Business Law

Question 10
A - List out and explain the Information Technology offences.

Offences
Tampering with computer source documents.
Whoever knowingly or intentionally conceals, destroys or alters any computer source code used for
a computer, computer programme, computer system or computer network, when the computer
source code is required to be kept or maintained by law for the time being in force, shall be
punishable with imprisonment up to three years, or with fine which may extend up to two lakh
rupees, or with both.
Hacking with computer system.
Whoever with the intent to cause or knowing that he is likely to cause wrongful loss or damage to
the public or any person destroys or deletes or alters any information residing in a computer
resource or diminishes its value or utility or affects it injuriously by any means, commits hack:
Whoever commits hacking shall be punished with imprisonment up to three years, or with fine
which may extend upto two lakh rupees, or with both.
Publishing of information which is obscene in electronic form.
Whoever publishes or transmits or causes to be published in the electronic form, any material which
is lascivious or appeals to the prurient interest or if its effect is such as to tend to deprave and
corrupt persons who are likely, having regard to all relevant circumstances, to read, see or hear the
matter contained or embodied in it, shall be punished on first conviction with imprisonment of either
description for a term which may extend to five years and with fine which may extend to one lakh
rupees and in the event of a second or subsequent conviction with imprisonment of either
description for a term which may extend to ten years and also with fine which may extend to two
lakh rupees.
Protected system.
The appropriate Government may, by notification in the Official Gazette, declare that any computer,
computer system or computer network to be a protected system.
Any person who secures access or attempts to secure access to a protected system in contravention
of the provisions of this section shall be punished with imprisonment of either description for a term
which may extend to ten years and shall also be liable to fine.
Penalty for misrepresentation.
Whoever makes any misrepresentation to, or suppresses any material fact from, the Controller or
the Certifying Authority for obtaining any licence or Digital Signature Certificate, as the case may
be. shall be punished with imprisonment for a term which may extend to two years, or with fine
which may extend to one lakh rupees, or with both

Question 10 B -- Brief notes about Hackers.

a hacker is a person who breaks into computers and computer networks, either for profit or
motivated by the challenge.
People committed to circumvention of computer security. This primarily concerns unauthorized
remote computer break-ins via a communication networks such as the Internet , but also includes
those who debug or fix security problems and the morally ambiguous
types of computer hackers
White hat
A white hat hacker breaks security for non-malicious reasons, for instance testing their own security
system.
Black hat
A black hat hacker, sometimes called "cracker", is someone who breaks computer security without
authorization or uses technology (usually a computer, phone system or network) for vandalism,
credit card fraud, identity theft, piracy, or other types of illegal activity
Grey hat
A gray hat hacker is a combination of a Black Hat Hacker and a White Hat Hacker. A Grey Hat
Hacker will surf the internet and hack into a computer system for the sole purpose of notifying the
administrator that their system has been hacked. Then they will offer to repair their system for a
small fee.[4]
Blue Hat
A blue hat hacker is someone outside computer security consulting firms who is used to bug test a
system prior to its launch, looking for exploits so they can be closed

QUESTION 6. . Explain the Doctrine of Ultra Vires.

Ultra vires means beyond the powers. When an statutory authority passes an order or
direction which is beyond its powers then it can be called as ultra vires.

The object clause of the Memorandum of the company contains the object for which the
company is formed. An act of the company must not be beyond the objects clause,
otherwise it will be ultra vires and, therefore, void and cannot be ratified even if all the
members wish to ratify it. This is called the doctrine of ultra vires.

The ultra vires doctrine typically applies to a corporate body, such as a limited company,
a government department or a local council so that any act done by the body which is
beyond its capacity to act will be considered invalid.

Basic principles included the following:

1. An ultra vires transaction cannot be ratified by all the shareholders, even if they
wish it to be ratified.
2. The doctrine of estoppel usually precluded reliance on the defense of ultra vires
where the transaction was fully performed by one party
3. A fortiori, a transaction which was fully performed by both parties could not be
attacked.
4. If the contract was fully executory, the defense of ultra vires might be raised by
either party.
5. If the contract was partially performed, and the performance was held to be
insufficient to bring the doctrine of estoppel into play, a suit for quasi contract for
recovery of benefits conferred was available.
6. If an agent of the corporation committed a tort within the scope of his or her
employment, the corporation could not defend on the ground the act was ultra
vires.

ORIGIN AND DEVELOPMENT

Doctrine of ultra vires has been developed to protect the investors and creditors of the
company. The doctrine of ultra vires could not be established firmly until 1875. A
company called “The Ashbury Railway Carriage and Iron Company,” was
 incorporated under the Companies Act, 1862. Its objects, as stated in the
Memorandum of Association were to supply and sell the materials required to
construct railways, but not to undertake their construction. The contract here was to
construct a railway. That was contrary to the memorandum of association; what was
done by the directors in entering into that contract was therefore in direct
contravention of the provisions of the Company Act, 1862.

It was held that this contract, being of a nature not included in the Memorandum of
Association, was ultra vires not only of the directors but of the whole company, so
that even the subsequent assent of the whole body of shareholders would have no
power to ratify it.

The doctrine of ultra vires played an important role in the development of corporate
powers. Though largely obsolete in modern private corporation law, the doctrine
remains in full force for government entities.

EFFECT OF ULTRA VIRES TRANSACTIONS

A contract beyond the objects clause of the company’s memorandum is an ultra vires
contract and cannot be enforced by or against the company

A borrowing beyond the power of the company (i.e. beyond the objects clause of the
memorandum of the company) is called ultra vires borrowing.

However, the courts have developed certain principles in the interest of justice to protect
such lenders. Thus, even in a case of ultra vires borrowing, the lender may be allowed by
the courts the following reliefs:

(1) Injunction --- if the money lent to the company has not been spent the lender can get
the injunction to prevent the company from parting with it.
(2) Tracing--- the lender can recover his money so long as it is found in the hands of the
company in its original form.
(3) Subrogation---if the borrowed money is applied in paying off lawful debts of the
company, the lender can claim a right of subrogation and consequently, he will stand in
the shoes of the creditor who has paid off with his money and can sue the company to the
extent the money advanced by him has been so applied but this subrogation does not give
the lender the same priority that the original creditor may have or had over the other
creditors of the company.

EXCEPTIONS TO THE DOCTRINE OF ULTRA VIRES

There are, however, certain exceptions to this doctrine, which are as follows:
1. An act, which is intra vires the company but outside the authority of the directors may
be ratified by the shareholders in proper form.20
2. An act which is intra vires the company but done in an irregular manner, may be
validated by the consent of the shareholders. The law, however, does not require that the
consent of all the shareholders should be obtained at the same place and in the same
meeting.
3. If the company has acquired any property through an investment, which is ultra vires,
the company’s right over such a property shall still be secured.
4. While applying doctrine of ultra vires, the effects which are incidental or
consequential to the act shall not be invalid unless they are expressly prohibited by the
Company’s Act.
5. There are certain acts under the company law, which though not expressly stated in the
memorandum, are deemed impliedly within the authority of the company and therefore
they are not deemed ultra vires. For example, a business company can raise its capital by
borrowing.
6. If an act of the company is ultra vires the articles of association, the company can alter
its articles in order to validate the act.