JURISPRUDENCE, INTERPRETATION & GENERAL LAWS – LAWGURU CS DUSHYANT JAIN

Sr No Chapter Name Page No

Student has to
fill
1 Basics of Law & Jurisprudence
2 Constitution of India
3 Interpretation of Statutes
4 Administrative Laws
5 Law of Torts
6 Civil Procedure Code, 1908
7 Law relating to crime and it’s procedure

8. Indian Evidence Act, 1872

9. Specific Relief Act, 1963
10. Indian Limitation Act
11. Arbitration and Conciliation Act
12. Indian Stamp Act, 1899
13. Registration Act, 1908
14. Provisions relating to Transfer of Properties Act, 1882 and Registration of
Documents
15. Right to Information Act, 2005
16. Information Techonology Act, 2000
17. Indian Contract Act, 1872
18. Sales of Goods Act, 1930
19. Negotiable Instruments Act, 1882

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 CHAPTER: 1
BASICS OF LAW & JURISPRUDENCE

SOURCES OF LAW
The nature and meaning of law has been described by various judjes. However, there is no unanimous opinion
regarding the true nature and meaning of law. The reason for the non similarity of opinion regarding the
meaning of law is that the subject of law is dealt by different judges at different time, from different point of
view in terms of nature, scope, source and function of law as per the needs of different times.

Therefore, it is not practicable to give a precise and definite meaning to law which may hold good for all
times to come. So for the better understanding of the term law we will refer and understand the definition
given by different judges or jurists at different times.

So we shall refer to some definitions and discuss them.

For the purpose of clarity and better understanding of the nature and meaning of law, we may classify various
definitions into five broad

1) Natural School: Most of the definitions of law Were given by Romans

Ulpine Justinians Digest Salmond Ancient Hindu view.

Law is art & science of Standard of What is Body of principles Law is command of
what is equitable and just and unjust. recognized & applied god and not any
goods by state [Govt.] in political rule
administration of
justice. Everybody including
the ruler is bound to
follow it.

2) Positivstic School :
John Austin :- Law is aggregate of rules set by men as politically superior for the men as political subject.
(inke hisab se politically superior logon ne law banaya, un logonke liye jo ek opllitical subject hai – insan)

Kelsen gave a ‘pure theory of law’. According to him, law is a ‘normative science’. The legal norms are
‘Ought’ norms as distinct from ‘Is’ norms of physical and natural sciences.
(kelsen ke hisab se law niyam se related hai, norms ka matlab hai niyam)
Law does not attempt to describe what actually occurs but only prescribes certain rules. The science of law to
Kelson is the knowledge of hierarchy of normative relations. All norms derive their power from the ultimate
norm called Grund norm.

3) Historical Definition of Law :

Savigny’s theory of law can be summarised as follows:
− That law is a matter of unconscious and organic growth. Therefore, law is found and not made.
− Law is not universal in its nature. Like language, it varies with people and age.
− Custom not only precedes legislation but it is superior to it. Law should always conform to the popular
consciousness.

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 − Law has its source in the common consciousness (Volkgeist) of the people.
− Legislation is the last stage of law making, and, therefore, the lawyer or the jurist is more important
than the legislator.

Sir Henry Maine :- Law has come down to us in close association of 2 notions :
(a) The notion of order
(b) The notion of force.

4) Sociological definition of law :

Duguit :- Law is essentially and exclusively a social fact.

Ihering :- Law guarantees rights to citizens and also punishes citizens, if laws are not followed, so law
relates to society.

