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VIEW

Sr.No Topic Page.No

1 CHAPTER 1: RBI ACT 1934 1-2

2 Chapter 2: FEMA 1999 3-4

3 CHAPTER 3 FEMA CURRENT & CAPITAL ACCOUNT 5-7
TRANSACTION LIBERALIZED REMITTANCE SCHEME

4 CHAPTER 4 FEMA-FOREIGN DIRECT INVESTMENT IN INDIA 8 - 10

5 CHAP5 FEMA-DIRECT INVESTMENT OUTSIDE INDIA 11 - 12

6 CHAP6 EXTERNAL COMMERCIAL BORROWINGS 13

7 CHAPTER 7 FOREIGN CONTRUBUTION (REGULATION) ACT 14 - 16

2010

8 CHAP8-FOREIGN TRADE POLICY AND PROCEDURES 17 - 21

9 CHAPTER 9 NON BANKING FINANCE COMPANIES 22

10 CHAP10 SPECIAL ECONOMIC ZONES ACT 2005 23 - 27

11 CHAPTER 11 COMPETITON ACT 2002 28 - 32

12 CHAP 12 CONSUMER PROTECTION ACT 2019 33 - 35
13 CHAP 13 ESSENTIAL COMMODITIES ACT 1955 36 - 39
14 CHAP 14 LEGAL METROLOGY ACT 2009 40 - 42
15 CHAP 15 TRANSFER OF PROPERTY ACT 1882 43 - 49

16 CHAP 15 TRANSFER OF PROPERTY ACT 1882 50 - 51

17 CHAP 17 BENAMI TRANSACTION (PROHIBITION) ACT 1988 52 - 54

18 CHAP 18 PREVENTION OF MONEY LAUNDERING ACT 2002 55 - 57

19 CHAP 19 CONTRACT ACT 1872 58 - 62

20 CHAP 20 SPECIFIC RELEIF ACT 1963 63 - 64

21 CHAP 21 SALE OF GOODS ACT 1930 65 - 70

22 CHAP 22 PARTNERSHIP ACT 1932 71 - 73

23 CHAP 23 NEGITIABLE INSTRUMENT ACT 1881 74 - 79

-BY CA MAYUR AGARWAL

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CHAPTER 1: RBI ACT 1934

PAST PAPER CONCEPTS
1 Functions of RBI

2 RBI is a banker of bank

3 How Monetary policy committee constituted under the RBI act 1934 and its functions

LESSONS TO BE ROUNDED OFF

1) The Preamble to the Reserve Bank of India Act, 1934 under which it was constituted,
specifies its objective as regulation of the issue of Bank notes and the keeping of reserves
with a view to securing monetary stability in India, generally to operate the currency and
credit system of the country to its advantage and operation of the monetary policy
framework in India.

2) The Central Board of Directors is at the top of the Reserve Bank’s organizational structure.
Appointed by the Government under the provisions of the Reserve Bank of India Act, 1934,
the Central Board has the primary authority and responsibility for the oversight of the
Reserve Bank. It delegates specific functions to the Local Boards and various committees.
The Governor is the Reserve Bank’s chief executive

3) The Government of India on the advice of the Reserve Bank decides on the various
denominations of the currency notes to be printed. The Reserve Bank coordinates with the
Government in designing the banknotes, including their security features.

4) Monetary policy refers to the policy of the central bank with regard to the use of monetary
instruments under its Control to achieve the goals specified in the Act.

5) The Reserve Bank of India (RBI) is vested with the responsibility of conducting monetary
policy. This responsibility is explicitly mandated under the Reserve Bank of India Act, 1934.

6) The primary objective of monetary policy is to maintain price stability while keeping in mind
the objective of growth. Price stability is a necessary precondition to sustainable growth.

7) Repo Rate is the fixed interest rate at which the Reserve Bank provides overnight liquidity to
banks against the collateral of government and other approved securities under the liquidity
adjustment facility (LAF).

8) Reverse Repo Rate is the fixed interest rate at which the Reserve Bank absorbs liquidity, on
an overnight basis, from banks against the collateral of eligible government securities under
the liquidity adjustment facility (LAF)

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HIGLIGHTED PART IN MODULE.

Origin of the Reserve Bank of India at a glance

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Chapter 2: FEMA 1999

PAST PAPER CONCEPTS
1 SECTION 2(n) Foreign exchange
2 SECTION 2(o) Foreign security
3 SECTION 2(u) Person
4 SECTION 2(c) Authorised person
5 SECTION 4 Person resident India can acquire, hold, own, possess or transfer any foreign
exchange only after compliance
6 REGULATION 3 Limit for possession and retention of foreign currency or foreign coins
7 SECTION 2(y) Repatriate to India
8 Section 8 Realization & repatriation of foreign exchange
9.SECTION 9 Exemption from realization and repatriation in certain cases
10. SECTION 11 RBI’S power to issue directions to authorised person
11. SECTION 10(1) & (2) Authorization to act as authorized person
12 SECTION 8 A person resident in India shall take all reasonable steps to realize and
repatriate
13. SECTION 15 Compounding of offence
14. SECTION 15(1) Power to compound contravention
15. SECTION 15(2) No further proceedings after compounding
16 SECTION 13 Penalty
17. SECTION 18 Establishment of appellate tribunal
18. SECTION 19(1) Appeal to Appellate tribunal
19. SECTION 20 Composition of Appellate tribunal

LESSONS TO BE ROUNDED OFF

1. The Foreign Exchange Management Act has repealed the FERA.

2. The Foreign Exchange Management Act, 1999 is an Act to facilitate external trade
and payments and for promoting the orderly development and maintenance of
foreign exchange market in India.
3. Foreign Exchange Management Act, 1999 extends to the whole of India. The Act also
applies to all branches, offices and agencies outside India owned or controlled by a

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person resident in India and also to any contravention there under committed
outside India by any person to whom this Act applies.

4. FEMA makes provisions for dealings in foreign exchange. Broadly, all Current
Account Transactions are free. However Central Government can impose reasonable
restrictions by issuing Rules.

5. Capital Account Transactions are permitted to the extent specified by RBI by issuing
Regulations.

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CHAPTER 3 FEMA CURRENT & CAPITAL ACCOUNT

TRANSACTION LIBERALIZED REMITTANCE SCHEME
PAST PAPER CONCEPTS
1. SECTION 2(j) Current account transaction

2. SECTION 5 Provision regarding CAT

3. RULE 3 Transaction for which drawal of foreign exchange is prohibited

4. RULE 4 Foreign exchange can be drawn with prior approval of CG

5. RULE 5 Foreign exchange can be drawn with prior approval of RBI

6. REGULATION 3 Restriction on acquisition and transfer of immovable property

outside India

7. REGULATION 5 Acquisition and transfer of immovable property outside India

LESSONS TO BE ROUNDED OFF

• As liberalization measure to facilitate resident individuals to remit funds abroad for
permitted current or capital account transactions or combination of both Reserve Bank of
India issues Liberalised Remittance Scheme.
• The Scheme is available to all resident individuals including minors.
• Remittances under the Scheme can be consolidated in respect of family members subject
to individual
• family members complying with its terms and conditions.
• For private visits abroad, other than to Nepal and Bhutan, any resident individual can
obtain foreign exchange up to an aggregate amount of USD 2,50,000, from an Authorised
Dealer in any one financial year, irrespective of the number of visits undertaken during the
year.
• The individual will have to designate a branch of an AD through which all the remittances
under the Scheme will be made. The resident individual seeking to make the remittance
should furnish Form A2 for purchase of foreign exchange under LRS.

HIGLIGHTED PART IN MODULE.

Prohibition on drawal of foreign exchange for certain transactions

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Permissible Current Account Transactions by an individual under LRS

Private visit, Gift/Donation Going abroad on employment, Emigration, Maintenance of

closed, Relatives abroad, Business trip, Medical treatment

Permissible capital account transactions by an individual under LRS

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Prohibited Transactions

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CHAPTER 4 FEMA-FOREIGN DIRECT INVESTMENT IN

INDIA
PAST PAPER CONCEPTS
1) RULE 6 A person resident in India may subscribe, purchase, or sell capital instrument

2) RULE 7 A person resident outside India having instrument in an India may make
investment in capital instrument

3. Automatic route and government route

4. Depository receipts

5. Person of Indian origin

6. Distinguish depository receipts and foreign currency convertible bonds

7. Method of funding of FDI under FEMA

8. Foreign currency convertible bond

9. Sectors where FDI is prohibited

10. Intent and obligation of FDI under FEMA

11. RBI approval is not mandatory for transfer of capital instrument from resident to
non-resident

12. Eligibility criteria for forming the trust under Indian trust act

13. Condition to allot sweat equity share to resident outside India

14. LLP is permitted in FDI

15. Sectors where FDI is prohibited

LESSONS TO BE ROUNDED OFF

• “FDI” or “Foreign Direct Investment” means investment through equity instruments by a
person resident outside India in an unlisted Indian company; or in ten per cent or more of
the post issue paid- up equity capital on a fully diluted basis of a listed Indian company.

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• A non-resident entity can invest in India, subject to the FDI Policy except in those
sectors/activities which are prohibited. However, an entity of a country, which shares land
border with India or where the beneficial owner of an investment into India is situated in or
is a citizen of any such country, can invest only under the Government route.
• A citizen of Pakistan or an entity incorporated in Pakistan can invest, only under the
Government route, in sectors/activities other than defence, space, atomic energy and
sectors/activities prohibited for foreign investment.
• Indian companies can issue capital against Foreign Direct Investment.
• Indian companies which are eligible to issue shares to person’s resident outside India
under the FDI Policy may be allowed to retain the share subscription amount in a Foreign
Currency Account, with the prior approval of RBI.
• FDI is permitted under the automatic route in Limited Liability Partnership (LLPs)
operating in sectors/ activities where 100% FDI is allowed through the automatic route and
there are no FDI-linked performance conditions.
• FDI is allowed under the automatic route without prior approval either of the Government
or the Reserve Bank of India in all activities/sectors as specified in the consolidated FDI
Policy, issued by the Government of India from time to time.
• FDI in activities not covered under the automatic route requires prior approval of the
Government. Proposals for foreign investment under Government route, are considered by
respective Administrative Ministry/Department.
• If a person violates/contravenes any FDI Regulations, by way of breach/non-
adherence/non- compliance/ contravention of any rule, regulation, notification, press note,
press release, circular, direction or order issued in exercise of the powers under FEMA or
contravenes any conditions subject to which an authorization is issued by the Government
of India/ Reserve Bank of India, he shall, upon adjudication, be liable to a penalty

HIGLIGHTED PART IN MODULE

GENERAL CRITERIA

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Remittance of profit/surplus

Requests for closure of the BO/LO/PO and submit the application along with following
documents for remittance of winding up proceeds of BO/LO/PO to the designated AD Category-
I bank
• Copy of the Reserve Bank’s/AD Category- I bank’s approval
• Auditor’s certificate
• Confirmation from the applicant/parent company that no legal proceedings is pending in any court in
India;
• A report from the Registrar of Companies regarding compliance with the provisions of the companies Act,
2013;
• The designated AD category- I bank has to ensure that the BO/LO/PO had filed their respective AACs; and
• Any other document/s, specified by reserve Bank of India / AD category-I bank
Designated AD category- I bank may allow remittance of winding up proceeds in respect of offices
of bank and insurance companies, after obtaining copies of permission of closure from the
sectoral regulators along with the documents mentioned above.

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CHAP5 FEMA-DIRECT INVESTMENT OUTSIDE INDIA

PAST PAPER CONCEPTS
1. RULE 4 PRI may purchase a foreign security out of funds in RFC account

2. REGULATION 6(1) Indian party may make investment in JV/WOS

3. REGULATION 3 Restriction on acquisition or transfer of immovable property outside

India

4. REGULATION 5 Acquisition or transfer of immovable property outside India

5. SECTION 6(4) Person resident in India may hold, own, transfer or invest in foreign
currency

6. Eligibility criteria for overseas investment by proprietorship and registered trust

Proprietorship concerns
Registered trust
Eligibility criteria for trust

LESSONS TO BE ROUNDED OFF

• Overseas investments (or financial commitment) in Joint Ventures (JV) and Wholly Owned
Subsidiaries (WOS) have been recognised as important avenues for promoting global
business by Indian entrepreneurs.
• “Financial Commitment” means the amount of direct investment by way of contribution
to equity, loan and 100 per cent of the amount of guarantees and 50 per cent of the
performance guarantees issued by an Indian Party to or on behalf of its overseas Joint
Venture Company or Wholly Owned Subsidiary.
• Indian party/ Resident Individual is required to route all transactions in respect of a
particular overseas JV/WOS only through one branch of an Authorized Dealer. This branch
would be the ‘designated Authorised Dealer’ in respect of that JV/WOS and all transactions
and communications relating to the investment in that particular JV/WOS are to be reported
only through this ‘designated’ branch of an Authorized Dealer.
• An Indian Party is a company incorporated in India or a body created under an Act of
Parliament or
• a partnership firm registered under the Indian Partnership Act 1932 or a Limited Liability
Partnership (LLP) incorporated under the LLP Act, 2008 and any other entity in India as may
be notified by the Reserve Bank.

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When more than one such company, body or entity makes investment in the foreign JV /
WOS, such combination will also form an “Indian Party”.
• An Indian Party receive share certificates or any other documentary evidence of
investment in the foreign JV / WOS as an evidence of investment and submit the same to
the designated AD within 6 months and repatriate to India, all dues receivable from the
foreign JV / WOS, like dividend, royalty, technical fees etc.

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CHAP6 EXTERNAL COMMERCIAL BORROWINGS

PAST PAPER CONCEPTS
1 Foreign currency convertible bond

2 External commercial borrowing

3 FCCB and ECB
4 FCCB and FCEB
5 ECB and the types
6 Advantages of FCEB over FCCB
7 Benefits of FCCB
8 Conversion of ECB into equity
9 Who can access ECB
10 End use of ECB under approval route
11 Parking of ECB
12 Conversion of ECB into equity is permissible

LESSONS TO BE ROUNDED OFF

• External Commercial Borrowings are commercial loans raised by eligible resident entities
from recognised non-resident entities and should conform to parameters such as minimum
maturity, permitted and non-permitted end-uses, maximum all-in-cost ceiling, etc.
• External Commercial Borrowings Framework enables permitted resident entities to
borrow from recognized non-resident entities.
• For conversion of ECB dues into equity, the exchange rate prevailing on the date of the
agreement between the parties concerned for such conversion or any lesser rate can be
applied with a mutual agreement with the ECB lender.
• Under External Commercial Borrowings Framework, borrowers may approach the RBI
with an application in prescribed format Form ECB for examination through their AD
Category I bank. Such cases shall be considered keeping in view the overall guidelines,
macroeconomic situation and merits of the specific proposals.
• Borrowings under ECB Framework are subject to reporting requirements Loan Registration
Number, Changes in terms and conditions of ECB and Reporting of actual transactions.

