Institute of Management Technology

Centre for Distance Learning

A16, Site 3, UPSIDC Industrial Area, Meerut Road, Ghaziabad - 201 003

Subject Code: IMT-54

Subject Name : BUSINESS LAW
Objectives
To gain an insight into the Indian Legal process and legal provisions specifically with reference to business and
corporate functioning.

Contents
1. Introduction : Business Law
2. Law of Contract.
3. Law of Indemnity, Guarantee, Bailment and Pledge and Law of Agency.
4. Law of sale of goods.
5. Law of Negotiable Instruments.
6. Consumer Protection Act.
7. FEMA, Information Technology Act and Competition Act.
8. Copyright and Patent Law.
9. Company Law.

References
1. Business Law, S.S. Gulshan, Excel Books
2. Mercantile Law, S.S. Gulshan, Excel Books
3. Competition Act, Base
4. Elements of Mercantile Law, Kapoor N.D., Sultan Chand
5. Taxmann’s Students Guide to Co. Law, Majundar A.K. or Kapoor G.K., 2003.

a. First Set of Assignments: Part-A : 5 Marks & Part-B : 5 Marks. Each question carries 1 marks.
b. Second Set of Assignments: Part-C : 5 Marks & Part-D : 5 Marks. Each question carries 1 marks.
c. Third Set of Assignments: 20 Short Answer Questions : 10 Marks. Each question carries ½ marks.
Confine your answers to 150 to 200 Words.
d. Forth Set of Assignments: Two Case Studies : 10 Marks. Each case study carries 5 marks.

Notes:
a. Write answers in your own words as far as possible and refrain from copying from the text books/handouts.
b. Answers of Ist Set (Part-A & Part-B), IInd Set (Part-C, Part-D), IIIrd Set (Short Answer Questions) and Case
Study must be sent together.
c. Mail the answer sheets alongwith the copy of assignments for evaluation & return.
d. Only hand written assignments shall be accepted.

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 ASSIGNMENTS
Subject Code : IMT-54
Subject Name: BUSINESS LAW
PART– A
1. “All contracts are agreements but all agreements are not contracts”. Explain this statement and also give
essential elements of a valid contract.
2. Define the term “offer” and “acceptance”. Explain the rules regarding valid offer and acceptance.
3. What do you understand by ‘capacity to contract’? What is the effect of agreements made by persons not
qualified to contract?
4. Explain the following statements:
(a) “It is not only the consent of the parties which is necessary for making the contract binding.”
(b) “No Consideration No Contract”
5. Write short notes on:
(a) Quasi-Contract.
(b) Contingent Contract.

PART– B
1. Discuss:
(a) Remedies for breach of a contract.
(b) How a contract can be discharged.
2. Differentiate between the following:
(a) Contracts of Indemnity and Guarantee.
(b) Sale and Agreement to Sell.
3. Give highlights of the following:
(a) Competition Act, 2002.
(b) Information Technology Act, 2000.
4. Write short notes on:
(a) Creation of Agency.
(b) Bailment.
5. Explain:
(a) Dishonour of cheques for insufficiency of funds under the Negotiable Instruments Act, 1881.
(b) How a patent is granted?

PART – C
1. What is a “Company”? Explain the essential characteristics of a company.
2. Differentiate between:
(a) Memorandum and Articles of Association.
(b) Share and Stock.
3. Write short notes on:
(a) Mis-statements in Prospectus.
(b) Shareholders Meetings.
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4. Explain:
(a) Shelf Prospectus and Information Memorandum.
(b) Buy back of shares by the company.
5. How are directors appointed and removed in a company?

PART– D
1. Write short notes on:
(a) Inter corporate loans and advances.
(b) Postal Ballot.
2. Explain:
(a) Lifting of corporate veil.
(b) Doctrine of indoor management.
3. Discuss:
(a) Rights and duties of an auditor of a company.
(b) What remedies are available to share holders of a company against oppression and mismanagement.
4. How the amalgamation of a company with another company is carried out?
5. What is winding up? Explain the different modes of winding up.

SHORT ANSWER QUESTIONS

State whether the following are true or false with reasons.

1. “An agreement requires a meeting of the minds”.
2. An agreement with or by a minor is voidable.
3. A contract of insurance is a wagering agreement.
4. The liability of the surety is co-extensive with that of the principal debtor.
5. In a contract of bailment it is only possession that passes from bailor to the bailee and not ownership.
6. He who acts through an agent is himself acting.
7. ‘Property in goods’ means the custody or control of goods.
8. A cheque is a species of a bill of exchange.
9. There is a requirement of a woman member in all the Consumer Disputes Redressal Agencies (CDRA).
10. Indian law permits international copyright and patent.
11. The competition law in India prohibits competition.
12. Foreign exchange can be procured from an authorized person.
13. The life of a company comes to an end with the death of all its members in a mishap.
14. An act ultra-vires the articles can not be ratified.
15. A statutory meeting must discuss the statutory report.
16. A firm cannot be appointed as a director in a company.
17. A member can demand a copy of the minutes of a board meeting.
18. The dividend warrants must be posted within 45 days of its declaration at the annual general meeting.
19. A committee of inspection is appointed in all types of winding up.
20. In creditor’s voluntary winding up a declaration of solvency is made by the company.