Roscoe Pound, analysed the term “law” in the 20th century background as predominantly an instrument
of social engineering in which conflicting pulls of political philosophy, economic interests and ethical
values constantly struggled for recognition against background of history, tradition and legal technique

KAHTA HAI PAUND,

LAW SAMAJ SUDHARNE WALA HAI GROUND

5) Realist Definition of Law :

Holmes : Law is statement of circumstances which is enforced through courts.
According to Johg Gray, law is what judges declare.
(Law main kafi sari situations hoti hai jinhe courts enforce karta hai)
Lets Revise all the Schools of Law quickly:
Natural Positivistic Historical Sociological Realist
Natural Law means Law is creation of Law is found and Law is a social Law is uncertain in
set of principles of state. not made, it is self institution and its nature. Societies
human conduct existant. aim is to fulfill keep on changing
which are based on demands of society. and so law must
a reason or divine also change as per
law and, it comes changes in society.
from God or
Supreme Authority
and not from
politically superior
authority.
Law relates to Without sovereign Law had its The task of law is It focuses on the
justice and ethics. there can be no existance even social engineering decisions of the
law. before the system and as per this Court.
of Government. school various
interests of society
are to be protected
by law.
The source of law is The task of judges Law is independent Laws are made for Before passing
the supreme is not to make laws of political welfare of society. judgement the
authority and the but to interpreat authority and judges are to
law is binding on all the law. enforcement. consider what are
persons. the realities
relating to case.
It is based on moral Typical law is The Typical Law is Roscoe Pound was Law is not just

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ideals which have statue (made by custom and in the main statue but the
universal politically superior interpreting the contributor to this interpretation of
applicability. body) statues the judges theory. the statue.
For example, should consider
Rituals followed by history of
Hindu Dharma Can legislation.
be considered as
natural laws in
India.

SIGNIFICANCE OF LAW

Significance of Law means the importance of law in the Society. The significance of law can be understood
from the following points:

The law and the system through which the law operates has been developed over many centuries and it now
includes statues, judicial decisions, customes and conventions (personal agreements between the parties)

The laws are not static and as socities change the laws are also changed to meet the requirements of the
society.

Existing laws must be consistent with the general statements, customs and aspirations of the people. for
example shariya law can not exist in India as it exists in Afghanistan as the customs of India and Afghanistan
are different. (law ko custmos ke khilaf nai hona chahiye)

Modern science and technologies have created new and big ambitions in men and materialism and
individualism (promoting self interest) prevails at the every sphere of life so as a result of this even laws have
undergone a transformation in terms of concepts and structures.

Now abstract justice has been replaced by social justice due to laws.

Laws provide a hope of security for the future and removes imbalances in the social structure and plays an
important role in achieving socio economic goals.

Law is the vehicle of social change and an instrument of social justice.

SOURCES OF INDIAN LAW

It means the manner in which Indian laws are made:-
✓ Primary source
✓ Secondary source

Laws are made effective:

(a) By requiring damages for the disobedience.
(b) By asking the person to perform the act, which he has failed to perform.
(c) By preventing disobedience.
(d) By administering some kind of punishment.

Significance of law
(a) Law is not static, as the societies change, the law changes.

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(b) Austin contends that law originates from the sovereign.

PRIMARY SOURCE
❑ CUSTOMS:-
JO REET RIVAAZ PAHLE SE CHALE AARAHE HAI,
WAHI CUSTOMS KHALATE HAI
❑ It means accepted behavior by the society. There are two types of customs.
(i) Custom without sanction
These are non-obligatory customs. Not enforced by law.
(ii) Custom having sanction (aise cusotms jinke pas law ki Shakti hai, jihe law enforce karta hai)
a. Legal customs
Custom enforced by law. They have been recognised and enforced by the courts and therefore,
they have become a part of the law of land.
Legal customs are again of two kinds:
(a) Local Customs (b) General Customs.
(a) Local Customs: Local custom is the custom which prevails in some definite locality and
constitutes a source of law for that place only. But there are certain sects or communities which
take their customs with them wherever they go. They are also local customs. Thus, local customs
may be divided into two classes: – Geographical Local Customs – Personal Local Customs These
customs are law only for a particular locality, section or community.

(b) General Customs: A general custom is that which prevails throughout the country and
constitutes one of the sources of law of the land. The Common Law in England is equated with the
general customs of the realm
b. Conventional customs
These customs become enforceable due to any kind of contract between the parties. These
customs are binding due to an agreement between the parties, and not due to any legal authority
independently possessed by them. Before a Court treats the conventional custom as incorporated
in a contract, following conditions must be satisfied: –

It must be shown that the convention is clearly established and it is fully known to the contracting
parties.

