are
considered void. The terms of the agreement must also be capable of
performance and should not enforce impossible act.

 Legal Formalities
Legal formalities if any required for particular agreement such as
registration, writing, they must be followed. Writing is essential in order to
effect a sale, lease, mortgage, gift of immovable property etc. Registration is
required in such cases and legal formalities in the relevant legislation should
be strictly followed.

(B)Prospectus
Section 2(70) of the Companies Act, 2013 (hereinafter referred to as CA, 2013) defines a
prospectus as “any document described or issued as a prospectus and includes a red herring
prospectus referred to in Section 32 or shelf prospectus referred to in Section 31 or any notice,
circular, advertisement or other document inviting offers from the public for the subscription or
purchase of any securities of a body corporate.”

Types of Prospectus
Red Herring
A red herring prospectus is defined under Section 32 of the CA, 2013. A red herring prospectus
does not provide detailed information about the quantum, or quantity, and price of the securities
offered. It is used for the book-building process. The process through which an issuer seeks to
identify the price at which an initial public offering (IPO) will be offered is known as book
building. An issuer often creates a book for institutional investors to make offers for the quantity of
shares and the estimated amount of money they will pay. The issuer examines the data and
estimates the final price for the security using an average value.
The Shelf
The shelf prospectus is outlined under Section 31 of the CA, 2013. A shelf prospectus offers
securities for subscription in one or more issues over a specific period of time without the need for
a fresh prospectus to be issued. This is done especially in projects where the issue size is
substantial, and large sums of money are required to be raised in order to save on the expense of
filing a new prospectus every time.
ABRIDGED
Section 2(1) of the CA, 2013 outlines an abridged prospectus. It means a memorandum containing
the salient features of a prospectus as per the regulations specified by the Securities and Exchange
Board. Section 33 mandates the issuance of application forms for securities along with an abridged
prospectus.
DEEMED
Section 25 of the CA, 2013 discusses deemed prospectuses. A deemed prospectus is a document
that is assumed to represent a company’s prospectus. A deemed prospectus is a document that
contains an offer for sale made by the intermediary or issuing house on behalf of a company that
allots or agrees to allot its shares or securities through an intermediary, such as a merchant bank,
another business, or an issuing house. A company usually opts for a deemed prospectus to avoid
complying with regulations issued by the SEBI.

(C) REGULATION OF CERTIFYING AUTHORITIES

SECTION 17 - APPOINTMENT OF CONTROLLER AND OTHER OFFICERS
The Central Government is empowered to appoint a Controller of Certifying Authorities (“CCA”)
and such number of Deputy Controllers and Assistant Controllers, other officers and employees.
Such an appointment of the Controller, Deputy & Assistant Controllers is to be notified in the
Official Gazette The Controller discharges his functions under this Act subject to the general control
and directions of the Central Government. The Deputy Controllers (“Dy CA”) and Assistant
Controllers (“ACA”), other officers and employees in turn, perform the functions assigned to them
by the Controller under the general superintendence and control of the Controller. Such assigned/
delegated functions are assigned by the CCA to the Dy CA & ACA in writing.
(D) Components of Business Environment:

1. Economic Environment: It has immediate and direct economic impact on a

business. Rate of interest, inflation rate, change in the income of people, monetary
policy, price level etc. are some economic factors which could affect business firms.
Economic environment may offer opportunities to a firm or it may put constraints.
2. Social Environment: It includes various social forces such as customs, beliefs,
literacy rate, educational levels, lifestyle, values etc. Changes in social environment
affect an organization in the long run. Example: Now a day's people are paying more
attention towards their health, as a result of which demand for mineral water, diet
coke etc. has increased while demand of tobacco, fatty food products ha s decreased.
3. Technological Environment: It provides new and advance ways/techniques of
production. A businessman must closely monitor the technological changes taking
place in the industry as it helps in facing competition and improving quality of the
product. For Example, Digital watches in place of traditional watches, artificial
fabrics in place of traditional cotton and silk fabrics, booking of railway tickets on
internet etc.
 4. Political Environment: Changes in political situation also affect business
organizations. Political stability builds confidence among business community while
political instability and bad law & order situation may bring uncertainty in business
activities. Ideology of the political party, attitude of government towards business,
type of government-single party or coalition government affects the business
Example: Bangalore and Hyderabad have become the most popular locations for IT
due to supportive political climate.
5. Legal Environment: It constitutes the laws and legislations passed by the
Government, administrative orders, court judgments, decisions of various
commissions and agencies. Businessmen have to act according to various
legislations and their knowledge Very necessary. Example: Advertisement of
Alcoholic products is prohibited and it is compulsory to give statutory warning on
advertisement of cigarettes.