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CHAPTER 7 FOREIGN CONTRUBUTION (REGULATION)

ACT 2010
PAST PAPER CONCEPTS
1. SECTION 2(1)(h): Foreign contribution

2. Legalise foreign donation and hospitality to office bearers of political parties

3. SECTION 3: Person prohibited from accepting foreign contribution (repeated)

4. SECTION 4: Exemption to the prohibition of accepting

5. SECTION 6 Person cannot receive foreign hospitality visiting any country without prior
permission of CG

6. SECTION 9: Power of the CG to prohibit receipt

7. SECTION 14: Cancellation of certificate

8. SECTION 16: Application for renewal of certificate

9. SECTION 28: Confiscation of article or currency or security obtained in contravention of the

act

10. SECTION 29: Adjudication of confiscation

11. SECTION 30: Procedure for confiscation

12. SECTION 34: Penalties and punishment

13. SECTION 35: Punishment for contravention of any provision of the act

14. SECTION 39: Offence by companies

15. SECTION 41: Composition of certain offence

LESSONS TO BE ROUNDED OFF
• FCRA, 2010 regulate the acceptance and utilisation of foreign contribution or foreign
hospitality by certain individuals or associations or companies and to prohibit acceptance
and utilisation of foreign contribution or foreign hospitality for any activities detrimental to
the national interest and for matters connected therewith or incidental thereto.
• In order to streamline the provisions of the Foreign Contribution (Regulation) Act, 2010 by
strengthening the compliance mechanism, enhancing transparency and accountability in the
receipt and utilisation of foreign contribution worth thousands of crores of rupees every

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year and facilitating genuine non-Governmental organisations or associations who are

working for the welfare of the society, Parliament enacted the Foreign Contribution
(Regulation) Amendment Act, 2020.
• The Act provides that persons having definite cultural, economic, educational, religious
and social programmes should get themselves registered with the Government of India
before accepting any ‘foreign contribution’. In case a person falling in the above category is
not registered with the Central Government, it can accept foreign contribution only after
obtaining prior permission of the Central Government.
• Central Government is empowered to prohibit any person or organisation not specified in
the Act from accepting any foreign contribution and to require any person or class of
persons, not specified in it to obtain prior permission of the Central Government before
accepting any foreign hospitality.
• Associations which were granted certificates of registration, such registration shall be valid
for a period of five years.
• Any offence punishable under this act (whether committed by an individual or association
or any officer or employee thereof), not being an offence punishable with imprisonment
only, may, before the institution of any prosecution, be compounded by such officers or
authorities and for such sums as the central government may, by notification in the official
gazette, specify in this behalf.

HIGLIGHTED PART IN MODULE.

Who cannot receive foreign contribution?

As defined in Section 3(1) of FCRA, 2010, the following are prohibited to receive foreign
contribution:
Candidate for election; Correspondent, columnist, cartoonist, editor, owner, printer or
publisher of a registered newspaper; Public Servant, Judge, Government servant or
employee of any corporation or any other body controlled or owned by the Government;
Member of any legislature; Political party or office bearer thereof; Organization of a political
nature as may be specified under sub-section (1) of Section 5 by the Central Government.
Association or company engaged in the production or broadcast of audio news or audio
visual news or current affairs programmes through any electronic mode, or any other
electronic form as defined in clause (r) of sub-section (1) of Section 2 of the Information
Technology Act, 2000 or any other mode of mass communication; Correspondent or
columnist, cartoonist, editor, owner of the association or company referred to in above
point. Individuals or associations who have been prohibited from receiving foreign
contribution.
Who can receive foreign contribution?
Any “Person” can receive foreign contribution subject to the following conditions:-

It must have a definite cultural, economic, educational, religious or social programme. It must
obtain the FCRA registration/prior permission from the Central Government

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It must not be prohibited under Section 3 of FCRA, 2010.

What is foreign hospitality?
Foreign Hospitality means any offer, not being a purely casual one, made in cash or kind by a
foreign source for providing a person with the costs of travel to any foreign country or
territory or with free board, lodging, transport or medical treatment.

State the categories of persons requires prior approval from Ministry of Home Affairs before
accepting Foreign Hospitality?
The following categories of persons require prior approval from Ministry of Home Affairs
before accepting Foreign Hospitality:-
Members of a Legislature, Office bearers of political parties, Judges, Government servants,
Public Servants, Employees of any corporation or any other body owned or controlled by
the Government.

Provided that it shall not be necessary to obtain any such permission for an emergent
medical aide needed on account of sudden illness contracted during a visit outside India.
But, where such foreign hospitality has been received, the person receiving such hospitality
shall give an intimation to the Central Government as to the receipt of such hospitality
within one month from the date of receipt of such hospitality, and the source from which,
and the manner in which, such hospitality was received.

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CHAP8-FOREIGN TRADE POLICY AND PROCEDURES

PAST PAPER CONCEPTS
1 Privileges of star export house
2 Board of trade
3 Advance authorization scheme
4 Short term and long term objectives
5 Privileges and trading house status holders
6 Describe SEIS and eligible services under service export
7 Capital goods and consumer goods
8 Capital goods and spares that have become obsolete/surplus may be exported,
transferred to another SEZ until but law does not permit to dispose of in domestic tariff area
on payment of applicable duties
9 Objective of service export and eligibility condition of obtaining benefits under FTP

LESSONS TO BE ROUNDED OFF

• India’s Foreign Trade Policy (FTP) has, conventionally, been formulated for five years at a
time and reviewed annually. The focus of the FTP has been to provide a framework of rules
and procedures for exports and imports and a set of incentives for promoting exports.
• The Foreign Trade Policy is primarily focused on accelerating exports. This is sought to be
implemented through various schemes intended to exempt and remit indirect taxes on
inputs physically incorporated in the export product, import capital goods at concessional
duty, stimulate services exports and focus on specific markets and products.
• The Foreign Trade Policy, 2015-20, is notified by Central Government, in exercise of
powers conferred under Section 5 of the Foreign Trade (Development & Regulation) Act,
1992 (No. 22 of 1992) [FT (D&R) Act], as amended. The Foreign Trade Policy, 2015-20 came
into force with effect from 01.04.2015.
• Capital Goods means any plant, machinery, equipment or accessories required for
manufacture or production, either directly or indirectly, of goods or for rendering services,
including those required for replacement, modernisation, technological up-gradation or
expansion. It includes packaging machinery and equipment, refrigeration equipment, power
generating sets, machine tools, equipment and instruments for testing, research and
development, quality and pollution control.
• An Importer-Exporter Code (IEC) Number is a 10-digit number allotted to a person that is
mandatory for undertaking any export/import activities. Now the facility for IEC in electronic
form or e-IEC has also been operationalised.

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• The objective of the Export from India Schemes is to provide rewards to exporters to
offset infrastructural inefficiencies and associated costs involved and to provide exporters a
level playing field.
• Status Holders are business leaders who have excelled in international trade and have
successfully contributed to country’s foreign trade. Status Holders are expected to not only
contribute towards India’s exports but also provide guidance and handholding to new
entrepreneurs.
• The objective of the Export Promotion Capital Goods(EPCG) Scheme is to facilitate import
of capital goods for producing quality goods and services to enhance India’s export
competitiveness.
• Units undertaking to export their entire production of goods and services (except
permissible sales in DTA), may be set up under the Export Oriented Unit (EOU) Scheme,
Electronics Hardware Technology Park (EHTP) Scheme, Software Technology Park (STP)
Scheme or Bio-Technology Park (BTP) Scheme for manufacture of goods, including repair,
re-making, reconditioning, re-engineering, rendering of services, development of software,
agriculture including agro-processing, aquaculture, animal husbandry, biotechnology,
floriculture, horticulture, pisciculture, viticulture, poultry and sericulture. Trading units are not
covered under these schemes.

HIGLIGHTED PART IN MODULE.

PRINCIPLES OF RESTRICTIONS

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Export Obligation

DUTY FREE IMPORT AUTHORISATION SCHEME (DFIA)

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Eligibility of DFIA

Export through Exhibitions/Export Promotion Tours/Showrooms Abroad/Duty Free

Shops

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Quality Complaints/ Trade Disputes

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CHAPTER 9 NON BANKING FINANCE COMPANIES

PAST PAPER CONCEPTS
1 Regulation regarding to acceptance of deposit by NBFC

2 Explain NBFC and powers of RBI vested in RBI Act for regulating NBFC
3 NBFC differ from banks
4 SECTION 45-1A: Requirement for registration of NBFC with RBI
5 NBFC systematically important non deposit company and deposited taking company
directions

LESSONS TO BE ROUNDED OFF

 The Reserve Bank of India is entrusted with the responsibility of regulating and
supervising the Non-Banking Financial Companies by virtue of powers vested in
Chapter III B of the Reserve Bank of India Act, 1934.

 A Non-Banking Financial Company (NBFC) is a company registered under the

Companies Act, engaged in the business of loans and advances, acquisition of
shares/stocks/bonds/debentures/ securities issued by Government or local authority
or other marketable securities of a like nature, leasing, hire-purchase, insurance
business, chit business but does not include any institution whose principal business
is that of agriculture activity, industrial activity, purchase or sale of any goods (other
than securities) or providing any services and sale/purchase/construction of
immovable property.

 The Reserve Bank has been given the powers under the RBI Act 1934 to register, lay
down policy, issue directions, inspect, regulate, supervise and exercise surveillance
over NBFCs that meet the 50- 50 criteria of principal business.

 The Reserve Bank can penalize NBFCs for violating the provisions of the RBI Act or
the directions or orders issued by RBI under RBI Act.

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CHAP10 SPECIAL ECONOMIC ZONES ACT 2005

PAST PAPER CONCEPTS
1. SEZ are engines of growth

2. Features of SEZ

3. SECTION 2(u): Offshore banking unit

4. SECTION 5: Factors considered by CG while notifying and area as SEZ and discharging
its functions

5. SECTION 3: Who can establish SEZ

6. SECTION 9: Power and functions of the board

7. SECTION 10: Board of approval is empowered to suspend the letter of approval

granted to the developer

8. SECTION 11: method of appointment and functions of the development

commissioner

9. SECTION 12(2) Function of development commissioner

10. SECTION 14: Function and powers of approval committee

11. SECTION 15(8) Approve, modify or reject proposal

12. SECTION 34: SEZ cast upon the authority a duty to undertake such measures for
development, operation and management of SEZ

13. SECTION 40(1): Powered to suspend authority

14. SECTION 40(2): Effect of notification

15. SECTION 40(3): Extension of the period of supersession and reconstitution of

authority

16. SECTION 31(1): Constituted of authority

17. SECTION 31(2): Authority to be body corporate

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18. SECTION 31(3): Head office

19. SECTION 31(4): Branch office

20. SECTION 31(9): Act of an authority not invalidated due to defect

LESSONS TO BE ROUNDED OFF

• Special Economic Zones (SEZ) are growth engines that can boost manufacturing, augment
exports and generate employment. The SEZs require special fiscal and regulatory regime in
order to impart a hassle free operational regime encompassing the state of the art
infrastructure and support services.
• Special Economic Zone (SEZ) is a specifically delineated duty free enclave and is deemed
to be foreign territory for the purposes of trade operations and duties and tariffs.
• SEZ units are governed by Special Economic Zones Act, 2005.
• Central Government, State Government, or any other person, jointly or severally, may
establish a Special Economic Zone. Any person who, intends to set up a Special Economic
Zone, may, after identifying the area, make a proposal to the State Government concerned
for the purposes of setting up a Special Economic Zone.
• Board of Approval granting of approval or rejecting proposal or modifying such proposals
for establishment of the Special Economic Zones.
• Every Development Commissioner to take steps in order to discharge his functions to
ensure speedy development of the Special Economic Zone and promotion of exports there
from.
• The Central Government to constitute by notification, a Committee for every Special
Economic Zone, to be called the Approval Committee to exercise the powers and perform
the functions as specified.
• Any person, who intends to set up a Unit for carrying on the authorised operations in a
Special Economic Zone, to submit a proposal to the Development Commissioner concerned.
• An application for setting up and operation of an Offshore Banking Unit in a Special
Economic Zone may be made to the Reserve Bank of India.
• SEZ Act casts upon the SEZ Authority a duty to undertake such measures as it thinks fit for
the development, operation and management of the respective Special Economic Zone.
• Every person whether employed or residing or required to be present in a Special
Economic Zone shall be provided an identity card by every Development Commissioner in
prescribed form and containing specified particulars.

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• Provisions of the SEZ Act shall have effect notwithstanding anything inconsistent
therewith contained in any other law for the time being in force or in any instrument having
effect by virtue of any law other than this Act.
• Any person aggrieved by any decision or order of the designated Court may file an appeal
to the High Court within sixty days from the date of communication of the decision or order
of the said court to him on any question of fact or law arising out of such orders.

HIGLIGHTED PART IN MODULE.

1) The salient features of the Act are as under:—
(i) matters relating to establishment of Special Economic Zone and for setting up of units
therein, including requirements, obligations and entitlements;
(ii) matters relating to requirements for setting up of off-shore banking units and units in
International Financial Service Center in Special Economic Zone, including fiscal regime
governing the operation of such units;
(iii) the fiscal regime for developers of Special Economic Zones and units set up therein;
(iv) single window clearance mechanism at the Zone level;
(v) establishment of an Authority for each Special Economic Zone set up by the Central
Government to impart greater administrative autonomy; and
(vi) designation of special courts and single enforcement agency to ensure speedy trial and
investigation of notified offences committed in Special Economic Zones.
Guidelines for notifying Special Economic Zone
Section 5 stipulates broader guidelines to be considered by the Central Government, while
notifying any area as a Special Economic Zone or an area to be included in the SEZ and in
discharging its functions under the Act. These include:
(a) generation of additional economic activity;
(b) promotion of exports of goods and services;
(c) promotion of investment from domestic and foreign sources;
(d) creation of employment opportunities;
(e) development of infrastructure facilities; and
(f) maintenance of sovereignty and integrity of India, the security of the State and friendly
relations with foreign States

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The processing and non-processing areas

2) Duties, powers and functions of Board of Approval

The powers and functions of the Board, inter alia, include:
(a) granting of approval or rejecting proposal or modifying such proposals for establishment
of the Special Economic Zones;
(b) granting approval of authorised operations to be carried out in the Special Economic Zones
by the Developer;
(c) granting of approval to the Developers or Units (other than the Developers or the Units
which are exempt from obtaining approval under any law or by the Central Government)
for foreign collaborations and foreign direct investments (including investments by a
person resident outside India) in the Special Economic Zone for its development,
operation and maintenance;
(d) granting of approval or rejecting proposal for providing infrastructure facilities in a Special
Economic Zone or modifying such proposals;
(e) granting, a licence to an industrial undertaking referred to in section 3(d) of IDR Act, if such
undertaking is established, as a whole or part thereof, or proposed to be established, in
a Special Economic Zone;
(f) suspension of the letter of approval granted to a Developer and appointment of an
Administrator under Section 10(1) of the Act;
(g) disposing of appeals preferred under Section 15(4) and Section 16(4) of the Act;
(h) performing such other functions as may be assigned to it by the Central Government.

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Suspension of letter of approval and transfer of special economic zone in certain cases

The functions of the Development Commissioner include :

(a) guide the entrepreneurs for setting up of Units in the Special Economic Zone;
(b) ensure and take suitable steps for effective promotion of exports from the Special
Economic Zone;
(c) ensure proper coordination with the Central Government or State Government
Departments concerned or agencies with respect to, or for above purposes;
(d) monitor the performance of the Developer and the Units in SEZ;
(e) discharge such other functions as may be assigned to him by the Central Government
under this Act or any other law for the time being in force; and
(f) any other functions as may be delegated to him by the Board of approval.