There is no fixed period for which a convention must have been observed before it is recognised as
binding.

Convention cannot alter the general law of the land.

It must be reasonable. Like legal customs, conventional customs may also be classified as general
or local. Local conventional customs are limited either to a particular place or market or to a
particular trade or transaction

Essentials of valid customs

1. It should be ancient
2. It should have been continuously used.
3. It should be reasonable
4. It should be certain
5. It should not be opposed to public policy
6. It should not be immoral
7. It should not be opposed to law
8. It must be peacefully enjoyed

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❑ PRECEDENT
COURTS KE DWARA JO DECISION PAAS KIYE GAYE HAI,
WO DECISIONS FUTURE KE DECCISIONS KE AADHAR BAN JATE HAI
Precedent refers to the decision passed by the Court which can be used for future references.

Example : The concept of separate legal entity of company is interpreted through the decision of court
passed in case of Saloman v Saloman Company.

The principle of stare decisis states that while interpreting any law, previous decisions passed by the court
can be referred.

Stare Decisis

As per the principle of stare decisis decision of high court is binding on all sub-ordinate courts and
tribunal.

The doctrine of stare decisis means adherence to the past decision and do not change rules which are
established.

It is a useful principle which brings uniformity and surity in the law. Under the stare decisis doctrine, a
principle of law which has been settled by a series of decisions passed by the Courts is generally binding
on the courts and should be followed in similar cases.

In simple words, this principle means that similar cases should be decided similarly. This doctrine is based
on public policy.
Although doctrine should be strictly foloowed by the Courts, it is not universally applicable.
The doctrine should not be considdered as a rigid and unchangaeable doctrine which must be applied at
the cost of justice

The intention of the doctirine of state decisis is to bring uniformity in the decision passed by the Courts,
the doctrine is not iniversally acceptable and is rigid.

Features of high court

1. In the high court, the cases are decided by the
benches of High court.
a. Smallest bench consist of single Judge
b. 2 judges of High court constitute a division
bench.
2. Supreme court is the highest court of the
country and its decisions are binding on all the
sub-ordinate courts and tribunal. Supreme
Court may depart from its earlier decisions on account of special reasons.
3. Decision passed by one High Court is not binding on other High Court and has persuasive value only.

Kinds of precedent
1. Original precedent
It means a new rule made by the court by its decision.
2. Declarative Precedent
When the original precedent is followed by the court in subsequent decisions such precedent becomes
declarative precedent.
3. Persuasive Precedent
The prior decisions passed by the Court which another court is not obliged to follow.

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 4. Absolutely Authoritative Precedent
The decision passed by a higher court which is above the present court which has decided the matter,
the decision of higher court is absolutely authoritative precedent for the lower courts.
5. Conditional authoritative precedent
The decision passed by one bench of High Court is conditionally authoritative precedent for the other
bench of High Court and such decision may be changed by other bench.

OBITER DICTA
The literal meaning of this Latin expression is “said by the way”, it refers to the facts and the principle
that court considers while passing a decision are not the part of decision but can provide a guidance to
future judges while deciding on similar matters. So basically these are the facts or circumstances that the
court considers at the time of passing th edecision and can be found in the internal records of the case,
but these facts are not present in the decree or judgement. The judges are not bound to follow them but
they can take advantage of those facts in case of need.
These facts are not binding on the future judges.
These are the observations or personal opinions of the Judges which are not material to the present for
instance Judge may illustrate his reasoning by refering to some hypothetical situations. These
observations are obiter dicta.
For example: if the accused was getting angry and loosing his temperament, at every point which was
raised against him during proceedings by the prosecution, the judge noted this fact in his records and
when the jugde concluded that the accused is convict, the judge also considered the fact of loosing
temperament, but this fact was not mentioned in the judgement or the decree, but this fact will be
present in the internal records of the particular case and this fact can be used by future Judges, this is
obiter dicta.