(E) CULTURAL ENVIORNMENT

Cultural environment is a business concept which helps to understand the customs and collective
beliefs of a set of people or society based on their culture, religion, region, nationality, language etc
Components of Cultural Environment
There are many elements which need to be evaluated to understand the socio-cultural environment.
The key factors which define the culture, customs and beliefs of a group of people or society are as
follows:
1. Nationality
The values, history and beliefs of every country defines the cultural environment amongst the
citizens of a country.
2. Religion
Religious practices and beliefs defines various factors on how a business should operate and
communicate as it must be accurate about religion as well as be careful of handling sensitive issues.
3. Language
The preferred language or mother tongue of a region, town, city, state or country can define the
cultural environment.
4. Region
Regional factors like geography, terrain, climate etc. also creates a collective group or segment of
people which marketing firms can address to.
5. Demographics
Age, gender, marital status etc. also define cultures, beliefs and attitude of people.
6. Education
Cultural environment is also classified and segmented based on education, social status, income
levels etc.
 SECTION C
3(A) TYPES OF BUSINESS ORGANIZATION
A business is an organization that uses economic resources or inputs to provide goods
or services to customers in exchange for money or other goods and services. Business
organizations come in different types and forms.
There are 4 Types of Business,
1. Service Business: A service type of business provides intangible products (products
with no physical form). Service type firms offer professional skills, expertise, advice, and
other similar products. Examples of service businesses are: schools, repair shops, hair
salons, banks, accounting firms, and law firms.
2. Merchandising Business: This type of business buys products at wholesale price and
sells the same at retail price. They are known as "buy and sell" businesses. They
make profit by selling the products at prices higher than their purchase costs. A
merchandising business sells a productwithout changing its form. Examples are: grocery
stores, convenience stores, distributors, and other resellers.
3. Manufacturing Business: Unlike a merchandising business, a manufacturing
business buys products with the intention of using them as materials in making a new
product. Thus, there is a transformation of the products purchased. A manufacturing
business combines raw materials, labor, and factory overhead in its production process.
The manufactured goods will then be sold to customers.
4. Hybrid Business: Hybrid businesses are companies that may be classified in more
than one type of business. A restaurant, for example, combines ingredients in making a
fine meal (manufacturing), sells a cold bottle of wine (merchandising), and fills
customer orders (service). Nonetheless, these companies may be classified according to
their major business interest. In that case, restaurants are more of the service type –
they provide dining services.
(B) MICHAEL PORTER’S FIVE FORCES OF COMPETITIVE POSITION
ANALYSIS..