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CHAPTER 11 COMPETITON ACT 2002

PAST PAPER CONCEPTS.
1 Conditions conductive to centralization

2 SECTION 2(c) Cartel

3 What is competition and what ways competition kill the competition

4 ARTICLES 38 AND 39: Evolution and development of Indian competition

5 There is close relationship between competition and economic efficiency

6 SECTION 2(f): Consumer

7 Competition act and MRTP Act

8 SECTION 2(1): Person

9 SECTION 19(3): Factors which competition commission of India takes into consideration to
determine that the agreement has an appreciable adverse effect

10 SECTION 3: Anti-competitive agreement

11 SECTION 3(3): Bid rigging and ways in which bid rigging may occur

12 Bid rigging, tie-in agreement, exclusive supply agreement and refusal to deal

13 SECTION 4: Competition act Does not prohibit dominance but the abuse of dominant position

14 Abuse of dominance

15 Dominant position

16 Purpose of determining whether an enterprise enjoys dominant position or not

17 SECTION 6: Regulation of combination

18 Combination

19 SECTION 7: Establishment of commission

SECTION 8: Composition of commission

SECTION 9: Selection of chairperson and members

SECTION 10: Term of office of chairperson and member

20 SECTION 7: Duties, powers and functions of competition commission of India

SECTION 19(4): Commission while inquiring whether an enterprise enjoys a dominant position or
not

21 Order can be passed by CCI under SECTION 27

22 Who can appear before CCI

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23 Jurisdiction of the CCI extends to acts/agreement taking place outside India which affects
competition in India

24 Process of selection of chairperson and member of CCI & what circumstance they may remove by
the CG

25 SECTION 41: Duties and powers of director general

26 SECTION 49Competition advocacy

27 Purpose of competition policy of India

28 SECTION 39: CCI imposing monetary penalty be executed

29 SECTION 42: Penalty prescribed by competition act for contravention of the competition
commission

30 Competition appellate tribunal

[SECTION 53A] Appellate tribunal

[SECTION 411 OF COMPANIES ACT] Qualifications

[SECTION 416 COMPANIES ACT] Resignation

[53S] Right to legal representative

31 SECTION 44: Consequences of making false statement by a person being party to combination

LESSONS TO BE ROUNDED OFF

• Competition Act, 2002 seeks to provide, keeping in view the economic development of the
country, for the establishment of Competition 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 besides repeal of MRTP Act and the
dissolution of the MRTP Commission.

• No enterprise or association of enterprises or person or association of persons shall enter into any
agreement in respect of production, supply, distribution, storage, acquisition or control of goods or
provision of services, which causes or is likely to cause an appreciable adverse effect on competition.

• Competition Act expressly prohibits any enterprise or group from abusing its dominant position.
Dominant Position meaning thereby a position of strength, enjoyed by an enterprise or group, in the
relevant market, in India, which enables it to operate independently of competitive forces prevailing
in the relevant market; or affect its competitors or consumers or the relevant market in its favour.

• Competition Act prohibits any person or enterprise from entering into a combination which
causes or is likely to cause an appreciable adverse effect on competition within the relevant market
in India and if such a combination is formed it shall be void.

• While formulating a policy on the competition the Central/State Government may make a
reference to the Commission for its opinion on possible effect of such a policy on the competition.

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• Competition Appellate Tribunal to hear and dispose of appeals against the direction issued or
decision made or orders passed by the Commission under the Act, and to adjudicate on claim of
compensation.

• The Central Government or any State Government or the Commission or any statutory authority or
any local authority or any enterprise or any person aggrieved by any decision or order of the
Appellate Tribunal may file an appeal to the Supreme Court.

HIGHLIGHTED PART IN MODULE

Some of the conditions that are conducive to cartelization are:
high concentration - few competitors
high entry and exit barriers
homogeneity of the products (similar products)
similar production costs
excess capacity
high dependence of the consumers on the product
history of collusion
WHAT IS AN ANTI-COMPETITIVE AGREEMENT?
An anti-competitive agreement is an agreement having appreciable adverse effect on competition. Anti-
competitive agreements include, but are not limited to:-
agreement to limit production and/or supply;
agreement to allocate markets;
agreement to fix price;
bid rigging or collusive bidding;
conditional purchase/ sale (tie-in arrangement);
exclusive supply / distribution arrangement;
resale price maintenance; and
refusal to deal.
WHAT CONSTITUTES ABUSE OF DOMINANCE?
Dominance refers to a position of strength which enables an enterprise to operate independently of
competitive forces or to affect its competitors or consumers or the market in its favour. Abuse of dominant
position impedes fair competition between firms, exploits consumers and makes it difficult for the other players
to compete with the dominant undertaking on merit. Abuse of dominant position includes:
• imposing unfair conditions or price,
• predatory pricing,
• limiting production/market or technical development ,
• creating barriers to entry,
• applying dissimilar conditions to similar transactions,
• denying market access, and
• using dominant position in one market to gain advantages in another market.

WHAT IS COMBINATION?
Broadly, combination under the Act means acquisition of control, shares, voting rights or assets, acquisition
of control by a person over an enterprise where such person has direct or indirect control over another
enterprise engaged in competing businesses, and mergers and amalgamations between or amongst
enterprises when the combining parties exceed the thresholds set in the Act. The thresholds are specified
in the Act in terms of assets or turnover in India and outside India. Entering into a combination which
causes or is likely to cause an appreciable adverse effect on competition within the relevant market in India
is prohibited and such combination shall be void.

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Section 19(3) provides that while determining whether an agreement has appreciable adverse effect
on competition, the Commission shall give due regard to all or any of the following factors, namely–
(a) creation of barriers to new entrants in the market;
(b) driving existing competitors out of the market;
(c) foreclosure of competition by hindering entry into the market;
(d) accrual of benefits to consumers;
(e) improvements in production or distribution of goods or provision of services;
(f) promotion of technical, scientific and economic development by means of production or distribution of
goods or provision of services.

Duties, Powers and Functions of Commission

As per Section 18 of the Act, duties of the CCI are:–

For the purpose of determining whether an enterprise enjoys dominant position or not under Section
4, the Commission shall have due regard to all or any of the following factors, namely–
(a) market share of the enterprise;
(b) size and resources of the enterprise;
(c) size and importance of the competitors;
(d) economic power of the enterprise including commercial advantages over competitors;
(e) vertical integration of the enterprises or sale or service network of such enterprises;
(f) dependence of consumers on the enterprise;
(g) monopoly or dominant position whether acquired as a result of any statute or by virtue of being a
Government company or a public sector undertaking or otherwise;
(h) entry barriers including barriers such as regulatory barriers, financial risk, high capital cost of entry,
marketing entry barriers, technical entry barriers, economies of scale, high cost of substitutable
goods or service for consumers;
(i) countervailing buying power;
(j) market structure and size of market;
(k) social obligations and social costs;
(l) relative advantage, by way of the contribution to the economic development, by the enterprise enjoying
a dominant position having or likely to have an appreciable adverse effect on competition;
(m) any other factor which the Commission may consider relevant for the inquiry.

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The Commission shall have due regard to all or any of the factors for the purposes of determining
whether the combination would have the effect of or is likely to have an appreciable adverse effect on
competition in the relevant market, namely –
(a) actual and potential level of competition through imports in the market;
(b) extent of barriers to entry into the market;
(c) level of combination in the market;
(d) degree of countervailing power in the market;
(e) likelihood that the combination would result in the parties to the combination being able to significantly
and sustainably increase prices or profit margins;
(f) extent of effective competition likely to sustain in a market;
(g) extent to which substitutes are available or are likely to be available in the market;
(h) market share, in the relevant market, of the persons or enterprise in a combination, individually and as
a combination;
(i) likelihood that the combination would result in the removal of a vigorous and effective competitor or
competitors in the market;
(j) nature and extent of vertical integration in the market;
(k) possibility of a failing business;
(l) nature and extent of innovation;
(m) relative advantage, by way of the contribution to the economic development, by any combination
having or likely to have appreciable adverse effect on competition;
(n) whether the benefits of the combination outweigh the adverse impact of the combination, if any.

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CHAP 12 CONSUMER PROTECTION ACT 2019

PAST PAPER CONCEPTS
1 SECTION 2(9): Basic rights of consumer

2 Commercial purpose

3 SECTION 2(7): Consumer

4 SECTION 2(11): Deficiency in service

5 SECTION 2(10): Defects in goods

6 SECTION 2(5): Complainant

7 SECTION 2(41): Restrictive trade practices

8 SECTION 34: Pecuniary and territorial jurisdiction of the district forum

9 SECTION 39: Nature and scope of remedies

10 Composition and jurisdiction of national commission

11 Process of filling an appeal

12 Contract of service and contract for service

LESSONS TO BE ROUNDED OFF

 Consumer Protection Act, 2019 provides for protection of the interests of consumers and for the
said purpose, to establish authorities for timely and effective administration and settlement of
consumers’ disputes and for matters connected therewith or incidental thereto.
 Consumer means any person who (i) buys any goods for a consideration which has been paid or
promised or partly paid and partly promised, or under any system of deferred payment and
includes any user of such goods other than the person who buys such goods for consideration
paid or promised or partly paid or partly promised, or under any system of deferred payment,
when such use is made with the approval of such person, but does not include a person who
obtains such goods for resale or for any commercial purpose; or (ii) hires or avails of any service
for a consideration which has been paid or promised or partly paid and partly promised, or
under any system of deferred payment and includes any beneficiary of such service other than
the person who hires or avails of the services for consideration paid or promised, or partly paid
and partly promised, or under any system of deferred payment, when such services are availed of
with the approval of the first mentioned person, but does not include a person who avails of such
service for any commercial purpose.
 The expression “commercial purpose” does not include use by a person of goods bought and used
by him exclusively for the purpose of earning his livelihood, by means of self-employment and
the expressions “buys any goods” and “hires or avails any services” includes offline or online
transactions through electronic means or by teleshopping or direct selling or multi-level
marketing.
 Direct selling means marketing, distribution and sale of goods or provision of services through a
network of sellers, other than through a permanent retail location.
 E-Commerce means buying or selling of goods or services including digital products over digital
or electronic network.

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 Electronic service provider means a person who provides technologies or processes to enable a
product seller to engage in advertising or selling goods or services to a consumer and includes
any online market
place or online auction sites.
 Endorsement in relation to an advertisement, means any message, verbal statement,
demonstration; or depiction of the name, signature, likeness or other identifiable personal
characteristics of an individual; or depiction of the name or seal of any institution or
organisation, which makes the consumer to believe that it reflects the opinion, finding or
experience of the person making such endorsement.
 Express warranty means any material statement, affirmation of fact, promise or description
relating to a product or service warranting that it conforms to such material statement,
affirmation, promise or description and includes any sample or model of a product warranting
that the whole of such product conforms to such sample or model.
 Product liability means the responsibility of a product manufacturer or product seller, of any
product or service, to compensate for any harm caused to a consumer by such defective product
manufactured or sold or by deficiency in services relating thereto.
 Section 10 empowers the Central Government to establish a Central Consumer Protection
Authority to be known as the Central Authority to regulate matters relating to violation of rights
of consumers, unfair trade practices and false or misleading advertisements which are prejudicial
to the interests of public and consumers and to promote, protect and enforce the rights of
consumers as a class.
 District Commission shall have jurisdiction to entertain complaints where the value of the goods
or services paid as consideration does not exceed one crore rupees.
 State Commission shall have jurisdiction to entertain complaints where the value of the goods or
services paid as consideration, exceeds rupees one crore, but does not exceed rupees ten crore.

 National Commission shall have jurisdiction to entertain Complaints where the value of the
goods or services paid as consideration exceeds rupees ten crore.
 Product liability action may be brought by a complainant against a product manufacturer or a
product service provider or a product seller, as the case may be, for any harm caused to him on
account of a defective product.

HIGHLIGHTED PART IN MODULE

Who is a not a consumer?
• A person who obtains;
• goods free of charge
• who avails services free of charge
• who obtains goods for resale or for any commercial purposes
• who avails services for any commercial purposes
• who avails services under contract of service
 As per the provisions of the Act, commercial purpose does not include use by a person of goods
bought and used by him exclusively for the purposes of earning his livelihood by means of self-
employment.
While determining the penalty, regard shall be had to the following, namely:–
(a) the population and the area impacted or affected by such offence;
(b) the frequency and duration of such offence;
(c) the vulnerability of the class of persons likely to be adversely affected by such offence; and
(d) the gross revenue from the sales effected by virtue of such offence.

Vexatious Search
The Director General or any other officer, exercising powers under section 22, who knows that there are
no reasonable grounds for so doing, and yet–
(a) searches, or causes to be searched any premises; or

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(b) seizes any record, register or other document or article, shall, for every such offence, be punished with
imprisonment for a term which may extend to one year, or with fine which may extend to ten thousand
rupees or with both.

Appeal against order of District Commission

There are certain restriction on appeal, unless the person fulfil the following conditions namely-
No appeal by a person, who is required to pay any amount in terms of an order of the District
Commission, shall be entertained by the State Commission unless the appellant has deposited fifty per
cent. of that amount in the manner as may be prescribed.
No appeal shall lie from any order passed under sub-section (1) of section 81 by the District Commission
pursuant to a settlement by mediation under section 80.
According to Section 47(4), a complaint shall be instituted in a State Commission within the limits of
whose jurisdiction,–
(a) the opposite party or each of the opposite parties, where there are more than one, at the time of the
institution of the complaint, ordinarily resides or carries on business or has a branch office or
personally works for gain; or
(b) any of the opposite parties, where there are more than one, at the time of the institution of the
complaint, actually and voluntarily resides, or carries on business or has a branch office or personally
works for gain, provided in such case, the permission of the State Commission is given; or
(c) the cause of action, wholly or in part, arises; or
(d) the complainant resides or personally works for gain.

MEDIATION
A consumer mediation cell shall consist of such persons as may be prescribed. Every consumer mediation
cell shall maintain–
(a) a list of empanelled mediators;
(b) a list of cases handled by the cell;
(c) record of proceeding; and
(d) any other information as may be specified by regulations.

Duty of Mediator to Disclose Certain Fact

According to the Section 77 of the Act, it shall be the duty of the mediator to disclose–
(a) any personal, professional or financial interest in the outcome of the consumer dispute;
(b) the circumstances which may give rise to a justifiable doubt as to his independence or impartiality;
and
(c) such other facts as may be specified by regulations.

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CHAP 13 ESSENTIAL COMMODITIES ACT 1955

PAST PAPER CONCEPTS
1 Evaluate the efficacy of ECA in controlling the procedure, supply and distribution of essential
commodities in the country

2 Tea is food stuff? Does it have ant nutritional value?

3 SECTION 2(a) Essential commodities

4 Power of the CG to control production supply and distribution

5 SECTION 3(4) Who appoint authorised controller? State functions and liabilities

6 SECTION 6A (1) Confiscation of essential commodities seized in contravention of section 3

7 Seizer and Confiscation

8 Explain in brief Seizer and Confiscation

9 Mens rea

LESSIONS TO BE ROUNDED OFF

• Essential Commodities Act, 1955 has been enacted to provide in the interest of the general public
for the

• control of the production, supply and distribution of and trade and commerce in, certain
commodities.

• Section 2A dealing with Essential commodities declaration, etc. defines the “essential commodity”
as to means a commodity specified in the Schedule to the Act.

• Central Government has been empowered to administer the provisions of the Act by issuing
orders/ directions notified in the official gazette and by delegating the authority to State
Governments and administrators of Union Territories.

• An essential commodity which has been seized could be confiscated. Therefore, confiscation is an
action posterior to the seizure of the essential commodity. A commodity that has not been seized
cannot be confiscated. Seizure itself does not imply confiscation.

• Mens rea or guilty mind is an essential ingredient of the offence punishable under the Act.

• Culpable mental state, which includes intention, motive, knowledge of a fact and the belief in a
fact.

• Where an offence is committed by a company, if it is proved that the offence had been committed
with the consent or connivance of or is attributable to any neglect on the part of any Director,
Manager, Secretary or other officer of the company, such a person shall be deemed to be guilty of
that offence, and is liable to be proceeded against and punished accordingly.