RATIO DECIDENI
JIS AADHAR PAR COURT FAISLA SUNATA HAI,
RATIO DECIDENDI WAHI KAHLATA HAI
This principle considers the reasons and facts on basis of which court passes a decision. The decision
passed by High Court is binding on sub-ordinate court so sub-ordinate court, while passing decisions shall
consider the reasons which were considered by the higher court in similar situations, these facts and
circumstances are the part of the judgement.
A decision given by the Court has 2 aspects:
1. What principle the decision of Court makes on rule of law, which becomes obligatory for the
subordinate Court is Ratio Decidendi.
2. What the case decides between the parties, it becomes res judicata between the parties.
The case of Saloman Vs Saloman in Company Law is also an example of Ratio Decidendi.
So for example if the Maharashtra, High court in its judgement states that if Couple lives in liing
relationship and produce a child then they should be considered as husband and wife, now the facts and
reasons that the Court considered at the time of passing the decision shall be considered by all the Courts
that are subordinate to the High Court of Maharashtra.

Difference Between Obiter Dicta and Ratio Decidendi

Obiter Dicta Ratio Decidendi
Facts & principals which were considered at the Reasons on basis of which any idecision is given.
tme of giving decisions.
Not the part of decision Reasons are the part of judgement.
Serves as a guidance to future judgement It is binding on inferior courts.
It can be found from the records of the case. It is mentioned in the judgement.

❑ STATUTES

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Legislation means the “making of law” (every method of making of laws is also called as legislation),
legislation is considered as best source of law, It is sometimes called jus scriptum (written law) as opposed to
the customary law or jus non-scriptum (unwritten law). Salmond prefers to call it as “enacted law”.

Statute, law or statutory law is what is created by legislation, for example, Acts of Parliament or of State
Legislature.

Legislation is either supreme or subordinate (delegated) (as per Salmod).

Supreme Legislation is the law made by the parliament. These legilations are made by the Supreme
Authorities such as Parliament or State Legislature, it can not be repealed or replaced. Constitution of India,
or Any law made by Parliament or State Legilature.

Subordinate Legislation is the law made by an authority which is not the Parliament or State Legislature but
has the power of making laws or rules for its own conduct or for specific subject matters. However laws made
by subordinate authorities are controlled by Supreme Legislation, so subordinate legislation get its validity
from Supreme Legilations.

Kinds of Subordinate Legislations:

Executive Colonial Municipal Autonomus Judicial
Legislations Legislation
Rules or Orders made Power of Self Parliament and State The supreme The Supreme
by Central or State Government was given Legislatures give the Law gives the Court and High
Governements or by to Colonies. powers to municipal powers to Courts have power
various statutory authorities to make certain of making reules
authorities. special laws in bodies to for their own
respect of their areas. make rules procedures.
and
regulation for
managing
their own
affairs.
Under the Powers Such laws are called Universities, Article 145 of
contained in various as byelaws. Companies, Constitution gives
laws, for example the Statutorty the power to
Central Government Corporations Supreme Court
makes laws under are given and article 227
Companies Act, 2013. powers by gives the power to
Law to make High Court to
rules for make rules with
their internal respect to the
management. procedures and
exercising of
supervision on
subordinate
Courts.

PERSONAL LAWS
In many cases, the courts are required to apply the personal law of the parties where the point at issue is not
covered by any statutory law or custom. In the case of Hindus, for instance, their personal law is to be found
in:
(a) The Shruti which includes four Vedas.
(b) The ‘Smritis’ which are recollections handed down by the Rishis or ancient teachings and

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precepts of God, the commentaries written by various ancient authors on these Smritis. There are three main
Smritis; the Codes of Manu, Yajnavalkya and Narada.