Porter's Five Forces of Competitive Position Analysis were developed in 1979 by Michael E
Porter of Harvard Business School as a simple framework for assessing and evaluating the
competitive strength and position of a business organization.
This theory is based on the concept that there are five forces that determine the competitive
intensity and attractiveness of a market. Porter’s five forces help to identify where power lies in a
 business situation. This is useful both in understanding the strength of an organization’s current
competitive position, and the strength of a position that an organization may look to move into.
The five forces are:
1. Supplier power. An assessment of how easy it is for suppliers to drive up prices. This is driven
by the: number of suppliers of each essential input; uniqueness of their product or service; relative
size and strength of the supplier; and cost of switching from one supplier to another.
2. Buyer power. An assessment of how easy it is for buyers to drive prices down. This is driven by
the: number of buyers in the market; importance of each individual buyer to the organisation; and
cost to the buyer of switching from one supplier to another. If a business has just a few powerful
buyers, they are often able to dictate terms.
3. Competitive rivalry. The main driver is the number and capability of competitors in the market.
Many competitors, offering undifferentiated products and services, will reduce market
attractiveness.
4. Threat of substitution. Where close substitute products exist in a market, it increases the
likelihood of customers switching to alternatives in response to price increases. This reduces both
the power of suppliers and the attractiveness of the market.
5. Threat of new entry. Profitable markets attract new entrants, which erodes profitability. Unless
incumbents have strong and durable barriers to entry, for example, patents, economies of scale,
capital requirements or government policies, then profitability will decline to a competitive rate.
4(A) LPG Model
The structural reform policies aim to improve the economy to stand out in the international
competition. These reforms can be categorized under three heads -Liberalization, privatization, and
globalization (LPG).
Liberalization
There were many hindrances in the way of the country’s economic growth. Liberalization aimed to
remove these hindrances. This economic reform helped loosen the government’s control in various
sectors. Several restrictions were imposed on the private sectors, making them difficult to operate.
Liberalization allowed them to get the ease of expanding their sectors in the country.
Objectives of liberalization –
 To increase competition between the domestic industries
 To regulate imports and exports that can encourage foreign trade with different countries
 Foreign capital and technology enhancement
 Expanding the global market frontiers of the country
 To rid the country of debts
Privatization
Privatization is the reduction in the domination of the public sectors. These economic reform
policies make it easier for the private sector companies to increase their control.
The government-owned companies are transformed into private sector companies through this
reform. This is done by disinvesting or by withdrawing government ownership. There are three
forms of privatization discussed as follows –
1. Strategic sale or Denationalization – In this form of privatization, the government hands over 100%
of the productive assets to the private sector.
2. The partial sale or Partial privatization – This form of privatization helps the private sector
companies partially take ownership of the government sector company. The percentage of
ownership can go above 50% but never 100%.
3. Token or Deficit privatization – Sometimes, the government disinvests to as little as 5 to10 percent
to meet the deficit in the budget. This is called token or deficit privatization.
Objectives of privatization
 Improve the government’s financial condition
 Lessen the work pressure on the public sector companies
 Increase the orderliness of the government organizations
 Provision of improved goods and better services to the consumer
 Creation of healthy competition in the society
 Encourage foreign direct investments (FDI)
Globalization
Globalization is the economic reform that ties the country’s economy with that of the world. The
main focus of this reform is on foreign trade. Various strategic policies are set up that aim to
integrate the world as a whole. This reform increases the cross-border exchange of social, cultural,
and technological knowledge. There are several measures to pursue globalization.
In Information Technology, much contractual work is being outsourced, leading to its development.
This has given many opportunities to the private sector. Moreover, in the global market, Indian
skills are considered skilled and effective. This is one of the best outcomes of globalization.
Objectives of globalization
 Reducing import duties
 Encouraging foreign investments
 Encouragement to the agreement in foreign technology
(B) Impact of technology on the growth of business
Technology has revolutionized business as we know it, and companies across numerous
industries are looking to harness it to improve their workforce, build brand recognition and
bolster the bottom line. Some areas in which technology has transformed businesses include
accounting, data collection, sales and digital promotion.
 Globalization
Information technology has enabled businesses to attain a greater reach. Now more than ever, it’s
easier for companies to do business across the world. Emails, text, instant messaging, websites
and applications have made global communication quicker and more effective than ever.
 Collaboration and Access
Businesses have advanced internal communications quite a bit as well, making it possible for
employees at many companies to work from home throughout the coronavirus pandemic.
Communication networks enable managers to access and share data within their department as
well as throughout their organization. Businesses have relied on advanced collaboration tools to
complete work that usually only occurred in person.
 Storage
The thought of organizing and storing paperwork makes most employees cringe. Fortunately,
much data is stored electronically now, making it easier for retrieval when the information is
needed.
 Cybersecurity
Every organization has information that they want to be protected from competitors, hackers and
others trying to damage the company, which is why cyber security is a major priority for
businesses.
 Support
Technology makes it possible for businesses to support external customer service efforts as well
as help individuals within the organization. There are hundreds of platforms that streamline the
workflow but also facilitate the work process. Getting feedback is also easier since
communication is also more straightforward.
 Mobile Technology
Thanks to mobile technology, it has truly become easier to take your work anywhere. If you don’t
have a laptop or pad at your disposal, it is now possible to use your phone to complete your work.
5(A) QUASI CONTRACT:
A quasi contract is a contract that is created by a court order, not by an agreement
made by the parties to the contract. For example, quasi contracts are created by the
court when no official agreement exists between the parties, in disputes over
payments for goods or services.
Types of Quasi Contract
 Claim for necessaries supplied to person incapable of
contracting, or on his account(Section68)-" If a person,
incapable of entering into a contract, or anyone whom he is
legally bound to support, is supplied by another person with
necessaries suited to his condition in life, the person who has
furnished such supplies is entitled to be reimbursed from the
property of such incapable person.
 Reimbursement of person paying money due by another, in
payment of which he is interested (Section69)- A person who
is interested in the payment of money which another is
bound by law to pay, and who therefore pays it, is entitled to be
reimbursed by the other.
 Obligation of person enjoying benefit of non-gratuitous act
(Section 70)- Where a person lawfully does anything for
another person, or delivers anything to him, not intending to do
so gratuitously, and such another person enjoys the benefit
thereof, the letter is bound to make compensation to the
former in respect of, or to restore, the thing so done or
delivered.