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 CASE STUDY-1

M
s. Ruchika Sood, aged 17 years, daughter of Shri M.K. Sood wanted admission in the BDS course in
response to an advertisement which was published in ‘The Tribune’ dated 8-8-2002 and earlier in
‘Dainik Tribune’ dated 5-7-2002 at Sitapur for the year 2002-2003. The medical college was being run
by Vinayaka Mission and Sh. A. Shanmugasundaram was acting as its Chairman. Shri Sunil Dutt Sharma, who
was the Director of admission maintaining his offce at 1261-B, Sector 41 B, Chandigarh. A Bank Draft of Rs.
75,000/- bearing No. 575169 dated 7-9-2002 of State Bank of India, Punjab University, Chandigarh was drawn
in favour of Vinayaka Foundation and it was the amount towards annual fee for the first year of the course of
BDS at Sitapur. Another sum of Rs. 25,000/- was demanded by Shri Sunil Dutt Sharma and it was paid to him
on 9-9-2002 in cash. Besides this another sum of Rs. 12,900/- was handed over to Shri. Sunil Dutt Sharma at
Chandigarh by means of a Cheque No. 571554 dated 2-11-2002 and it was also encashed. It has been alleged
that the course did not start till mid November, 2002 and the complainant became worried about the education
and future of his daughter. Since the classes were not started at all and no reply was received from Shri Sunil
Dutt Sharma the present complaint has been instituted. The relief claimed is reproduced as under:
1. Refund of the money deposited by the complainant amounting to Rs. 1,12,900/- along with interest thereof
@ 18% p.a. from the date of payment till the date of actual refund;
2. An amount of Rs. 10,00,000/- (Rupees Ten Lakh) as compensation for the wastage of one precious year of
a brilliant young student.
3. An amount of Rs. 1,00,000/- (Rupees One Lakh) as compensation for immense physical harassment and
mental agony suffered by the complainant, his wife, family members and the student herself.
4. An amount of Rs. 11,000/- towards Counsel’s fee and litigation expenses.

Questions
1. In which Consumer Dispute Redressal Forum complaint should be filed?
2. Is Ms. Ruchika Sood and / or her father (Mr. M.K. Sood) entitled to file a complaint?
3. As a member of the Consumer Dispute Redressal Forum give your decision.
Answer to the above, are to be supported by reasons.

CASE STUDY-2

T
he appeal is by Punjab and Sind Bank challenging order of the district forum, Ludhiana dated December
19, 1997 whereby direction was given to the appellant Bank to pay token compensation of Rs. 5,000/- to
the complainant B.H.S. Money corporation.
The facts are summarised as arising out of pleadings of the parties. The complainant B.H.S. Money
Corporation is engaged in the business of lending money on interest (a financial corporation). The complainant
is having a bank account with Vijya Bank, Mata Rani Chowk, Branch Ludhiana. One of the customers of the
complainant gave cheque for Rs. 40,000/- in favour of the complainant on June 6, 1996. The same was given to
their Banker Vijya Bank for collection and credit in their account. Vijya Bank, for clearance, handed over the
cheque to the agent of Punjab and Sind Bank in the clearing house. The cheque was drawn on Punjab and Sind
Bank, Extension counter, Khalsa College for Women, Ludhiana No. X-910. The cheque was returned un-
encashed by Punjab and Sind Bank, extension counter, G.G.N. Khalsa College, Ludhiana, Extension No. X
1013. Subsequently the cheque having been represented was enchased. In the meantime, the complainant had
issued cheques to his different customers. Particulars of 5 such customers to whom said cheques were issued
for a sum of Rs. 6,500/- each were given in the complaint. For want of sufficient funds in their account, the
cheques were dishonoured. Thus, alleging negligence in the matter of handling the cheque for Rs. 40,000/- by
Punjab and Sind bank as briefly noticed above, compensation was claimed by the complainant who had
suffered loss in reputation as well as mental tension and inconvenience on account of threats of criminal
prosecution as complainant’s cheques bounced. A sum of Rs. 5 lacs was claimed as compensation. Punjab and
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Sind Bank, though admitting the broad facts as stated above, denied their negligence. There was no privity of
contract between the appellant and complainant. Vijya Bank broadly admitted the facts as alleged by the
complainants. The District Forum, holding negligence on the part of the Punjab and Sind Bank in the matter of
returning the cheque for Rs. 40,000/- directed payment of compensation of Rs. 5,000/-
The question for consideration in the present appeal as pressed by Counsel for the appellant is about the
status of the complainant in filing the complaint. According to the Counsel, the complainant could not be treated
as a consumer as defined under the Consumer Protection Act entitled to file the complaint. There was no
contract between the complainant and the appellant bank. Section 2(1)(d) of the consumer protection Action
defines ‘consumer’ as under:
“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 services 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 or such
services 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 payments, when such services are
availed of with the approval of the first-mentioned person”.

Questions
1. Is M/s BHS Money corporation a consumer under the Consumer Protection Act? Give reasons for
your answer.
2. As a member of the Punjab State consumer Disputes Redressal Commission decide the appeal giving
reasons for your decision.

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