• The Act expressly provides that no Civil Court can grant any injunction or make any order for any
other relief against the Central or State Government or any public officer, in respect of any act done,

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or purporting to be done, by such person in his official capacity under the Act, or any Order made
thereunder, until after notice of the application for such injunction or other report is given to the
Government or to such officer.

HIGHLIGHTED PART IN MODULE

Schedule to the Act lists out following commodities:

(1) drugs: The explanation clarifies that for the purposes of this Schedule, “drugs” has the meaning assigned
to it in clause (b) of Section 3 of the Drugs and Cosmetics Act, 1940;
(2) fertilizer, whether inorganic, organic or mixed;
(3) foodstuffs, including edible oilseeds and oils;
(4) hank yarn made wholly from cotton;
(5) petroleum and petroleum products;
(6) raw jute and jute textiles;
(7) (i) seeds of food-crops and seeds of fruits and vegetables;
(ii) seeds of cattle fodder; and
(iii) jute seeds.

IN S. Samuel, MD. Harrisons Malayava v. Union of India, AIR 2004 SC 218, Supreme Court held that Tea
is not foodstuff. Even in a wider sense, foodstuffs will not include tea as tea either in the form of the
leaves or in the form of beverage, does not go into the preparation of food proper to make it more
palatable and digestible.
Tea leaves are not eaten. Tea is a beverage produced by steeping tea leaves or buds of the tea plants in the
boiled water. Such tea is consumed hot or cold for its flavour, taste and its quality as a stimulant. The
stimulating effect is caused by the presence of caffeine therein. Tea neither nourishes the body nor sustains
nor promotes its growth. It does not have any nutritional value. It does not help formation of enzymes nor
does it enable anabolism. Tea or its beverage does not go into the preparation of any foodstuff. In common
parlance, any one who has taken tea would not say that he has taken or eaten food. Thus tea is not a food.

Order: “Order” includes a direction issued thereunder [Section 2(c)].

State Government: “State Government”, in relation to a Union territory means the administrator of such
territory [Section 2(d)].
Sugar: “Sugar” means: (i) any form of sugar containing more than 90 per cent of sucrose, including sugar
candy; (ii) Khandsari sugar or bura sugar or crushedsugar, or any sugar in crystalline or powdered form; or (iii)
sugar in process in vacuum pan sugar factory, or raw sugar [Section 2(e)].

Power to Issue Orders

The Central Government having been vested with power under Section 3(1) can issue order in the following
circumstances providing for regulating or prohibiting the production, supply and distribution of essential
commodities and trade and commerce therein:
(i) when it is necessary or expedient for maintaining or increasing supplies of any essential commodity;
(ii) for securing the equitable distribution and availability of essential commodities at fair price; or
(iii) for securing any essential commodity for the defence of India or the efficient conduct of military
operations.

Explanation.—The expression “value chain participant”, in relation to any agricultural product, means and
includes a set of participants, from production of any agricultural produce in the field to final consumption,
involving processing, packaging, storage, transport and distribution, where at each stage value is added to the
product.

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Explanation I provides that an order made under this clause in relation to foodgrains, edible oilseeds or
edible oils may, having regard to the estimated production, In the concerned area, of such foodgrains, edible
oilseeds and edible oils, fix the quantity to be sold by the producers in such area and may also fix, or provide
for the fixation of such quantity on a graded basis, having regard to the aggregate of the area held by, or
under the cultivation of the producers.
Explanation II provides that “production” for the purposes of this clause includes manufacture of edible oils
and sugar with its grammatical variation and cognate expressions;

Issuance and Service of Order

An order made under Section 3 of the Act shall be issued and served in the manner as provided under
Section 3(5) i.e. in the following manner:
(a) in the case of an order of general nature or affecting a class of persons be notified in the official gazette;
and
(b) in the case of an order directed to a specified individual be served on such individual (i) by delivering or
tendering it to that individual, or (ii) if it cannot be so delivered or tendered, by affixing it on the outer door or
some other conspicuous part of the premises in which that individual lives, and a written report thereof shall
be prepared and witnessed by two persons living in the neighbourhood.

EFFECT OF THE ORDER

The Calcutta High Court had observed that the ultimate effect of Section 6 is that an order under Section 3
will override existing laws, only on the ground that these are orders validly made under Section 3 of the
Act (Ramananda Agrawala v. State AIR 1951 Calcutta 120).
As rightly pointed out by the Patna High Court, Section 6 is a saving section which affords protection to the
orders made under Section 3 of the Act as against the onslaught of any law, merely by reason of inconsistency
(Mohammad Anwar Hussi v. State of Bihar, AIR 1955 Patna 220).

Seizure’
The expression ‘seize’ means to take possession contrary to the wishes of the owner of the property and that
such action is unilateral action of the person seizing. The person from whom anything is seized loses, from
the moment of seizure, the right or power to control or regulate the use of that thing. The dictionary
meaning of the word ‘seize’ means to lay hold of suddenly or forcible, to take hold of, to reach and grasp, to
clutch’. It also means ‘to take possession of or appropriate in order to subject to the force or operation of a
warrant, order of Court or other legal processes. A reference to some provisions of the Codes of Criminal
Procedure shows that the term seizure had been used therein in connection with the taking of actual
physical possession of moveable property.

Confiscation’
‘Confiscation’ according to Wharton’s Law Lexicon, is condemnation and adjudication of property to the
public treasury as of goods seized under the Customs Act. Confiscation, according to Strouds judicial
Dictionary, must be an act done in some way on the part of the Government of the country where it takes
place and in some way beneficial to that Government, though the proceeds may not strictly speaking be
brought into its treasury. In State of Kerala v. Mathai (1961 K.L.T. 169) it was pointed out that confiscation is
not to be considered part of the sentence for an offence but is only a mode by which Courts can dispose of
property which comes before it in criminal trials.

Prosecution of Public Servants (Section 15A)

If any public servant is accused of any offence alleged to have been committed by him while acting, or
purporting to act, in the discharge of his duties, in pursuance of any order made under Section 3, no court can
take cognizance of such an offence except with the previous sanction—(a) of the Central Government in the
case of a person who is employed in connection with the affairs of the Union; and (b) of the State Government
in the case of a person who is employed in connection with the affairs of the State.

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Mens rea (Sections 6A and 7)

In Nathulal v. State of Madhya Pradesh (AIR 1966 S.C. 43) it was held by the Supreme Court that mens rea or
guilty mind is an ingredient of the offence punishable under Section 7 of the Essential Commodities Act, 1955
i.e., an intentional contravention of an order made under Section 3, is an essential ingredient of an offence
under Section7. In other words, if the dealer did believe bona fide that he could store the foodgrains for
instance, without infringing any order under Section 3, there could be no contravention under Section 7.
It was observed by the Supreme Court in this case that mens rea is an essential ingredient of any criminal
offence. Mens rea by necessary implication may be excluded from a statute only where it is absolutely clear
that the implementation of the object of the Statute would otherwise be defeated. The nature of mens rea that
would be implied in a Statute creating an offence depends on the object of the Act and the provisions thereof.
In Hariprasad Rao v. State (AIR 1951 SC 264), it was observed that unless a Statute either clearly or by
necessary implication rules out mens rea as a constituent part of a crime, an accused cannot be found guilty of
an offence against the criminal law unless he has got a guilty mind. Therefore, mens rea is an essential
ingredient of an offence under Section 7 of the Act.

Culpable Mental State

Section 10-C provides for a presumption of culpable mental state, which includes intention, motive, knowledge
of a fact and the belief in a fact. It is now provided thati n any prosecution for an offence under the Act which
requires a culpable mental state on the part of the accused, the Court shall presume the existence of mental
state. Of course, it is open to the accused to prove that he had no such mental state with respect of the act
committed by him.

GRANT OF INJUNCTION BY CIVIL COURTS (SECTION 12B)

It is expressly provided by Section 12B that no Civil Court can grant any injunction or make any order for any
other relief against the Central or State Government or any public officer, in respect of any act done, or
purporting to be done, by such person in his official capacity under the Act, or any Order made thereunder,
until after notice of the application for such injunction or other report is given to the Government or to such
officer.

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CHAP 14 LEGAL METROLOGY ACT 2009

PAST PAPER CONCEPTS
1 International Organisation of Legal Metrology certificate system for measuring instrument

2 Legal metrology

3 Features of legal metrology act

4 Pre-packaged commodity

5 Declaration required to be made by the manufacturer on pre-packaged commodities and refer

penalties

LESSONS TO BE ROUNDED OFF

Consumer Protection Act, 2019 provides for protection of the interests of consumers and for the
said purpose, to establish authorities for timely and effective administration and settlement of
consumers’ disputes and for matters connected therewith or incidental thereto.

• Consumer means any person who (i) buys any goods for a consideration which has been paid or
promised or partly paid and partly promised, or under any system of deferred payment and includes
any user of such goods other than the person who buys such goods for consideration paid or
promised or partly paid or partly promised, or under any system of deferred payment, when such
use is made with the approval of such person, but does not include a person who obtains such goods
for resale or for any commercial purpose; or (ii) hires or avails of any service for a consideration
which has been paid or promised or partly paid and partly promised, or under any system of
deferred payment and includes any beneficiary of such service other than the person who hires or
avails of the services for consideration paid or promised, or partly paid and partly promised, or
under any system of deferred payment, when such services are availed of with the approval of the
first mentioned person, but does not include a person who avails of such service for any commercial
purpose.

• The expression “commercial purpose” does not include use by a person of goods bought and used
by him exclusively for the purpose of earning his livelihood, by means of self-employment and the
expressions “buys any goods” and “hires or avails any services” includes offline or online
transactions through electronic means or by teleshopping or direct selling or multi-level marketing.

• Direct selling means marketing, distribution and sale of goods or provision of services through a
network of sellers, other than through a permanent retail location.

• E-Commerce means buying or selling of goods or services including digital products over digital or
electronic network.

• Electronic service provider means a person who provides technologies or processes to enable a
product seller to engage in advertising or selling goods or services to a consumer and includes any
online market place or online auction sites.

• Endorsement in relation to an advertisement, means any message, verbal statement,

demonstration; or depiction of the name, signature, likeness or other identifiable personal
characteristics of an individual; or depiction of the name or seal of any institution or organisation,

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which makes the consumer to believe that it reflects the opinion, finding or experience of the person
making such endorsement.

• Express warranty means any material statement, affirmation of fact, promise or description
relating to a product or service warranting that it conforms to such material statement, affirmation,
promise or description and includes any sample or model of a product warranting that the whole of
such product conforms to such sample or model.

• Product liability means the responsibility of a product manufacturer or product seller, of any
product or service, to compensate for any harm caused to a consumer by such defective product
manufactured or sold or by deficiency in services relating thereto.

• Section 10 empowers the Central Government to establish a Central Consumer Protection

Authority to be known as the Central Authority to regulate matters relating to violation of rights of
consumers, unfair trade practices and false or misleading advertisements which are prejudicial to
the interests of public and consumers and to promote, protect and enforce the rights of consumers
as a class.

• District Commission shall have jurisdiction to entertain complaints where the value of the goods
or services paid as consideration does not exceed one crore rupees.

• State Commission shall have jurisdiction to entertain complaints where the value of the goods or
services paid as consideration, exceeds rupees one crore, but does not exceed rupees ten crore.

• National Commission shall have jurisdiction to entertain Complaints where the value of the goods
or services paid as consideration exceeds rupees ten crore.

• Product liability action may be brought by a complainant against a product manufacturer or a

product service provider or a product seller, as the case may be, for any harm caused to him on
account of a defective product.

HIGHLIGHTED PART IN MODULE

OIML
According to OIML, Legal Metrology is the entirety of the legislative, administrative and technical
procedures established by, or by reference to public authorities, and implemented on their behalf in order
to specify and to ensure, in a regulatory or contractual manner, the appropriate quality and credibility of
measurements related to official controls, trade, health, safety and the environment.

Appointment and Power of Director, Controller and legal metrology officers

The Director and every legal metrology officer, appointed, shall exercise such powers and discharge such
functions in respect of such local limits as the Central Government may, by notification, specify. Every legal
metrology officer shall exercise powers and discharge duties under the general superintendence, direction
and control of the Director.

Section 14 of the Act, provides that the State Government may, by notification, appoint a Controller of legal
metrology, Additional Controller, Joint Controller, Deputy Controller, Assistant Controller, Inspector and
other employees for the State for exercising the powers and discharging the duties conferred or imposed on
them by or under this Act in relation to intra State trade and commerce.

Declarations on pre-packaged commodities

Section 18 states that no person shall manufacture, pack, sell, import, distribute, deliver, offer, expose or
possess for sale any pre-packaged commodity unless such package is in such standard quantities or number

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and bears thereon such declarations and particulars in such manner as may be prescribed. Any advertisement
mentioning the retail sale price of a pre- packaged commodity shall contain a declaration as to the net
quantity or number of the commodity contained in the package in such form and manner as may be
prescribed.

APPROVAL OF MODAL
It may be noted that the prescribed authority may, if he is satisfied that the model of any weight or
measure which has been approved in a country outside India conforms to the standards established by or
under this Act, approve such model without any test or after such test as he may deem fit.

A person is said to “counterfeit” who causes one thing to resemble another thing, intending by means of
that resemblance to practice deception, or knowing it to be likely that deception will thereby be practiced.

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CHAP 15 TRANSFER OF PROPERTY ACT 1882

PAST PAPER CONCEPT
1 Vested interest & contingent interest

2 Movable property & immovable property

3 Meaning and characteristic of immovable property

4 Spes successionis

5 SECTION 6 Enumerate the property which cannot be transferred

6 Consolidations restraining alienation & condition restraining enjoyment

7 SECTION 13 Property may be transferred in favour of unborn person

8 SECTION 10 Exceptions to the absolute restraint on transfer of property is void

9 SECTION 35 Doctrine of election

10 Doctrine of part-performance embodied in SECTION 53A

11 SECTION 17 Accumulation of income

12 SECTION 52 Rule of lis pendens

13 Lease & License

14 Sale & Contract for sale

15 Sale & Exchange

16 SECTION 127 onerous gifts

17 SECTION 123 Gift of immovable property is accepted but not registered, does it amount to a valid
gift

18 Actionable claim & mere right to sue

19 Mortgage & charge

20 SECTION 81 Marshalling

21 Right of redemption

22 English mortgage & mortgage by conditional

22 Usufructuary mortgage

23 Crystallization of floating charge

24 Puisne mortgage

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LESSONS TO BE ROUNDED OFF

• The law relating to transfer of property is governed by the Transfer of Property Act, 1882. ‘Transfer
of Property’ means an act by which a living person conveys property, in present or future, to one or
more other living persons, or to himself, and one or more other living persons. ‘living person’
includes a company or association or body of individuals, whether incorporated or not.

• Every person who is competent to contract and entitled to transferable property, or authorized to
dispose of property is competent to transfer such property. Property can be transferred either orally
or by writing. Moveable property can be transferred by delivery of possession or by registration. In
the case of tangible immoveable property of the value of one hundred rupees and upwards, or in the
case of a reversion or other intangible thing, transfer can be made only by a registered instrument.
In the case of tangible immoveable property of a value less than one hundred rupees, such transfer
may be made either by a registered instrument or by delivery of the property.

• When property is transferred, the transferee should not be restrained absolutely from alienating
the property. One may give property to another subject to a condition, but the condition should not
be one which absolutely prevents the transferee from alienating the property. A transfer may also
be made subject to a contingency which may or may not occur. This is known as condition
subsequent. Condition subsequent is one which destroys or divests the rights upon the happening or
non-happening of an event.