 Responsibility of finder of goods (Section 71) -A person who

finds goods belonging to another, and takes them into his
custody, is subject to the same responsibility as a bailee.

 Liability of a person to whom money is paid or thing delivered

by mistake or under coercion: (Sec. 72): A person to whom
money has been paid, or anything delivered by mistake or
under coercion, must repay or return it.

(b) DISCHARGE OF CONTRACT:

Discharge of a contract implies termination of contractual obligations. This is

because when the parties originally entered into the contract, the rights and
duties in terms of contractual obligations were set up. Consequently when
those rights and duties are put out then the contract is said to have been
discharged. Once a contract stands discharged, parties to it are no more liable
even though the obligations under thecontract remain incomplete.
A Contract is deemed to be discharged, that is, concluded and no longer
binding, in thefollowing circumstances:
 Discharge by performance.
 Discharge of Contract by Substituted Agreement.
 Discharge by lapse of time.
 Discharge by operation of law.
 Discharge by Impossibility of Performance.
 Discharge by Accord and Satisfaction.
 Discharge by breach.
Discharge by performance
Where both the parties have either carried out or tendered (attempted) to
carry out their obligations under the contract, is referred to as discharge of
the contract by performance. Because performance by one party constitutes
the occurrence of a constructive condition, the other party’s duty to perform
is also triggered, and the person who has performed has the right to receive
the other party’ s performance. The overwhelming majority of contracts are
discharged in this way.
Discharge of Contract by Substituted Agreement
A contract emanates from an agreement between the parties. It thus follows
that, the contract must also be discharged by agreement. Therefore, what is
required, inevitably, is mutuality. Discharge by substituted agreement
arises when a contract is abandoned, or the terms within it are altered, and
both the parties are in conformity over it.
For example, A and B enter into some agreement, and A wants to change his
mind and not to carry out his terms of the contract. If he does this unilaterally
then he will be in breach of contract to B. However, if he approaches B and
states that he would like to be released from his liabilities under the contract
then the latter might agree. In that case the contract is said to be discharged
by (bilateral) agreement. In effect B has promised not to sue A if he does not
perform his part of the contract and the consideration for his promise is A ‘s
promise not to sue B. Discharge by agreement may arise in the following
ways.
Novation
The term novation implies the substitution of a new contract for the original
one. This arrangement may be either with the same parties or with different
parties. For a novation to be valid and effective, the consent of all the
parties, including the new one(s), if any, is essential. Moreover, the
subsequent or second agreement must be one

capable of enforcement in law, the consideration for which is the exchange of

promises not to enforce the original contract.
Rescission
This refers to cancellation of all or some of the material terms of the contract.
If the contracting parties mutually decide to do so, the respective contractual
obligations of the parties stand terminated.
Alteration
This refers to a change in one or more of the terms of a contract with the
consent of all the contracting parties. Alteration results in a new contract but
parties to it remain the same. Here the assumption is that both the parties are
to gain a fresh but different benefit from the new agreement. Remission This
means the acceptance (by the promisee) of a lesser sum than what was
contracted for, or a lesser fulfillment of the promise made. As per Section 63,
‘every promisee may (a) remit or dispense with it, wholly or in part, or (b)
extend the time of performance, or (c) accept any other satisfaction instead of
performance’.
Waiver
The term waiver implies abandonment or relinquishment of a right. Where a
party deliberately abandons its rights under the contract, the other party is
released of its obligations, otherwise binding upon it.
Discharge by lapse of time
A contract stands discharged if not enforced within a specified period called
the ‘period of limitation‘. The Limitation Act, 1963 prescribes the period of
limitation for various contracts. For instance, period of limitation for
exercising right to recover an immovable property is twelve years, and right
to recover a debt is three years. Contractual rights become time barred after
the expiry of this limitation period. Accordingly, if a debt is not recovered
within three years of its payment becoming due, the debt ceases to be payable
and is discharged by lapse of time.
Discharge by Impossibility of Performance
Sometimes after a contract has been established, something might occur,
though not at the fault of either party, which can render the contract
impossible to perform, or illegal, or radically different from that originally
undertaken.