Hindus are governed by their personal law as modified by statute law and custom in all matters relating to
inheritance, succession, marriage, adoption, coparcenary, partition of joint family property, pious obligations
of sons to pay their father’s debts, guardianship, maintenance and religious and charitable endowments.
The personal law of Mohammedans is to be found in:–
(a) The holy Koran.
(b) The actions, percept and sayings of the Prophet Mohammed which though not written during his life time
were preserved by tradition and handed down by authorised persons. These are known as Hadis.
(c) Ijmas, i.e., a concurrence of opinion of the companions of the Prophet and his disciples.
(d) Kiyas or reasoning by analogy. These are analogical deductions derived from a comparison of the Koran,
Hadis and Ijmas when none of these apply to a particular case.
(e) Digests and Commentaries on Mohammedan law, the most important and famous of them being the
Hedaya which was composed in the 12th century and the Fatawa Alamgiri which was compiled by
commands of the Mughal Emperor Aurangzeb Alamgiri.
Mohammedans are governed by their personal law as modified by statute law and custom in all matters
relating to inheritance, wills, succession, legacies, marriage, dowry, divorce, gifts, wakfs, guardianship and
pre-emption
SECONDARY SOURCE
❑ JUSTICE, EQUITY AND GOOD CONSCIENCE
• When the laws are not clear on any particular matter, the court must provide an interpretation or
make such decision which is on the lines of justice, equity and good conscience.
• Justice, equity and good conscience may mean the rules of English Law, in if they are applicable
to Indian society and circumstances.
• The Ancient Hindu Law had its own versions of the doctrine of justice, equity and good conscience.
• In its modern version, justice, equity and good conscience as a source of law, got its origin when
British administration began providing justice in India.
• The rules of the several High Courts established by the British Government directed that when the
law fwas silent on any matter, they should decide the cases in accordance with justice, equity and
good conscience.
• Justice, equity and good conscience have been generally interpreted to mean rules of English law
on similar matter as changed, to suit the Indian conditions and circumstances.
• The Supreme Court has stated that it is now well established that in the absence of any rule of
Hindu Law, the courts have authority to decide cases on the principles of justice, equity and good
conscience as long as it is inconsistent with, any rule or theory of Hindu Law.

Que: The charters of several high courts established by british government has laid down the rule to
decide a case where the law on the matter is silent. Explain with the help of Supreme Court of Indias
View on the similar situation.
❑ SOURCES OF ENGLISH LAW
i. Common law
Common law refers to legal customs that were followed in England. In England the decisions passed
by courts on the basis of legal customs were merged and laws were developed.

ii. Principles of equity

When legal customs are adopted as law, there can be many issues for example in some cases legal
customs are never against kings or chancellors so at the time of making the laws the concept of
“fairness” should also be followed which will ensure equal applicability of law.

iii. Law merchant

One of the major sources of commercial laws is the commercial transactions between

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 the parties. The parties to the commercial transactions such as customers, agents, sellers were asked
to give their opinions and on the basis of their opinions , business laws were made in England.

iv. Statute law

All the rules and regulations are made on the basis of law passed by Parliament.

SOURCES OF MERCANTILE AND COMMERCIAL LAW

Indian mercantile laws are formed on the lines of English Mercantile laws. England is one of the most
important part of Mercantile laws.
On the basis of judicial decisions passed from time to time, the Indian Mercantile laws have been changed
/altered from time to time.
The commercial practises and customs followed in India also regulates the commercial transactions and
contract Act does not affect such customs.

JURISPRUDENCE
JURISPRUDENCE KA MATLAB KANNON KI SAMJH
Juris means law and prudence means knowledge, so the word jurisprudence means knowledge of law.

Law can be classified into :

SUBSTANTIVE LAW PROCEDURAL LAW
It deals with rights and duties It deals with procedures
The meaning of word jurisprudence has changed over time.

Bentham and Austin, stated that jurisprudence is concerned with analysis of formal structure of law,
however in the later year more alternate concepts were offered as people were not satisfied with the
analytical composition (analyse the law as it is) done by Benthan and Austin.
One conclusion about the word jurisprudence has been drawn, that it relates to law.
Various scholars have defined “law” in their own ways and due to each different definition of law, the scope
of jurisprudence also changes as, it relates to law.

There are two aspects of law :

An abstract body of rules Social objective
It means law contains different rules for different It means the laws are made to protect the society.
purposes,

However many scholars, instead of recognizing both, have chosen any one of the aspects.
Sociological jurisprudence states that the laws are made with the intention to resolve social problems.
Teleological jurisprudence states that laws are collection of facts and exists because of purpose.