• Section 35 of the Transfer of Property Act deals with what is called doctrine of election. Election
may be defined as “the choosing between two rights where there is a clear intention that both were
not intended to be enjoyed”. The foundation of doctrine of election is that a person taking the
benefit of an instrument must also bear the burden, and he must not take under and against the
same instrument.

• Where, with the consent, express of implied, of the persons interested in immoveable property, a
person is the ostensible owner of such property and transfers the same for consideration, the
transfer shall not be voidable on the ground that the transferor was not authorized to make it,
provided that the transferee, after taking reasonable care to ascertain that the transferor had power
to make the transfer, has acted in good faith. This is called doctrine of Holding Out.

• Doctrine of Feeding the Grant by Estoppel means where, a person fraudulently or erroneously
represents that he is authorized to transfer certain immoveable property and professes to transfer
such property for consideration, such transfer shall, at the option of the transferee, operate on any
interest which the transferor may acquire in such property at any time during which the contract of
transfer subsists.

• Where a person transfers his property so that his creditors shall not have anything out of the
property, the transfer is called a fraudulent transfer. A debtor in order to defeat or delay the rights
of a creditor, may transfer his property to some person, who may be his relative or a friend. The law
does not allow this.

• The Act does not allow accumulation of income from the land for an unlimited period without the
income-being enjoyed by owner of the property. The law allows accumulation of income for a
certain period only. The period for which such accumulation is valid is: (a) the life of the transferor,
or (b) eighteen years from the date of transfer. Any direction to accumulate the income beyond the
period mentioned above is void. However, this is subject to certain exceptions.

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• Lis pendens means a pending suit, action, petition or the like. Section 52 of the T.P. Act
incorporates the doctrine of Lis pendens. It states that during the pendency of a suit in a court of
law, property which is subject to a litigation cannot be transferred.

• The Act expressly provides for special types of transfers such as sale, exchange, gift, mortgage and
lease. In a sale, exchange and gift, there is a transfer of the ownership of property but mortgage is a
transfer of an interest in specific immovable property and lease is a transfer of the right to enjoy
immoveable property.

• Actionable claims are claims, to unsecured debts. If a debt is secured by the mortgage of
immoveable property it is not an actionable claim, because the section clearly excludes such a debt.

• Charge under the Act has been defined as “where immoveable property of one person is by the act
of parties or operation of law made security for the payment of money to another, and the
transaction does not amount to a mortgage, the latter person is said to have a charge on the
property”.

• As is evident from the above definition, a charge comes into existence either by the act of parties
or by operation of law. A charge may be floating as well as fixed. A fixed charge is a charge on
specific property but a floating charge is an equitable charge on the assets for time being of a going
concern. It is peculiar to companies which are able to borrow money without any interference with
their assets so long as they are going concerns.

HIGHLIGHTED PART IN MODULE

Distinction between a vested and a contingent interest: The following are the principal points of
distinction between a vested and a contingent interest:
1. When an interest is vested the transfer is complete. It creates an immediate proprietory interest in the
property though the enjoyment may be postponed to a future date. A contingent interest on the other
hand is dependant upon the fulfilment of some conditions which may or may not happen. In other
words, in case of vested interest, the owner’s title is already prefect; in case of a contingent interest,
the title is as yet imperfect but may become perfect on the fulfilment of a stipulated condition.
2. A vested interest takes effect from the date of transfer. A contingent interest in order to become vested
is conditioned by a contingency which may not occur.
3. A vested interest cannot be defeated by the death of the transferee before he obtains possession. A
contingent interest may fail in case of the death of transferee before the fulfilment of condition.
4. Since vested interest is not circumscribed by any limitation which derogates from the completeness of
the grant, it logically follows that a vested interest is transferable as well as heritable. If, therefore, a
transferee of the vested interest dies before actual enjoyment, it will devolve on his legal heirs. A contingent
interest, on the other hand, cannot be inherited though it may be transferred coupled with limitation
regarding fulfilment of a condition.

Distinction between moveable and immoveable property

The distinction between moveable and immoveable property was explained in the case of Sukry Kurdepa v.
Goondakull, (1872) 6 Mad. H.C. 71, by Holloway J. as moveability may be defined to be a capacity in a thing of
suffering alteration. Immoveablity for such alteration e.g., a piece of land in all circumstances is immoveable. If
a thing cannot change its place without injury to the quality it is immoveable. Certain things e.g. trees attached
to the ground are so long as they are so attached, immoveable when the severance has been effected they
become moveable.

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THE FOLLOEING HAVE BEEN RECOGNISED AS IMMOVEABLE PROPERTY

RULES RELATING TO TRANSFER OF PROPERTY (WHETHER MOVEABLE OR IMMOVEABLE)

The first point to note is that transfer inter vivos (i.e., between living persons) alone is contemplated by the
Act. A transfer by means of a will is not a transfer according to the Act, because it is not a transfer between
two living persons. Section 5 also says that the transfer may be “in present or in future”. The words in present
or in future qualify the words ‘conveys’, and not the word ‘property’. A transfer of property not in existence
operates as a contract to be performed in future which may be specially enforced as soon as the property
comes into existence (Jugalkishore v. Ram Cotton Company, (1955) I SCR 1369).

FORMALITIES OF TRANSFER
The tangible property means a property which can be touched physically and hence, capable of physical
dealing.
The intangible property means something in abstract, either capable of being touched or perceived and yet
standing in relation to a certain thing.
‘Reversion’ means the bundle of rights remaining with the lessor after the execution of a lease of a certain
immoveable property.

ATTESTATION
Attestation is valid and complete when two witnesses sign the instrument. According to the definition given
in the Transfer of Property Act (Section 3), the following essentials are required for a valid attestation:
(a) There must be at least two or more witnesses;
(b) Each witness must see (i) the executant’s sign or affix his mark to the instrument, or (ii) some other
person sign the instrument in the presence and by the direction of the executant, or (iii) receive from
the executant a personal acknowledgement of his signature or mark or of the signature of such other
person; and
(c) Each witness must sign the instrument, (i.e. document), in the presence of the executant.

The following conditions are necessary for the application of Section 41:
The transferor is the ostensible owner He is so by the consent express or implied, of the real owner
The transfer is for consideration The transferee has acted in good faith taking reasonable care to
ascertain that the transferor had power to transfer

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Esentials: In order to invoke this section, the transferee must prove that:

The rule did not exist on the statute book before 1929. Section 53A, was inserted by an amendment to the Act
in 1929. Followings are the essential conditions for the operation of the doctrine of part-performance
according to Section 53A.
1. There must be a contract to transfer immoveable property.
2. It must be for consideration.
3. The contract should be in writing and signed by the transferor himself or on his behalf.
4. The terms necessary to constitute the transfer must be ascertainable with reasonable certainty from the
contract itself.
5. The transferee should have taken the possession of the property in part performance of the contract. In case
he is already in possession, he must have continued in possession in part performance of the contract
and must have done something in furtherance of the contract.
6. The transferee must have fulfilled or be ready to fulfill his part of the obligation under the contract.

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ESSENTIAL

2. Exchange
Sections 118 to 121 of the Transfer of Property Act, 1882 deal with “Exchanges”.
When two persons mutually transfer the ownership of one thing for the ownership of another, neither thing
or both things being money only, the transaction is called an “exchange”.
Essentials
(i) The person making the exchange must be competent to contract.
(ii) There must be mutual consent.
(iii) There is a mutual transfer of ownership though things and interests may not be identical.
(iv) Neither party must have paid money only.
This Section applies to both moveable and immoveable property.
3. Gift
Essentials
1. There must be a transfer of ownership.
2. The subject matter of gift must be a certain existing moveable or immoveable property.
3. The transfer must be made voluntarily.
4. It must be done without consideration.
5. There must be acceptance by or on behalf of the donee, and such acceptance must be made during the
lifetime of the donor and while he is capable of giving.
4. Leases
(i) Meaning and nature of lease: According to Section 105, a “lease” of immoveable property is a transfer of
a right to enjoy property. Since it is a transfer to enjoy and use the property, possession is always given to
the transferee. The lease of immoveable property must be made for a certain period. For example, you
may give a lease of property for a definite number of years, or for life, or even permanently.
Essentials
The essentials of a lease are:
(1) It is a transfer of a right to enjoy immoveable property;
(2) Such transfer is for a certain time or perpetuity;
(3) It is made for consideration which is either premium or rent or both;

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(4) The transfer must be accepted by the transferee.

6. Mortgages
Definition and nature of mortgage:
According to Section 58 of the Transfer of Property Act, a “mortgage” is the transfer of an interest in specific
immoveable property for the purpose of securing the payment of money advanced or to be advanced by
way of loan, an existing or future debt or the performance of an engagement which may give rise to
pecuniary liability.
The transferor is called a mortgagor, the transferee a mortgagee. The principal money and interest the
payment of which is secured for the time being are called the mortgage money and the instrument by which
the transfer is effected is called a mortgage deed.

(c) Usufructuary mortgage

Thus, a usufructuary mortgage has the following characteristics:
1. Possession of property must be delivered to the mortgagee;
2. There is no personal liability on the part of the mortgagor to pay;
3. The mortgagee is entitled to rents and profits in lieu of interest or principal or both; and
4. The mortgagee however is not entitled to foreclose the mortgagee or to sue for sale

English mortgage
The essential features of an English mortgage are as under:
1. The mortgagor binds himself to repay the mortgage money on a certain day. In other words, there
should be a personal undertaking to pay.
2. The mortgaged property is absolutely transferred to the mortgagee.
3. Such absolute transfer is subject to a proviso that the mortgagee will reconvey the property to the
mortgagor upon payment by him of the mortgage money on the fixed day.

Charges
A floating charge has the following characteristics:
1. It is a charge on class of assets both present and future.
2. The class of assets charged is one which in the ordinary course of business would be changing from time
to time.
3. It is contemplated by the charge that until some future step is taken by those who are interested in the
charge the company may carry on its business in the ordinary way, i.e., it may use its assets charged in the
ordinary course of its business. (Per Roman L.J. in Reyork Shive Wool Combers Associated Limited, (1903) 2 Ch.
284) A floating charge is created by debentures on the company’s undertaking or its estate, property and
effects. It is not necessary that the charge should be on all company’s assets. Thus a mortgage of a cinema and
of the chattels used in the cinema premises was held to be a floating charge as to the chattles (National
Provisional Bank of England Limited v. Charteb Electric Theatres Limited, (1916) Ch. 132). Similarly, a floating
charge was created by a mortgage of book and other debts which shall become due during the continuance of
this security (Reyork Shive Wool Combers Association, Supra).

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CHAP 16 REAL ESTATE (REGULATION & DEVELOPMENT) ACT

PAST PAPER CONCEPTS
1 Salient features RERA

2 Functions of RERA

• Parliament enacted the Real Estate (Regulation and Development) Act, 2016 which aims at
protecting the rights and interests of consumers and promotion of uniformity and standardization of
business practices and transactions in the real estate sector. It attempts to balance the interests of
consumers and promoters by imposing certain responsibilities on both. It seeks to establish
symmetry of information between the promoter and purchaser, transparency of contractual
conditions, set minimum standards of accountability and a fast-track dispute resolution mechanism.

• Carpet area means the net usable floor area of an apartment, excluding the area covered by the
external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open
terrace area, but includes the area covered by the internal partition walls of the apartment.

• Real estate project means the development of a building or a building consisting of apartments, or
converting an existing building or a part thereof into apartments, or the development of land into
plots or apartment, as the case may be, for the purpose of selling all or some of the said apartments
or plots or building, as the case may be, and includes the common areas, the development works, all
improvements and structures thereon, and all easement, rights and appurtenances belonging
thereto.

• A promoter shall not advertise, market, book, sell or offer for sale, or invite persons to purchase in
any manner any plot, apartment or building, as the case may be, in any real estate project or part of
it, in any planning area, without registering the real estate project with the Real Estate Regulatory
Authority established.

• The appropriate Government shall establish an Authority to be known as the Real Estate
Regulatory Authority to exercise the powers conferred on it and to perform the functions assigned
to it under the Act.

•The Central Advisory Council is required to advise the Central Government on matters relating to
implementation of the Act, questions of policy, protection of consumer interest, foster growth and
development of the real estate sector, and other matters as may be assigned to it by the Central
Government.

• Real Estate Appellate Tribunal (REAT) is to be formed by appropriate government to ensure faster
resolution of disputes. Parties aggrieved by the RERA order can appeal before REAT and REAT has to
adjudicate such cases within 60 days. Civil Courts have been prevented from exercising jurisdiction
on such matters.

• As per Section 56 of the Act, a Company Secretary holding certificate of practice can appear
before Appellate Tribunal or a Regulatory Authority or Adjudicating Officer on behalf of applicant or
appellant as the case may be.

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LESSONS TO BE ROUNDED OFF

Responsibilities of the Appropriate Government

(a) As per section 84 of the Act the appropriate Government is required to notify Rules for the
implementation of the Act.
(b) As per section 20 of the Act the appropriate Government is required to establish the Regulatory
Authority.
(c) As per section 20 of the Act the appropriate Government is required to appoint Regulatory Authority.
(d) As per section 43 of the Act the appropriate Government is required to establish the Appellate Tribunal.
(e) The Chairperson and Members of the Regulatory Authority and the Members of the Appellate Tribunal
are required to be appointed based on recommendations of a Selection Committee, thus the
appropriate Government is required to constitute the Selection Committee.
(f) As per section 28 and section 51 the appropriate Government is required to appoint officers and other
employees of Regulatory Authority and the Appellate Tribunal.
(g) As per section 41 the Central Government (i.e. the Ministry of HUPA) is required to establish the Central
Advisory Council.
(h) As per section 75 the appropriate Government is required to constitute a ‘Real Estate Regulatory Fund’.

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CHAP 17 BENAMI TRANSACTION (PROHIBITION) ACT

1988
PAST PAPER CONCEPTS
1 Salient features

2 SECTION 26(1): Adjudicating authority to furnish documents, evidence

SECTION 26(2): Serving of notice where benami property is held jointly

SECTION 26(3): Orders by adjudicating authority

SECTION 26(4): Procedure to be adopted by adjudicating authority when only some part of the
property is benami property

SECTION 26(5): Power of adjudicating authority to attach other property even though no
reference has been made by initiating officers

SECTION 26(6): Power of adjudicating authority to remove a name or add the name of any person
in relation case before him

SECTION 26(7): Time limit for passing order

SECTION 26(8): Appearance before adjudicating authority

LESSONS TO BE ROUNDED OFF

• The Benami Transactions (Prohibition) Act, 1988 prohibits benami transactions and consequently
prevent circumvention of law through unfair practices. It empowers the Government to confiscate
benami property by following due procedure. It therefore promotes equity across all citizens.
However, those who declare their benami properties under income declaration scheme will get
immunity under the Benami Act.

• The Benami Transactions (Prohibition) Amendment Act, 2016received the assent of the President
on the 10th August, 2016 and came into effect from1st November, 2016.

• Where any person enters into any benami transaction on and after the date of commencement of
the Benami Transactions (Prohibition) Amendment Act, 2016, shall be punishable in accordance with
the provisions contained in Chapter VII.

• Any property, which is subject matter of benami transaction, shall be liable to be confiscated by
the Central Government.