However, if whatever happens to prevent the contract from being performed

 has not been caused by either party
 could not have been foreseen, and
 its effect is to destroy the basis of the contract
The performance of a contractual obligation may become subsequently
impossible on a number of grounds. They include the following.
 Objective impossibility of performance
 Commercial impracticability
 Frustration of purpose
 Temporary impossibility
Discharge of operation of law
A contract stands discharged by operation of law in the following circumstances.
Unauthorized material alteration of a written document
A party can treat a contract discharged (i.e., from his side) if the other party
alters a term (such as quantity or price) of the contract without seeking the
consent of the former.
Statutes of Limitations
A contract stands discharged if not enforced within a specified period called
the ‘period of limitation’. The Limitation Act, 1963 prescribes the period of
limitation for various contracts. For instance, limitation period for exercising
right to recover an immovable property is twelve years and right to recover a
debt is three years. Contractual rights become time barred after the expiry of
this limitation period. Accordingly, if a debt is not recovered within three
years of its payment becoming due, the debt ceases to be payable and is
discharged by lapse of time.
Insolvency
A discharge in bankruptcy will ordinarily bar enforcement of most of a
debtor’s contracts.

Merger
A contract also stands discharged through a merger that occurs when an
inferior right accruing to party in a contract amalgamates into the superior
right ensuing to the same party. For instance, A hires a factory premises
from B for some manufacturing activity for a year, but 3 months ahead of the
expiry of lease purchases that very premises. Now since A has become the
owner of the building, his rights associated with the lease (inferior rights)
subsequently merge into the rights of ownership (superior rights). The
previous rental contract ceases to exist.
Discharge by Accord and Satisfaction
To discharge a contract by accord and satisfaction; the parties must agree to
accept performance that is different from the performance originally
promised. It may be studied under the following sub-heads.
Accord
An accord is an executory contract to perform an act that will satisfy an
existing duty. An accord suspends, but does not discharge, the original
contract.
Satisfaction
Satisfaction is the performance of the accord, which discharges the original
contractual obligation.
If the obligor refuses to perform
The oblige can sue on the original obligation or seek a decree for specific
performanceon the accord.
Discharge of contract by breach
Breach occurs where one party to a contract fails to perform its contractual obligations, or
the performance is defective. A breach of contract does not per se bring a contract to an
end. The breach may give to the aggrieved party the right to terminate the contract but it is
for the non-breaching side to decide whether or not to exercise that option. The aggrieved
party has a right of election; that is to say, it can choose either to affirm the contract or to
terminate it. However, once that decision has been taken, it is, in principle, irrevocable.

6(A) Winding up is a means by which the dissolution of a company is brought

about and its assets are realized and applied in the payment of its debts. After
satisfaction of the debts, the remaining balance, if any, is paid back to the members
in proportion to the contribution made by them to the capital of the company.”
“Winding up is a means by which the dissolution of a company is brought about and
its assets are realized and applied in the payment of its debts. After satisfaction of
the debts, the remainingbalance, if any, is paid back to the members in proportion to
the contribution made by them to the capital of the company.”
Modes of Winding Up of a Company:
A company may be wound up in any of the following two ways:
1.Compulsory Winding Up of a Company:

Winding up a company by an order of the Tribunal is known as

compulsory winding up. A petition for compulsory winding up of a
company may be filed in the Tribunal by any of the following persons.
(Sec. 272)
a. Petition by the Company - A company can file a petition to the
Tribunal for its winding up when the members of the company
have resolved by passing a Special Resolution to wind up the
affairs of the company. Managing Director or the directors cannot
file such a petition on their own account unless they do it on
behalf of the company and with the proper authority of the
members in the General Meeting.
b. Petition by the Contributories - A contributory shall be entitled
to present a petition for the winding up of the company,
notwithstanding that he may be the holder of fully paid-up shares
 or that the company may have no assets at all, or may have no
surplus assets left for distribution among the holders after the
satisfaction of its liabilities. It is no more required of a
contributory makingpetition to have tangible interest in the assets
of the company

i. Petition by the Registrar - Registrar may with the previous

sanction of the Central Government make petition to the
Tribunal for the winding up the company only in the following
cases: If the company has acted against the interests of the
sovereignty and integrity of India the security of the State
friendly relations with foreign States, public order, decency or
morality;
ii. If on an application made by the Registrar or any other person
authorised by the Central Government by notification under this
Act, the Tribunal is of the opinion that the affairs of the company
have been conducted in a fraudulent manner or the company was
formed for fraudulent and unlawful purpose or the persons
concerned in the formation or management of its affairs have
been guilty of fraud, misfeasance or misconduct in connection
therewith and that it is proper that the company be wound up.

c. Petition by the Central Government or a State Government

on the ground that company has acted against the interests of the
sovereignty and integrity of India, the security of the State,
friendly relations with foreign States, public order, decency or
morality.

d. Any person authorized by the Central Government in that behalf.