Salmond states that jurisprudence means a scheme of law, which uses the words in vague or general sense in
which obligations of human are included.
As per him jurisprudence can be divided on 3 streams :

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In the narrowest sense, jurisprudence includes only part of science of civil laws which are called as first
principals of civil law.

Jermy Benthan used jurisprudence in 2 senses:

Law referring to substance Interpretive history consisting of case laws & commentary.

As per Prof. Julius Stone jurisprudence is “Lawyers Extraversion”

As per G. W Patan “Jurisprudence does not attempt to find universal principal of law, but to develop a
science which will explain relationship between law, concepts and the life of society.
Through the legal system disputes are settled.
BHAI PATAN TO BOLTA HAI KI,
JURISPRUDENCE SE EK LAW AUR SOCIETY,
KA RELATION SAMJHA JATA HAI!
LEGAL THEORY
It is a part of jurisprudence that involves development and analysis of foundation of law.
Two important theories
Normative legal theory Positive legal theory
What the law should be? What is law?
Why is law?
Why it is in this way?

Prof. H L A Hart gave meanings relating to positivism, as follows :

INKE HISAB SE LAW, SUPERIOR AUTHORITY KA COMMAND HAI
− Laws are command, distinct from sociological and historical enquiries.
− Logical decisions can be made
− Moral judgements cannot be established without pre- determined rules.
− Law should be kept separate from what the law should be.
− As per the Hart, it is necessary for law and morality to have certain elements of natural law as a logical
requirement

Merits Demarits
The theory of Hart has discouraged speculative Hart has compared his theory with the game of

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thinking. Cricket and Umpires can be compared with
Government officers. Sometimes not only one officer
but Committee makes law, where as in Cricket there
is only one umpire.
The power of Government officers is based upon law. Hart has confused us with regard to powers and laws.
The Powers are given to State Officers to make Hi explanation of pre legal and legal society seems bit
secondary laws (rules) vague.

JHON AUSTIN also gave meaning of positivism.

AUSTIN BOLTA HAI, KI JURISPRUDENCE EK,
POLITICAL SUPEROUR AUTHORITY KA FARMAN HAI,
JO SAB KO FOLLOW KARNA HAI!
− It is a command of political authority, which the citizens have to follow.
− It is given by sovereign authority which is politically superior.
− It has sanction behind it.
Que: According to Austin, “Law is the command of sovereign that is backed by sanction.” Discuss.

Criticism of Positivism:
1. Welfare states pass a number of social legislations that does not command the people but confer rights
and benefits upon them. Such laws are not covered under the command theory.
2. According to Austin the sovereign does not have to obey anyone but the modern states have their powers
limited by national and international laws and norms. For example, the Government of India cannot make
laws that are violative of the provisions of the Constitution of India.
3. Austin does not provide for judges made laws. He said that judges work under the tacit command of the
sovereign but in reality judges make positive laws as well.
Merits of Austins Theory Demerits of Austin Theory
For the first time analytical metnod was introduced Custmos are ignored.
for inderstanding law.
Its simple and consistent No place of Judge made laws
Austin correctly said that sanction helps in better The word command is over emphasized.
enforcement of law.
Austins theory was later improved by Salmond and Law is based on religion.
Grey.
Permissive character of law is ignored.

Roscoe Pound
POUND BOLTA HAI, KI JURISPRUDENCE EK,
LAW SE SIRF SAMAJ KA ACCHA HONA CHAIYE

He was a supporter of sociological jurisprudence.

He drew a similarity between task of lawyer and engineer and gave the theory of social engineering. The goal
of his legal theory was to provide maximum satisfaction of wants of society with minimum wastage. Such a
society according to Roscoe Pound would be an ‘efficient’ society.

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Realisation of such a social structure would require balancing of competing interests.