HIGHLIGHTED PART IN MODULE

The Salient Features of the Benami Transactions (Prohibition) Act, 1988 are as
under:
It defines a benami transaction and benami property and also provides for exclusions and
transactions which shall not be construed benami
It provides the consequences of entering into a prohibited benami transactions

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It lays down the procedure for determination and related penal consequences in the case of a
prohibited benami transaction
It also provides that the powers of civil court shall be available to authorities under the said Act
Miscellaneous Provisions have been provided for service of notice, protection of action taken in
good faith, etc.
Central Government empowers to make rules for the implementation of the provisions of the Act
It enables the Central Government in consultation with the Chief Justice of the High Court to
designate one or more Courts of Session as Special Court or Special Courts for the purpose of the
Act
It provides penalty for entering into benami transactions and for furnishing any false documents
in any proceeding under the Act
It provides for transfer of any suit or proceeding in respect of a benami transaction pending in
any court (other than High Court) or Tribunal or before any authority to the Appellate Tribunal

For the removal of doubts, hereby declared that benami transaction shall not include any transaction
involving the allowing of possession of any property to be taken or retained in part performance of a
contract referred to in section 53A of the Transfer of Property Act, 1882, if, under any law for the time being
in force,—
(i) consideration for such property has been provided by the person to whom possession of property has
been allowed but the person who has granted possession thereof continues to hold ownership of
such property;
(ii) stamp duty on such transaction or arrangement has been paid; and
(iii) the contract has been registered.

Sub-section (4) of this section provides that the Initiating Officer, after making such inquires and calling
for such reports or evidence as he deems fit and taking into account all relevant materials, shall, within a
period of ninety days from the date of issue of notice under sub-section (1), -
(a) where the provisional attachment has been made under sub-section (3), -
(i) pass an order continuing the provisional attachment of the property with the prior approval of
the Approving Authority, till the passing of the order by the Adjudicating Authority under sub-
section (3) of section 26; or (ii) revoke the provisional attachment of the property with the
prior approval of the Approving Authority;
(b) where provisional attachment has not been made under sub-section (3), -
(i) pass an order provisionally attaching the property with the prior approval of the Approving
Authority, till the passing of the order made by the Adjudicating Authority under sub-clause
(3) of section 26; or
(ii) decide not to attach the property as specified in the notice, with the prior approval of the Approving
Authority.

Sub-section (2) of this section provides that any notice referred to above may be addressed---
(i) in case of an individual, to such individual ;
(ii) in the case of a firm, to the managing partner or the manager of the firm;
(iii) in the case of a Hindu undivided family, to karta or any member of such family;
(iv) in the case of a company, to the principal officer thereof;
(v) in the case of any other association or body of individuals, to the principal officer or any member
thereof;
(vi) in the case of any other person (not being an individual), to the person who manages or controls his affairs.

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Sub-section (2) of this section provides that the Administrator shall, -

(a) by notice in writing, order within seven days of the date of the service of notice any person, who may
be in possession of the benami property, to surrender or deliver possession thereof to the
Administrator or any other person duly authorised in writing by him in this behalf;
(b) in the event of non-compliance of the order referred to in clause (a), or if in his opinion, taking over of
immediate possession is warranted, for the purpose of forcibly taking over possession, requisition the service
of any police officer to assist him and it shall be the duty such officer to comply with the requisition.

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CHAP 18 PREVENTION OF MONEY LAUNDERING ACT 2002

PAST PAPER CONCEPTS
1 SECTION 5: Attachment of property involve in money laundering

2 SECOND SCHEDULE: Execution of attached

3 SECTION 12: Reporting entity to maintain records

4 SECTION 13: To furnish information whenever called upon by director

5 SECTION 14: If the Bank, financial institute and intermediary supply the information, no civil
proceedings can be taken against them for furnishing information to authority

6 SECTION 15: Procedure and manner of furnishing information by reporting entities

7 SECTION 45: Offence to be cognizable and non-bailable

8 KYC guidelines

9 Certain powers of the CG [SECTION 51A of the unlawful activities (prevention) act 1967

LESSONS TO BE ROUNDED OFF

• Money laundering is the processing of criminal proceeds to disguise its illegal origin.

• The process of money laundering can be classified into three stages, namely, placement, layering
and integration.

• The Prevention of Money-laundering Act, 2002 was enacted to prevent money laundering and to
provide for confiscation of property derived from, or involved in, money laundering and for matters
connected therewith or incidental thereto.

• The Act also addresses the international obligations under the Political Declaration and Global
Programme of Action adopted by the General Assembly of the United Nations to prevent money
laundering.

• The Act contains provisions pertaining to offences and punishment for money laundering,
attachment, adjudication and confiscation, obligations of banking companies, financial institutions
and intermediaries, Summons, Searches and Seizures etc.

• The Act states that whoever, acquires, owns, possesses, or transfers any proceeds of crime or
knowingly enters into any transaction which is related to proceeds of crime directly or indirectly or
conceals or aids in the concealment of the proceeds of crime, shall be guilty of offence of money
laundering.

• Every banking company, financial institution and intermediary is required to maintain a record of
all transactions, the nature and value of which may be prescribed, whether such transactions
comprise of a single transaction or a series of transactions legally connected to each other, and
when such series of transactions take place within a month.

• The objective of Know Your Customer (KYC) Norms/Anti-Money Laundering (AML) Measures/
Combating of Financing of Terrorism (CFT) guidelines is to prevent banks from being used,

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intentionally or unintentionally, by criminal elements for money laundering or terrorist financing

activities. KYC procedures also enable banks to know/understand their customers and their financial
dealings better which in turn help them manage their risks prudently.

HIGHLIGHTED PART IN MODULE

What is the connection of money laundering with society at large?
The possible social and political costs of money laundering, if left unchecked or dealt with ineffectively, are
serious. Organised crime can infiltrate financial institutions, acquire control of large sectors of the economy
through investment, or offer bribes to public officials and indeed governments.
The economic and political influence of criminal organisations can weaken the social fabric, collective ethical
standards, and ultimately the democratic institutions of society.
In countries transitioning to democratic systems, this criminal influence can undermine the transition. Most
fundamentally, money laundering is inextricably linked to the underlying criminal activity that generated it.
Laundering enables criminal activity to continue.

What influence does money laundering have on economic development?

Launderers are continuously looking for new routes for laundering their funds. Economies with growing or
developing financial centres, but inadequate controls are particularly vulnerable as established financial
centre countries implement comprehensive anti-money laundering regimes.
Differences between national anti-money laundering systems will be exploited by launderers, who tend to
move their networks to countries and financial systems with weak or ineffective countermeasures.
Some might argue that developing economies cannot afford to be too selective about the sources of capital
they attract. But postponing action is dangerous. The more it is deferred, the more entrenched organised crime
can become.
As with the damaged integrity of an individual financial institution, there is a damping effect on foreign direct
investment when a country’s commercial and financial sectors are perceived to be subject to the control and
influence of organised crime. Fighting money laundering and terrorist financing is therefore a part of creating a
business friendly environment which is a precondition for lasting economic development.

Section 8(3) provides that where the Adjudicating Authority decides under sub-section (2) that any
property is involved in money-laundering, he shall, by an order in writing, confirm the attachment of the
property made under sub-section (1) of section 5 or retention of property or record seized or frozen under
section 17 or section 18 and record a finding to that effect, whereupon such attachment or retention or
freezing of the seized or frozen property or record shall—
(a) continue during investigation for a period not exceeding three hundred and sixty-five days or the
pendency of the proceedings relating to any offence under this Act before a court or under the
corresponding law of any other country, before the competent court of criminal jurisdiction outside
India, as the case may be; and
(b) become final after an order of confiscation is passed under sub-section (5) or sub-section (7) of section 8 or
section 58B or sub-section (2A) of section 60 by the Special Court.

Section 8(8) provides that where a property stands confiscated to the Central Government under sub-section
(5), the Special Court, in such manner as may be prescribed, may also direct the Central Government to restore
such confiscated property or part thereof of a claimant with a legitimate interest in the property, who may
have suffered a quantifiable loss as a result of the offence of money laundering: Provided that the Special
Court shall not consider such claim unless it is satisfied that the claimant has acted in good faith and has
suffered the loss despite having taken all reasonable precautions and is not involved in the offence of money
laundering. Provided further that the Special Court may, if it thinks fit, consider the claim of the claimant for
the purposes of restoration of such properties during the trial of the case in such manner as may be
prescribed.

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Obligation of Banking Companies, Financial Institutions and Intermediaries

Chapter IV of the Act deals with obligations of Banking companies, financial institutions and intermediaries.
According to Section 12(1) requires every reporting entity shall—
(a) maintain a record of all transactions, including information relating to transactions covered under
clause (b), in such manner as to enable it to reconstruct individual transactions;
(b) furnish to the Director within such time as may be prescribed, information relating to such transactions,
whether attempted or executed, the nature and value of which may be prescribed.
(c) maintain record of documents evidencing identity of its clients and beneficial owners as well as account
files and business correspondence relating to its clients.

The objective of KYC Norms/ AML Measures/ CFT Guidelines

The objective of Know Your Customer (KYC) Norms/Anti-Money Laundering (AML) Measures/Combating of
Financing of Terrorism (CFT) guidelines is to prevent banks from being used, intentionally or unintentionally, by
criminal elements for money laundering or terrorist financing activities. KYC procedures also enable banks to
know/understand their customers and their financial dealings better which in turn help them manage their
risks prudently.

Information to be preserved
Banks are required to maintain all necessary information in respect of transactions to permit
reconstruction of individual transaction, including the following information:
(a) the nature of the transactions;
(b) the amount of the transaction and the currency in which it was denominated;
(c) the date on which the transaction was conducted; and
(d) the parties to the transaction

Reporting to Financial Intelligence Unit – India

In terms of the PMLA Rules, banks are required to report information relating to cash and suspicious
transactions and all transactions involving receipts by non-profit organisations of value more than rupees
ten lakh or its equivalent in foreign currency to the Director, Financial Intelligence Unit-India (FIU-IND) in
respect of transactions.

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CHAP 19 CONTRACT ACT 1872

PAST PAPER CONCEPTS
1) SECTION 10: Agreements are contracts

2) SECTION 2(a): Offer

3) SECTION 25: No consideration, no contract

Privity of contract

Contract cannot confer right or impose obligation arising under it on any person or agent except
the parties to the contract

4) SECTION 11 Competent to contract

5) SECTION 20: Both the parties to an agreement are under a mistake as to a matter of fact essential
to the agreement, the agreement is void

6) SECTION 24: Agreement is restraint of trade

7) SECTION 29: Agreement, the meaning of which is not certain, are void

8) SECTION 11(2): Restriction on existing partner

9) SECTION 30: Agreements by way of wager, void

10) SECTION 31: Contingent contract

11) SECTION 32: Enforcement of contract enforcing on an event happening

12) SECTION 33: Enforcement of contract enforcing on an event not happening

13) SECTION 35: When event on which contract is contingent to be deemed impossible, if it is the
conduct of a living person

14) SECTION 36: Agreements contingent on impossible events, void

15) SECTION 36(2) & SECTION 53 of PARTNERSHIP ACT: Restriction on outgoing partner

16) SECTION 56: Agreement to do impossible acts

17) SECTION 71: Finder of goods

18) SECTION 128: Surety’s liability

19) SECTION 129: Contingent guarantee

20) SECTION 130: Revocation of a continuing guarantee

21) SECTION 178: Pledge by mercantile agent

22) SECTION 178A: Pledge by person in possession under voidable contract

23) SECTION 179: Pledge where pawnor has limited interest

24) SECTION 191: Sub-agent

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25) SECTION 192: Representation of principal by sub-agent duly appointed

26) SECTION 193: Agents responsible for sub-agent appointed without authority

27) SECTION 202: When the agency is coupled with interest

28) SECTION 210: Termination sub agents authority

29) SECTION 212: Skills and diligence required from agent

LESSONS TO BE ROUNDED OFF

A contract is an agreement enforceable at law, made between two or more persons, by which rights
are acquired by one or more to acts or forbearances on the part of the other or others.

• Every promise and every set of promises, forming the consideration for each other, is an
agreement.

• All agreements are contracts if they are made by the free consent of parties competent to
contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared
to be void.

• In flaw contract There may be the circumstances under which a contract made under these rules
may still be bad, because there is a flaw, vice or error somewhere. As a result of such a flaw, the
apparent agreement is not a real agreement.

• Section 27 of the Indian Contract Act states that every agreement by which any one is restrained
from exercising a lawful profession, trade or business of any kind, is, to that extent, void.

• The literal meaning of the word “wager” is a “bet”. Wagering agreements are nothing but ordinary
betting agreements.

• An agreement not enforceable by law is void ab initio.

• A contingent contract is a contract to do or not to do something, if some event collateral to such

contract, does or does not happen. Contract of insurance and contracts of indemnity and guarantee
are popular instances of contingent contracts.

• A quasi-contract rests on the equitable principle that a person shall not be allowed to enrich
himself unjustly at the expense of another. In truth, it is not a contract at all. It is an obligation which
the law creates, in the absence of any agreement, when any person is in the possession of one
persons money, or its equivalent, under such circumstances that in equity and good conscience he
ought not to retain it, and which in justice and fairness belongs to another. It is the duty and not an
agreement or intention which defines it.

• A contract is said to be discharged or terminated when the rights and obligations arising out of a
contract are extinguished.

• Where a contract is broken, the injured party has several courses of action open to him. The
appropriate remedy in any case will depend upon the subject-matter of the contract and the nature
of the breach.

• A contract of indemnity is a contract by which one party promises to save the other party from
loss caused to him by the conduct of the promisor himself, or by the conduct of any other person.

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• A bailment is a transaction whereby one person delivers goods to another person for some
purpose, upon a contract that they are, when the purpose is accomplished to be returned or
otherwise disposed of according to the directions of the person delivering them.

HIGHLIGHTED PART IN MODULE

Three consequences follow from the above discussion:
(i) To constitute a contract, the parties must intend to create legal relationship.
(ii) The law of contract is the law of those agreements which create obligations, and those obligations which
have their source in agreement.
(iii) Agreement is the genus of which contract is the specie and, therefore, all contracts are agreements but all
agreements are not contracts.

The essential elements of a valid contract are:

(i) An offer or proposal by one party and acceptance of that offer by another party resulting in an agreement
– consensus-ad-idem.
(ii) An intention to create legal relations or an intent to have legal consequences.
(iii) The agreement is supported by a lawful consideration.
(iv) The parties to the contract are legally capable of contracting.
(v) Genuine consent between the parties.
(vi) The object and consideration of the contract is legal and is not opposed to public policy.
(vii) The terms of the contract are certain.
(viii) The agreement is capable of being performed i.e., it is not impossible of being performed.

Lapse of Offer
Section 6 deals with various modes of lapse of an offer. It states that an offer lapses if—
(a) it is not accepted within the specified time (if any) or after a reasonable time, if none is specified.
(b) it is not accepted in the mode prescribed or if no mode is prescribed in some usual and reasonable
manner, e.g., by sending a letter by mail when early reply was requested;
(c) the offeree rejects it by distinct refusal to accept it;
(d) either the offeror or the offeree dies before acceptance;
(e) the acceptor fails to fulfill a condition precedent to an acceptance.
(f) the offeree makes a counter offer, it amounts to rejection of the offer and an offer by the offeree may be
accepted or rejected by the offeror.

But in order to avoid a contract on the ground of misrepresentation, it is necessary to prove that:
(i) there was a representation or assertion,
(ii) such assertion induced the party aggrieved to enter into the contract.
(iii) the assertion related to a matter of fact ( and not of law as ignorance of law is no excuse).
(iv) the statement was not a mere opinion or hearsay, or commendation (i.e., reasonable praise). For
example an advertisement saying, “washes whiter than the whitest”.
(v) the statement which has become or turned out to be untrue, was made with an honest belief in its truth.