2. Liquidation under Insolvency and Bankruptcy Code 2016:

The Insolvency and Bankruptcy Code, 2016 relates to re-organisation and

insolvency resolution of companies, partnership firms and individuals in a
time bound manner.
The Insolvency and Bankruptcy Code, 2016 applies to matters relating to
 the insolvency and liquidation of a company where the minimum amount
of the default is Rs. 1 lakh (may be increased up to Rs.1 cr by the
Government, by notification).
(B) Appointment of a director as per Section 152 of the Companies Act 2013
Section 152 of the Companies Act 2013 came into force on 1st April 2014. As far as the
appointment is concerned, this Section deals with the following:

1. Appointment of first directors; and

2. Appointment of directors at general meetings.
3. Appointment of first directors
Section 152(1) of the Act provides for the appointment of the first directors of the companies. The
first directors hold their offices from the date of formation of the companies.As per Section 152(1),
the Articles of Association of Companies have provisions through which the companies appoint the
first directors. Where the articles do not provide such provisions, the companies consider the
following persons as first directors:

1. One-Person Companies: Individuals being members.

2. In other circumstances: Individuals who subscribe to the Memorandum of Associations
of companies.
The first directors hold their offices until the members appoint directors as per the provisions of
Section 152.
Where, for any reason, for example, death, the first directors do not assume their offices, the
subscribers of the Memorandum (who will then be only members) have to convene meetings for the
appointment of directors.
Appointment of directors at general meetings
According to Section 152(2), the companies appoint directors in general meetings except where the
Act provides otherwise.
However, in the case of public companies, shareholders appoint two-thirds of the total number of
directors. They appoint the remaining one-third of the members as per the Articles of Association in
general meetings.
REMOVAL OF DIRECTORS
As a general rule, the appointing authority shall have the power to remove a director.

Applicable provisions of the Companies Act, 2013:

 Section 169 of the Companies Act 2013;

 Section 115 of the Companies Act 2013 and

 Rule 23 of the Companies (Management and Administration) Rules, 2014

Mandatory Requirements for removal of director

1. It is mandatory to issue Special Notice u/s 115 of the Companies Act, 2013 for
removal of director.
2. Special Notice shall be sent to concern director at least 14 days before passing the
resolution.
 3. It is mandatory to give opportunity of being heard to the concerned director and
representation of such director shall be in writing.
4. The director who has been removed from office shall not be re-appointed.

Provisions of Section 169 of the Companies Act, 2013

Pursuant to provisions of Section 169 of the Companies Act, 2013, a Company may, by
passing an ordinary resolution in its extra-ordinary general meeting, remove a director
before the expiry of the period of his office after giving him a reasonable opportunity of
being heard.
In case of an independent director which is re-appointed for second term under section
149 of the Companies Act, 2013 shall be removed by the company only by passing a
special resolution and after giving him a reasonable opportunity of being heard.

Exceptions under Section 169 for removal of director are as follows:

The Company can not remove the following mentioned persons from the position of
director:

 A director which is appointed by the Tribunal;

 The Company has exercised the option to appoint not less than 2/3 rd of the total
number of directors according to the principle of proportional representation.

Provisions of Section 115 of the Companies Act, 2013

Pursuant to Section 115 of the Companies Act, 2013 read with Rule 23 of the Companies
(Management and Administration) Rules, 2014, a special notice is a notice of an intention
to move a particular resolution as required under the provisions of the Companies Act,
2013 or pursuant to the articles of association of the company. The special notice can be
given by such number of members holding not less than 1% of the total voting power or
holding shares on which an aggregate sum of not less than Rs. 5 Lakh has been paid up on
the date of such notice. The Special Notice shall be sent at-least 14 days prior to the date of
the general meeting where specific agenda for which this notice is to be sent shall be
considered.
A special notice shall be required of any resolution, to remove a director or to appoint
somebody in place of a director so removed at the meeting at which he is being removed.
Procedure required to be followed by the Companies on receipt of Special Notice:
  Dispatch of notice of the Board Meeting at least 7 days before the meeting for
taking note of Special Notice received from the shareholder/s of the Company. The
Special Notice shall be annexed to the notice of the board meeting.
 The Company shall simultaneously send copy of such Special Notice to the
concerned director.
 Convening and conducting of the board meeting where noting of the special notice
received from the shareholder/s would be done. Fixing of date, time and venue for
holding an Extra-ordinary General Meeting (EGM).
 Dispatch of the notice of the EGM 21 clear days before the EGM or as specified in
the Articles of Association (AOA) of the Company. Where the meeting is to be held
by the shorter notice, the Company is required to take shorter consent from 95%
(Ninety-Five percent) of the shareholders entitled to vote at such meeting.
 Where it is not practicable to give the notice in such manner to the members, the
notice shall be published in English language in English newspaper and in
vernacular language in a vernacular newspaper which have wide circulation in the
State where the registered office of the company is situated. Further, such notice
shall also be posted on the website, if any, of the company. The notice shall be
published at least seven days before the meeting, exclusive of the day of publication
of the notice and day of the meeting.
 Convening and conducting of the EGM where the director being removed would be
given an opportunity of being heard and then an ordinary resolution shall be passed.
 Form MGT 14 and Form DIR 12 are required to be filed with Register of
Companies (ROC), within 30 days of passing of such resolution.
It may be noted that Form DIR 12 is an approval form and the ROC may send the form for
resubmission for the requirement of the additional documents. The additional documents
may include:

1. Copy of representation letter by the concerned Director;

2. Copy of Special Notice;
3. Copy of Affidavit from the Director who has signed the form that they have
complied with all the legal requirements for removal;
4. Copy of Indemnity from the Director who signed the form;
5. Copy of certificate from Practising Company Secretary who has signed the form;
6. Copy of proof of dispatch of documents to the director being removed; and
 7. Copy of minutes of board and extra-ordinary general meeting and attendance
register thereof.
This list is inclusive and it is at the discretion of the ROC, based on the situation.
After resubmission of Form DIR 12 and upon satisfaction of the ROC, Form DIR 12 would
get approved. The timeline for approval from the date of filing of Form DIR 12 ranges
approximately between 3 to 6 months.

Penalty for failure to comply with provisions of the Companies Act, 2013
Contravention of Section 169
If a company is in default in complying with any of the provisions of section 169,
the company and every officer of the company who is in default shall be liable to a penalty
of Rs. 50,000, and in case of continuing failure, with a further penalty of Rs. 500 for each
day during which such failure continues, subject to a maximum of Rs. 3,00,000 in case of
a company and Rs. 1,00,000 in case of an officer who is in default.
Contravention of rule 23 of the Companies (Management and Administration) Rules, 2014
As per rule 30 of Companies (Management and Administration) Rules, 2014 contravention
of rules made under section 169, the company and every officer of the company who is in
default are punishable with a fine upto Rs.5,000, where the contravention is a continuing
one then the fine shall be Rs. 500 for every day of contravention.
The offenses committed under section 169 of the Companies Act, 2013 read with rule 23 of
the Companies (Management and Administration) Rules, 2014 are compoundable under
section 441 of the Companies Act, 2013.
Conclusion: Removal of director is an inherent right of the shareholders and a director can
be removed from his office if he is incompetent or unfit to hold his position as a director of
the Company. However, it is always better to try all the legal options before initiating the
removal of director. The removal of director being very sensitive and rare activity, the due
care and diligence ought to be exercised if one wants to invoke the above provisions to
remove a director.
7A)
PROCEDURE ON COMPLIANT UNDER CONSUMER PROTECTION ACT,1986.

1. The District Forum shall, on admission of a complaint, if it relates to any goods,—

(a) refer a copy of the admitted complaint, within twenty-one days
from the date of its admission to the opposite party mentioned in the
complaint directing him to give his version of the case within a
period of thirty days or such extended period not exceeding fifteen
days as may be granted by the District Forum;
(b) where the opposite party on receipt of a complaint referred
to him under clause (a) denies or disputes the allegations contained
in the complaint, or omits or fails to take any action to represent his
case within the time given by the District Forum, the