Difference between Fraud and Innocent Misrepresentation

1. Fraud implies an intent to deceive, which is lacking if it is innocent misrepresentation.
2. In case of misrepresentation and fraudulent silence, the defendant can take a good plea that the plaintiff
had the means of discovering the truth with ordinary diligence. This argument is not available if there
is fraud (Section 19- exception).
3. In misrepresentation the plaintiff can avoid or rescind the contract. In fraud, the plaintiff can claim
damages as well.
4. If there is fraud, it may lead to prosecution for an offence of cheating under the Indian Penal Code.

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Section 23 of the Indian Contract Act, 1872 provides that the consideration or object of an
agreement is
(i) lawful unless it is forbidden by law; or
(ii) it is of such nature that if permitted it would defeat the provisions of law; or
(iii) is fraudulent; or
(iv) involves or implies injury to the person or property of another; or
(v) the Court regards it an immoral or opposed to public policy.

Exception to General Rule of no Recovery of Money or Property

In the following cases, a party to an illegal agreement may sue to recover money paid or property
transferred:
(a) Where the transfer is not in pari delicto (equally guilty) with the defendant, i.e. the transferee. For
example, where A is induced to enter into an illegal agreement by the fraud of B, A may recover the
money paid if he did not know that the contract was illegal.
(b) If the plaintiff can frame a cause of action entirely dependent of the contract.
(c) Where a substantial part of the illegal transaction has not been carried out and the plaintiff is truly and
genuinely repentant. (Bigos v. Bonstead(1951), All E.R. 92).

Quasi-Contracts or Implied Contracts under the Indian Contract Act

The following types of quasi-contracts have been dealt within the Indian Contract Act—
(a) Necessaries supplied to person incapable of contracting or to anyone whom he is illegally bound to
support - Section 68.
(b) Suit for money had and received - Section 69 and 72.
(c) Quantum Meruit
(d) Obligations of a finder of goods - Section 71.
(e) Obligation of person enjoying benefit of a non-gratuitous act - Section 70

Rights of Indemnity Holder when Sued

Under Section 125, the promisee in a contract of indemnity, acting within the scope of his authority, is
entitled to recover from the promisor—
1. all damages which he may be compelled to pay in any suit in respect of any matter to which the promise
to indemnify applies;
2. all costs which he may be compelled to pay in any such suit if, in bringing or defending it, he did not
contravene the orders of the promisor, and acted as if it would have been prudent for him to act in
the absence of any contract of indemnity, or if the promisor authorised him to bring or defend the
suit; and
3. all sums which he may have paid under the terms of any compromise of any such suit, if the compromise
was not contrary to the orders of the promisor, and was one which it would have been prudent for the
promise to make in the absence of any contract of indemnity, or if the promisor authorised him to
compromise the suit.

Duties of bailor
The bailor has the following duties:
(a) The bailor must disclose all the known faults in the goods; and if he fails to do that, he will be liable for
any damage resulting directly from the faults (Section 150). For example, A delivers to B, a carrier,
some explosive in a case, but does not warn B. The case is handled without extraordinary care
necessary for such articles and explodes. A is liable for all the resulting damage to men and other
goods.
In the case of bailment for hire, a still greater responsibility is placed on the bailor. He will be liable even if
he did not know of the defects (Section 150). A hires a carriage of B. The carriage is unsafe though B
does not know this. A is injured. B is responsible to A for the injury.
(B) It is the duty of the bailor to pay any extraordinary expenses incurred by the bailee. For example, if a
horse is lent for a journey, the expense of feeding the house would, of course, subject to any special
agreement be borne by the bailee. If however the horse becomes ill and expenses have been incurred
on its treatment, the bailor shall have to pay these expenses (Section 158).

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(C) The bailor is bound to indemnify the bailee for any cost or costs which the bailee may incur because of the
defective title of the bailor of the goods bailed (Section 164).

Creation of Agency
Ratification is effective only if the following conditions are satisfied –
(a) The agent must expressly contract as agent for a principal who is in existence and competent to contract.
(b) The principal must be competent to contract not only at the time the agent acted, but also when he
ratified the agents act.
(c) The principal at the time of ratification has full knowledge of the material facts, and must ratify the
whole contract, within a reasonable time.
(d) Ratification cannot be made so as to subject a third-party to damages, or terminate any right or interest
of a third person.
(e) Only lawful acts can be ratified.

Responsibilities of Principal to Third-parties

Principal Liable for Agent’s Torts (Section 238)

If an agent commits a tort or other wrong (e.g., misrepresentation or fraud) during his agency,
whilst acting within the scope of his actual or apparent authority, the principal is liable. But the
agent is also personally liable, and he may be sued also. The principal is liable even if the tort is
committed exclusively for the benefit of the agent and against the interests of the principal.

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CHAP 20 SPECIFIC RELEIF ACT 1963

PAST PAPER CONCEPTS
1 SECTION 4 Specific relief granted only for enforcing individual ‘Civil Rights’ and for enforcing ‘Penal
Laws’

2 SECTION 6 Suit by person dispossessed of immovable property

3 SECTION 14 Contracts not specifically enforceable

4 SECTION 15 Who may obtain specific performance

5 SECTION 11(2) A contract made by a trustee in excess of his power or in breach of trust cannot be
specifically enforced

6 SECTION 12(3) Where a party to a contract is unable to perform the whole of his part of it, and the
part which must be left unperformed either

7 SECTION 16 Personal bars to relief

8 SECTION 20 Substitute performance of contract

9 SECTION 26 Instrument may be rectified

10 SECTION 27 Rescission of contracts

11 SECTION 31 When cancellation may be ordered

12 SECTION 32 Instrument may be partially cancelled

13 SECTION 34 Discretion of court as to declaration of status or right

14 SECTION 35 Effect of declaration

15 SECTION 38 Perpetual injunction when granted

16 SECTION 42 Injunction to perform negative agreement

LESSONS TO BE ROUNDED OFF

• The Specific Relief Act, 1963 was enacted to define and amend the law relating to certain kinds of
specific relief. It contains provisions, inter alia, specific performance of contracts, contracts not
specifically enforceable, parties who may obtain and against whom specific performance may be
obtained, etc.

• The tremendous economic development since the enactment of the Act have brought in
enormous commercial activities in India including foreign direct investments, public private
partnerships, public utilities infrastructure developments, etc.; which have prompted extensive
reforms in the related laws to facilitate enforcement of contracts, settlement of disputes in speedy
manner.

• It has been felt that the Specific Relief Act is not in tune with the rapid economic growth
happening in our country and the expansion of infrastructure activities that are needed for the

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overall development of the country, Parliament enacted Specific Relief (Amendment) Act, 2018 and
came into effect from 01 October, 2018.

• Section 14 lays down the contracts which cannot be specifically enforced, namely:—(a) where a
party to the contract has obtained substituted performance of contract in accordance with the
provisions of section 20;(b) a contract, the performance of which involves the performance of a
continuous duty which the court cannot supervise;(c) a contract which is so dependent on the
personal qualifications of the parties that the court cannot enforce specific performance of its
material terms; and (d) a contract which is in its nature determinable.

• Where the court considers it necessary to get expert opinion to assist it on any specific issue
involved in the suit, it may engage one or more experts and direct to report to it on such issue and
may secure attendance of the expert for providing evidence, including production of documents on
the issue.

• Where the contract is broken due to non-performance of promise by any party, the party who
suffers by such breach shall have the option of substituted performance through a third party or by
his own agency, and, recover the expenses and other costs actually incurred, spent or suffered by
him, from the party committing such breach.

• Injunction shall not be granted by a court in a suit under this Act involving a contract relating to an
infrastructure project specified in the Schedule, where granting injunction would cause impediment
or delay in the progress or completion of such infrastructure project.

• State Government, in consultation with the Chief Justice of the High Court, shall designate, by
notification published in the Official Gazette, one or more Civil Courts as Special Courts, within the
local limits of the area to exercise jurisdiction and to try a suit under Specific Relief Act in respect of
contracts relating to infrastructure projects.

• A suit filed shall be disposed of by the court within a period of twelve months from the date of
service of summons to the defendant. The period may be extended for a further period not
exceeding six months in aggregate after recording reasons in writing for such extension by the court.

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CHAP 21 SALE OF GOODS ACT 1930

LESSONS TO BE ROUNDED OFF
• In a sale, the property in the goods sold passes to the buyer at the time of contract so that he
becomes the owner of the goods. In an agreement to sell, the ownership does not pass to the buyer
at the time of the contract, but it passes only when it becomes sale on the expiry of certain time or
the fulfilment of some conditions subject to which the property in the goods is to be transferred.

• Where goods are delivered to another on terms which indicate that the property is to pass at once
the contract must be one of sale and not bailment.

• The subject matter of the contract of sale is essentially goods. According to Section 2(7) of the Sale
of Goods Act, “goods” means every kind of movable property other than actionable claims and
money and 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. Goods may be (a)
existing, (b) future, or (c) contingent. The existing goods may be (i) specific or generic, (ii)
ascertained or unascertained.

• The sole purpose of a sale is the transfer of ownership of goods from the seller to the buyer. The
general rule is that only the owner of goods can sell the goods. Conversely, the sale of an article by a
person who is not or who has not the authority of the owner, gives no title to the buyer.

• It is the duty of the seller and buyer that the contract is performed. The duty of the seller is to
deliver the goods and that of the buyer to accept the goods and pay for them in accordance with the
contract of sale.

• Unless otherwise agreed, payment of the price and the delivery of the goods and concurrent
conditions, i.e., they both take place at the same time as in a cash sale over a shop counter.

• Delivery is the voluntary transfer of possession from one person to another. Delivery may be
actual, constructive or symbolic.

• A sale by auction is a public sale where goods are offered to be taken by bidders. It is a proceeding
at which people are invited to complete for the purchase of property by successive offer of
advancing sums.

HIGHLIGHTED PART IN MODULE

Rights of purchaser or lessee against person with no title or imperfect title

Contracts not specifically enforceable Section 14 lays down the contracts which cannot be
specifically enforced. The following contracts cannot be specifically enforced, namely:— (a) where a
party to the contract has obtained substituted performance of contract in accordance with the
provisions of section 20; (b) a contract, the performance of which involves the performance of a
continuous duty which the court cannot supervise; (c) a contract which is so dependent on the
personal qualifications of the parties that the court cannot enforce specific performance of its
material terms; and (d) a contract which is in its nature determinable.

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Personal bars to relief

Contract to sell or let property by one who has no title, not specifically enforceable As per Section
17, a contract to sell or let any immovable property cannot be specifically enforced in favour of a
vendor or lessor— (a) who, knowing himself not to have any title to the property, has contracted to
sell or let the property; (b) who, though he entered into the contract believing that he had a good
title to the property, cannot at the time fixed by the parties or by the court for the completion of the
sale or letting, give the purchaser or lessee a title free from reasonable doubt. The above provisions
shall also apply, as far as may be, to contracts for the sale or hire of movable property

Characteristics of an injunction

An injunction has three characteristic features; (a) It is a judicial process. (b) The object of this
judicial process is to restrain or to prevent. (c) The act restrained or prevented is a wrongful act. An
injuction acts or operates always in personam. If the wrongful act has already taken place, the
injunction prevents its repetition. If it is merely threatened, the threat is prevented from being
executed.

Effect of Perishing of Goods

Price

No sale can take place without a price. Thus, if there is no valuable consideration to support a
voluntary surrender of goods by the real owner to another person, the transaction is a gift, and is
not governed by the Sale of Goods Act. Therefore, price, which is money consideration for the sale
of goods, constitutes the essence for a contract of sale. It may be money actually paid or promised
to be paid. If a consideration other than money is to be given, it is not a sale.

Modes of Fixing Price (Sections 9 and 10)

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Warranties

When condition sinks to the level of warranty

In some cases a condition sinks or descends to the level of a warranty. The first two cases depend
upon the will of the buyer, but the third is compulsory and acts as estoppel against him. (a) A
condition will become a warranty where the buyer waives the condition; or (b) A condition will sink
to the level of a warranty where the buyer treats the breach of condition as a breach of warranty; or
(c) Where the contract is indivisible and the buyer has accepted the goods or part thereof, the
breach of condition can only be treated as breach of warranty. The buyer can only claim damages
and cannot reject the goods or treat the contract as repudiated. Sometimes the seller may be
excused by law from fulfilling any condition or warranty and the buyer will not then have a remedy
in damages.

Implied conditions under a sale by sample (Section 17)

In a contract of sale by sample: (a) there is an implied condition that the bulk shall correspond with
the sample in quality; (b) there is another implied condition that the buyer shall have a reasonable
opportunity of comparing the bulk with the sample; (c) it is further an implied condition of
merchantability, as regards latent or hidden defects in the goods which would not be apparent on
reasonable examination of the sample. “Worsted coating” quality equal to sample was sold to
tailors, the cloth was found to have a defect in the fixture rendering the same unfit for stitching into
coats. The seller was held liable even though the same defect existed in the sample, which was
examined.

Exceptions: Section 16 lays down the following exceptions to the doctrine of Caveat Emptor:

(1) Where the seller makes a false representation and the buyer relies on it.
(2) When the seller actively conceals a defect in the goods which is not visible on a reasonable
examination of the same.
(3) When the buyer, relying upon the skill and judgement of the seller, has expressly or impliedly
communicated to him the purpose for which the goods are required.
(4) Where goods are bought by description from a seller who deals in goods of that description.

Passing of Risk (Section 26)

In Consolidated Coffee Ltd. v. Coffee Board, (1980 3 SCC 358), one of the terms adopted by coffee
board for auction of coffee was the property in the coffee knocked down to a bidder would not pass
until the payment of price and in the meantime the goods would remain with the seller but at the
risk of the buyer, In such cases, risk and property passes on at different stages. In Multanmal
Champalal v. Shah & Co., AIR (1970) Mysore 106, goods were despatched by the seller from Bombay
to Bellary through a public carrier. According to the terms of the contract, the goods were to remain
the property of the seller till the price was paid though the risk was to pass to the buyer when they
were delivered to public carrier for despatch. When the goods were subsequently lost before the
payment of the price (and the consequent to the passing of the property to the buyer), the Court
held that the loss was to be borne by the buyer.

Acceptance of Goods by the Buyer

Acceptance of the goods by the buyer takes place when the buyer: (a) intimates to the seller that he
has accepted the goods; or (b) retains the goods, after the lapse of a reasonable time without
intimating to the seller that he has rejected them; or (c) does any act on the goods which is

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inconsistent with the ownership of the seller, e.g., pledges or resells. If the seller sends the buyer a
larger or smaller quantity of goods than ordered, the buyer may: (i) reject the whole; or (ii) accept
the whole; or (iii) accept the quantity ordered and reject the rest. If the seller delivers with the goods
ordered, goods of a wrong description, the buyer may accept the goods ordered and reject the rest,
or reject the whole. Where the buyer rightly rejects the goods, he is not bound to return the
rejected goods to the seller. It is sufficient if he intimates the seller that he refuses to accept them.
In that case, the seller has to remove them.

Rights of an Unpaid Seller against the Goods

Partners, Firm and Firm Name

Persons who have entered into partnership with one another are called individually “partners” and
collectively “a firm”, and the name under which their business is carried on is called the “firm name”.
(Section 4)

In law, “a firm” is only a convenient phrase for describing the partners, and the firm has no legal
existence apart from its partners. It is neither a legal entity, nor is it a person as is a corporation; it is
a collective name of the members of a partnership.