District Forum shall proceed to settle the consumer dispute in the

manner specified in clauses (c) to (g);
(c) where the complaint alleges a defect in the goods which cannot be
determined without proper analysis or test of the goods, the District Forum
shall obtain a sample of the goods from the complainant, seal it and
authenticate it in the manner prescribed and refer the sample so sealed to
the appropriate laboratory along with a direction that such laboratory make
an analysis or test, whichever may be necessary, with a view to finding out
whether such goods suffer from any defect alleged in the complaint or
from any other defect and to report its findings thereon to the District
Forum within a period of forty-five days of the receipt of the reference or
within such extended period as may be granted by the District Forum;
(d) before any sample of the goods is referred to any appropriate
laboratory under clause (c), the District Forum may require the
complainant to deposit to the credit of the Forum such fees as may be
specified, for payment to the appropriate laboratory for carrying out the
necessary analysis or test in relation to the goods in question;
(e) the District Forum shall remit the amount deposited to its credit
under clause (d) to the appropriate laboratory to enable it to carry out the
analysis or test mentioned in clause (c) and on receipt of the report
from the appropriate laboratory, the DistrictForum shall forward a copy
of the report along with such remarks as the District Forum may feel
appropriate to the opposite party;
(f) if any of the parties disputes the correctness of the findings of the
appropriate laboratory, or disputes the correctness of the methods of
analysis or test adopted by the appropriate laboratory, the District Forum
shall require the opposite party or the complainant to submit in writing his
objections in regard to the report made by the appropriate laboratory;
(g) the District Forum shall thereafter give a reasonable opportunity to
the complainant as well as the opposite party of being heard as to the
correctness or otherwise of the report made by the appropriate laboratory
and also as to the objection made in relation thereto under clause (/) and
issue an appropriate order under section 14.

7(b) Digital Signature: Any person may make an application to the

Certifying Authority for the issue of a Digital Signature Certificate in such
form as may be prescribed by the Central Government. Every such
application shall be accompanied by such fee not exceeding twenty-five
thousand rupees as may be prescribed by the Central Government, to be
paid to the Certifying Authority: Provided that while prescribing fees
under sub-section
(2) Different fees may be prescribed for different classes of applicants.
(3) Every such application shall be accompanied by a certification
practice statement or where there is no such statement, a statement
containing such particulars, as may be specified by regulations.
(4) On receipt of an application under sub-section (1), the Certifying
Authority may, after consideration of the certification practice statement
or the other statement under sub- section (3) and after making such
enquiries as it may deem fit, grant the Digital Signature Certificate or for
reasons to be recorded in writing, reject the application: Provided that no
Digital Signature Certificate shall be granted unless the Certifying
Authority is satisfied that—
(a) the applicant holds the private key corresponding to the public key to
be listed in theDigital Signature Certificate;
(b) the applicant holds a private key, which is capable of creating a digital signature;
(c) the public key to be listed in the certificate can be used to verify a
digital signature affixed by the private key held by the applicant: Provided
further that no application shall be rejected unless the applicant has been
given a reasonable opportunity of showing cause against the proposed
rejection.
A Certifying Authority while issuing a Digital Signature Certificate shall
certify that—
(a) it has complied with the provisions of this Act and the rules and
regulations made thereunder;
(b) it has published the Digital Signature Certificate or otherwise made it
available to such person relying on it and the subscriber has accepted it;
(c) the subscriber holds the private key corresponding to the public key,
listed in the Digital Signature Certificate;
(d) the subscriber's public key and private key constitute a functioning key pair;
(e) the information contained in the Digital Signature Certificate is accurate; and
(f) it has no knowledge of any material fact, which if it had been included
in the Digital Signature Certificate wouldadversely affect the reliability of
the representations made in clauses (a) to (d). Subject to the provisions of
sub-section (2), the Certifying Authority which has issued a Digital
Signature Certificate may suspend such Digital Signature Certificate,—
(a) on receipt of a request to that effect from— (i) the subscriber listed in
the Digital Signature Certificate; or (ii) any person duly authorised to act
on behalf of that subscriber;
(b) if it is of opinion that the Digital Signature Certificate should be
suspended in public interest. A Digital Signature Certificate shall not be
suspended for a period exceeding fifteen days unless the subscriber has
been given an opportunity of being heard in the matter. On suspension of a
Digital Signature Certificate under this section, the Certifying Authority
shall communicate the same to the subscriber.
A Certifying Authority may revoke a Digital Signature Certificate issued by it—
(a) where the subscriber or any other person authorized by him makes a
request to that effect; or
(b) upon the death of the subscriber; or
(c) upon the dissolution of the firm or winding up of the company where
the subscriber is a firm or a company. Subject to the provisions of sub-
section (3) and without prejudice to the provisions of sub-section (1), a
Certifying Authority may revoke a Digital Signature Certificate which has
been issued by it at any time, if it is of opinion that—
(a) a material fact represented in the Digital Signature Certificate is false
or has been concealed;
(b) a requirement for issuance of the Digital Signature Certificate shall
not be revoked unless the subscriber has been given an opportunity of
being heard in the matter.
(4) On revocation of a Digital Signature Certificate under this section, the
Certifying Authority shall communicate the same to the subscriber.