Change in a Firm

The Indian Partnership Act, 1932, contemplates the following changes in a partnership firm:

1. Changes in the constitution of a firm.

2. Changes in the nature of a business or undertakings.

3. Changes in the duration of a firm. A change in the constitution of a firm takes place when:

(a) a new partner is introduced as a partner in a firm; (Section 31)

(b) a partner retires from a firm; (Section 32),

(c) a partner is expelled from a firm; (Section 33),

(d) a partner is adjudicated as an insolvent; (Section 34) and

(e) a partner dies. (Section 35)

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In the absence of any such agreement, express or implied, the property of the firm is deemed to
include:

(a) all property, rights and interests which have been brought into the common stock for the
purposes of the partnership by individual partners, whether at the commencement of the business
or subsequently added thereto;

(b) those acquired in the course of the business with money belonging to the firm; and

(c) the goodwill of the business. (Section 14)

The ultimate test to determine the property of the firm is the real intention of the partners and
the Court can take into consideration the following facts:

1. The source of the purchase money.

2. The reason due to which the property was purchased or acquired.

3. The object for which the property was purchased or acquired. 4. The mode in which the property
was obtained.

5. The mode in which the property was dealt with.

6. The use to which the property was put to.

Exceptions to Holding Out

The doctrine of Holding Out is not applicable in the following cases:

(1) It does not apply to cases of torts committed by partners. A person, therefore, cannot be held
liable for the torts of another simply because that other person held himself to be his partner. (2) It
does not extend to bind the estate of a deceased partner, where after a partner’s death the business
of the firm is continued in the old firm name. [Section 28(2)]

(3) It also does not apply where the Holding Out partner has been adjudicated insolvent. (Section 45)

Minor Admitted to the Benefits of Partnership

In view of Section 11 of the Indian Contract Act, 1872, and the decision of the Privy Council in
Nohori Bibi Dharmo Das Ghose, (1903) 30 I.A 114, a minor’s agreement is altogether void and
unenforceable. An agreement is an essential ingredient in a partnership, it follows that a minor
cannot enter into an agreement of partnership. On the same principle, a minor cannot be clothed
with all the rights and obligations of a fullfledged partner through a guardian. Section 5 states “The
relation of partnership arises from a contract...” The minor is incompetent to contract and,
therefore, partnership cannot come into existence if the parties to a contract of partnership consist
of one major and one minor. The only provision that Section 30 makes is that with the “consent of all
the partners for the time being, a minor can be admitted into the benefits of partnership to which a
minor is going to be admitted”. A partnership firm cannot be formed with only minors as partners.
There must be atleast two major partners before a minor is admitted into the benefits of
partnership.

Election by Minor

If he becomes or elects to become a partner, his position will be as under:

1. His rights and liabilities will be similar to those of a full-fledged partner.

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2. He will be personally liable for all the acts of the firm, done since he was first admitted to the
benefits of the partnership.

3. His share of profits and property remains the same as was before, unless altered by agreement.

If he elects not to become a partner, then:

1. His rights and liabilities shall continue to be those of a minor upto the date of his giving public
notice.

2. His share shall not be liable for any acts of the firm done after the date of the public notice.

3. He is entitled to sue the partners for his share of the property and profits in the firm. [Section
30(8)]

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CHAP 22 PARTNERSHIP ACT 1932

PAST PAPER CONCEPTS
1 SECTION 14 The property of the firm

2 SECTION 28 Partner by estoppels or holding out

3 SECTION 51 Return of premium on premature dissolution

4 SECTION 55 Right to carry on business when goodwill is sold

LESSONS TO BE ROUNDED OFF

• The Indian Partnership Act, 1932 lays down the important provisions relating to partnership
contracts.

• According to Section 4 “Partnership is the relation between persons who have agreed to share the
profits of a business carried on by all or any of them acting for all.

• A partnership may either be for a particular adventure or for a fixed period. It may also be a
partnership at will.

• The minor is incompetent to contract and, therefore, partnership cannot come into existence if the
parties to a contract of partnership consist of one major and one minor.

• Every partner is an agent of the firm and of other partners for the purpose of the business of the
firm.

• The authority of a partner means the capacity of a partner to bind the firm by his act. This
authority may be express or implied.

• All partners are liable jointly and severally for all acts or omissions binding on the firm including
liabilities arising from contracts as well as torts.

• The dissolution of partnership between all the partners of a firm is called the “Dissolution of the
Firm”.

• A dissolution does not necessarily follow because the partnership has ceased to do business, for
the partnership may continue for the purpose of realising the assets.

Partners as Agents

Authority of a Partner

The authority of a partner means the capacity of a partner to bind the firm by his act. This authority
may be express or implied.

Express Authority: - Authority is said to be express when it is given by words, spoken or written.
The firm is bound by all acts of a partner done within the scope of his express authority even if the
acts are not within the scope of the partnership business.

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(ii) Implied Authority: - The implied authority of a partner is also known as ostensible or apparent
authority, Sections 19 and 22 contain provisions regarding the scope of the implied authority of a
partner. The implied authority is subject to the following conditions:

1. the act done must relate to the “normal business” of the firm;

2. the act must be done in the usual way;

3. the act must be done in the name of the firm.

Dissolution of Partnership

The dissolution of partnership takes place (even when there is no dissolution of the firm) in the
following circumstances:

(a) By the expiry of the fixed term for which the partnership was formed. [Section 42(a)]

(b) By the completion of the adventure. [Section 42(b)]

(c) By the death of a partner. [Section 42(c)]

(d) By the insolvency of a partner. [Section 42(d)]

(e) By the retirement of a partner. [Section 42(e)

In all the above cases, the remaining partners may continue the firm in pursuance of an agreement
to that effect. If they do not continue then the dissolution of the firm takes place automatically

Settlement of Accounts on Dissolution

Section 48 of the Act provides that in settling accounts between the partners after a dissolution of
partnership, the following rules shall, subject to any agreement, be observed:

(a) Losses, including deficiencies of capital shall be paid first out of undistributed profits, next out of
capital, and lastly, if necessary, by the partners individually in the proportion in which they were
entitled to share profits

(b) The assets of the firm, including the sums, contributed by the partners to make up losses or
deficiencies of capital shall be applied in the following manner and order:

(i) in paying outside creditors;

(ii) in repaying advances made by partners (distinct from investment of capital);

(iii) in repaying capital to partners; and

(iv) the ultimate residue, if any, shall be divided among the partners in the proportions in which
profits are divisible.

Sale of Goodwill

Where goodwill is sold, either to a partner or to an outsider, the value is divisible among the
partners in the same manner as they share profits and losses, unless otherwise agreed.

The rights of the buyer and seller of the goodwill are as follows:

(a) Buyer’s rights: On the sale of goodwill the buyer may, unless the terms in the contract of sale
provide otherwise:

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(i) represent himself in continuing the business,

(ii) maintain his exclusive rights to the use of the firm name, and

(iii) solicit former customers of the business and restrain the seller of the goodwill from doing so.

(b) Seller’s rights: The vendors may enter into competition with the purchaser unless he is prevented
by a valid restraint clause in the contract of sale.

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CHAP 23 NEGITIABLE INSTRUMENT ACT 1881

PAST PAPER CONCEPTS
1 SECTION 26 Capacity to make, promissory notes

2 SECTION 36 Liability of prior parties to holder in due course

3 Order instrument & Bearer instrument

LESSONS TO BE ROUNDED OFF

• The law relating to negotiable instruments is contained in the Negotiable Instruments Act, 1881. It
is an Act to define and amend the law relating to promissory notes, bills of exchange and Cheques.

• The term “negotiable instrument” means a document transferable from one person to another.

• A “promissory note” is an instrument in writing containing an unconditional undertaking, signed

by the maker to pay a certain sum of money to, or to the order of, a certain person, or only to bearer
of the instrument.

• A “bill of exchange” is an instrument in writing containing an unconditional order, signed by the

maker, directing a certain person to pay a certain sum of money only to or to the order of, a certain
person or to the bearer of the instrument.

• Bills of exchange were originally used for payment of debts by traders residing in one country to
another country with a view to avoid transmission of coin. Now-a-days they are used more as trade
bills both in connection with domestic trade and foreign trade and are called inland bills and foreign
bills respectively.

• A ‘Cheque’ is a bill of exchange drawn on a specified banker and not expressed to be payable
otherwise than on demand and it includes the electronic image of a truncated Cheque and a Cheque
in the electronic form.

HIGHLIGHTED PART IN MODULE

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IMPORTANT CHARACTERISTICS OF NEGOTIABLE INSTRUMENTS

Parties to a Promissory Note:

A promissory note has the following parties:

(a) The maker: the person who makes or executes the note promising to pay the amount stated
therein.

(b) The payee: one to whom the note is payable.

(c) The holder: is either the payee or some other person to whom he may have endorsed the note.

(d) The endorser.

(e) The endorsee.

Essentials of a Bill of Exchange:

(1) It must be in writing.

(2) It must contain an unconditional order to pay money only and not merely a request.

(3) It must be signed by the drawer.

(4) The parties must be certain.

(5) The sum payable must also be certain.

(6) It must comply with other formalities e.g. stamps, date, etc.

Note: By virtue of Section 31 of the Reserve Bank of India Act, no bill of exchange or hundi can be
made payable to bearer on demand and no promissory note or a bank draft can be made payable to
bearer at all, whether on demand or after a specified time. Only a cheque can be payable to bearer
on demand.

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Parties to a cheque

The following are the parties to a cheque:

• The drawer: The person who draws the cheque.

• The drawee: The banker of the drawer on whom the cheque is drawn.

• The payee, holder, endorser and endorsee: same as in the case of a bill.

Distinction between Cheques and Bills of Exchange

As a general rule, the provisions applicable to bills payable on demand apply to cheques, yet there
are few points of distinction between the two, namely:

(a) A cheque is a bill of exchange and always drawn on a banker, while a bill may be drawn on any
one, including banker.

(b) A cheque can only be drawn payable on demand, a bill may be drawn payable on demand, or on
the expiry of a specified period after sight or date.

(c) A bill payable after sight must be accepted before payment can be demanded, a cheque does not
require acceptance and is intended for immediate payment.

(d) A grace of 3 days is allowed in the case of time bills, while no grace is given in the case of a
cheque, for payment.

(e) The drawer of a bill is discharged, if it is not presented for payment, but the drawer of a cheque
is discharged only if he suffers any damage by delay in presentment for payment.

(f) Notice of the dishonour of a bill is necessary, but not in the case of a cheque.

(g) The cheque being a revocable mandate, the authority may be revoked by countermanding
payment, and is determined by notice of the customer’s death or insolvency. This is not so in the
case of bill.

(h) A cheque may be crossed, but not a bill.

Payment in due Course (Section 10)

A payment will be a payment in due course if:

(a) it is in accordance with the apparent tenor of the instrument, i.e., according to what appears on
the face of the instrument to be the intention of the parties;

(b) it is made in good faith and without negligence, and under circumstances which do not afford a
ground for believing that the person to whom it is made is not entitled to receive the amount;

(c) it is made to the person in possession of the instrument who is entitled as holder to receive
payment;

(d) payment is made under circumstances which do not afford a reasonable ground believing that
he is not entitled to receive payment of the amount mentioned in the instrument; and

(e) payment is made in money and money only

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Collecting Banker

A banker who has in good faith and without negligence received payment for a customer of a
cheque crossed generally or specially to himself shall not, in case the title to the cheque proves
defective, incur any liability to the true owner of the cheque by reason of only having received such
payment.

Explanation: A banker receives payment of a crossed cheque for a customer within the meaning of
this section notwithstanding that he credits his customer’s account with the amount of the cheque
before receiving payment thereof.

Rights of Holder against Banker

Crossing of Cheques

A cheque is either “open” or “crossed”. An open cheque can be presented by the payee to the
paying banker and is paid over the counter. A crossed cheque cannot be paid across the counter but
must be collected through a banker.

A crossing is a direction to the paying banker to pay the money generally to a banker or to a
particular banker, and not to pay otherwise. The object of crossing is to secure payment to a banker
so that it could be traced to the person receiving the amount of the cheque. Crossing is a direction
to the paying banker that the cheque should be paid only to a banker or a specified banker. To
restrain negotiability, addition of words “Not Negotiable” or “Account Payee Only” is necessary. A
crossed bearer cheque can be negotiated by delivery and crossed order cheque by endorsement and
delivery. Crossing affords security and protection to the holder of the cheque.

Holder in Due Course

In order to be a holder in due course, a person must satisfy the following conditions:

(i) He must be the holder of the instrument.

(ii) He should have obtained the instrument for value or consideration.
(iii) He must have obtained the negotiable instrument before maturity.

(iv) The instrument should be complete and regular on the face of it.

(iv) The holder should take the instrument in good faith.

Liability of the Drawee of Cheque (Section 31)

As a cheque is a bill of exchange, drawn on a specified banker, the drawee of a cheque must always
be a banker. The banker, therefore, is bound to pay the cheque of the drawer, i.e., customer, if the
following conditions are satisfied:

(i) The banker has sufficient funds to the credit of customer’s account.
(ii) The funds are properly applicable to the payment of such cheque, e.g., the funds are not
under any kind of lien etc.

(iii) The cheque is duly required to be paid, during banking hours and on or after the date on which
it is made payable.

Presentment for Acceptance

The following are the persons to whom a bill of exchange should be presented:

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(i) The drawee or his duly authorised agent.

(ii) If there are many drawees, bill must be presented to all of them.
(iii) The legal representatives of the drawee if drawee is dead.

(iv) The official receiver or assignee of insolvent drawee.

() To a drawee in case of need, if there is any. This is necessary when the original drawee refuses
to accept the bill.

The acceptor for honour. In case the bill is not accepted and is noted or protested for non-
acceptance, the bill may be accepted by the acceptor for honour. He is a person who comes forward
to accept the bill when it is dishonoured by non-acceptance.

Presentment for Payment when Excused

Dishonour by Non-Acceptance

Section 91 provides that a bill is said to be dishonoured by non-acceptance:

(a) When the drawee does not accept it within 48 hours from the time of presentment for
acceptance.

(b) When presentment for acceptance is excused and the bill remains unaccepted.

(c) When the drawee is incompetent to contract.

(d) When the drawee is a fictitious person or after reasonable search cannot be found.

(e) Where the acceptance is a qualified one.

Notice of Dishonour Unnecessary

No notice of dishonour is necessary:

(a) When it is dispensed with or waived by the party entitled thereto, e.g., where an endorser writes
on the instrument such words as “notice of dishonour waived”,

(b) When the drawer has countermanded payment.

(c) When the party charged would not suffer damage for want of notice.

(d) When the party entitled to notice cannot after due search be found.

(e) When the omission to give notice is caused by unavoidable circumstances, e.g., death or
dangerous illness of the holder.

(f) Where the acceptor is also a drawer, e.g., where a firm draws on its branch.

(g) Where the promissory note is not negotiable. Such a note cannot be endorsed.

(h) Where the party entitled to notice promises to pay unconditionally.

Section 89 affords protection to a person who pays an altered note bill or cheque. However, in order
to be able to claim the protection, the following conditions must be fulfilled:

(i) the alteration should not be apparent;

(ii) the payment must be made in due course; and
(iii) the payment must be by a person or banker liable to pay.

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Dishonour of Cheque for Insufficiency, etc., of Funds in the Account

Provided that nothing contained in this section shall apply unless—

(a) the cheque has been presented to the bank within a period of six months from the date on which
it is drawn or within the period of its validity, whichever is earlier;

(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for
the payment of the said amount of money by giving a notice; in writing, to the drawer of the cheque,
within thirty days] of the receipt of information by him from the bank regarding the return of the
cheque as unpaid; and

(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee
or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt
of the said notice.

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