For any legal order to be successful in making an efficient society, there has to be a recognition of certain
interests, such as individual, public and social.
As per him for any legal order (law) to be successful must have:
- Recognition of interest of individual public and society.
- The limits up to which such interest will be recognized.
- Securing such interest.
According to Roscoe Pound, for fixing the scope and the subject matter of the legal system, following five
things are required to be done:
1. Preparation of list of all interests and their classification.
2. Selection of the interests which should be legally recognized.
3. Specification of the limits up to which interest will be proteccted.
4. Creation of solutions through which laws may secure such interests when interest have been
recognised, and
5. Evolution of the principles of valuation of interests.
(kul milakar roscoe pound ke hisab se law ko sare logon ke interest “hit” protect karne chahiye aur is ke
liye aap sare logon ke hiton ko categorise Karen, fir dekhen ki kis had tak unhe protect karna hai aur fir
law banaiye)

CRITICISM
− Theory talks about interest but nothing is specified regarding measuring of such interest.
− Use of the word engineering is criticized as society keeps on changing and is dynamic and not static like
factory. Law is a social process rather then result of engineering.
− His theory gives more power of interpretation to judges in comparison with legislature as judges will have
to balance different interest.
− It is difficult to differentiate between public interest and social interest.
− Apart from the interest suggested by pound, selection of new interest is a matter of policy.

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− The theory says that wants of maximum number of people should be satisfied with mimimum friction so it
promotes public and social interest which may result in curtailing individual interest.
− The Classification of social and public interest is overlapping and misleading.
QUE:Critically examine Roscoe Pound’s theory of interests

Jhon William Salmond

SALMOND BOLTA HAI KI LAW KA EK HI KAAM,
LOGON KO DO JUSTIC AUR LO RAAM KA NAAM!
Law Professor of new Zealand, who also became the judge of supreme court of new Zealand, has also made
contribution towards jurisprudence.
According to him purpose of law is to deliver the justice to the people and he differentiated from Benthan
and Austin who did analysis of law without understanding its purpose.
He differentiated between “a law and the law”, a law refers to concrete law ( C.P.C ) , the law refers to
abstract law ( Civil Law ).

According to Salmond, some kind of compulsion is required to maintain justice and a person cannot be
compelled to do what he considers equitable in his own eyes.
One of the most important function of the state is to maintain justice.

According to Salmond the primary objective of state is the administration of justice and laws are made to
achieve such justice.
Law consists of pre- established and authoritative rules, which the judges apply in administration of justice
and judges should not apply their own discretion.

Salmond further said that the administration of justice is perfectly possible without laws though such a system
is not desirable. A court with free discretion in the absence of laws is capable of delivering justice if guided
by equity and good conscience.

CRITICISM
- As per Salmond laws must provide justice, but there are many laws that are unjust
- Justice is not only purpose of law, there are many other purposes.
- There is a contradiction when Salmond says that the purpose of law is the administration of justice but
limits ‘jurisprudence’ to the study of the ‘first principles’ of civil law of a national legal system because
justice is a universal concept, the jurisprudential analysis of law should not be constrained by national
boundaries.

Hans Kelson
Austrian philosopher: known for pure theory of law. He believed that contemporary theories were impure as
they were drawn from other fields like religion and morality.
He rejected the concept of justice as “there are many laws which may be unjust but continue as law”

Kelson described law as normative science as distinguished from natural sciences.

According to Kelsen, through legal norms we judge, whether an action is justified or not.

Kelsen developed a basic norm, which was called as Grundnorm and on the basis of such grundnorm all other
norms are developed and such grundnorm is the purest law.

For example, The Constitution of India may be treated as Grundnorm, as on the basis of Constitution of India
all other laws are developed in India.

Dushyant Jain^^ 14- -

Salient Features of Pure Theory:
• It is concerned with what law is not with how law should be.
• It tries to reduce the confusions created by natural school.
• It is not concerned with effectiveness of legal norm.
• This theory considers law as normative science.
KELSON BOLTA HAI, KI LAW SAHI HAI YA NAI HAI,
YEH PATA LAGAO GRUNDNORM SE!

Criticism of Kelsen’s Pure Theory:

1. It is difficult to trace ‘grundnorm’ in every legal system.
2. The Pure Theory also did not give the timeframe for which the effectiveness should hold for the
requirement of validity to be satisfied.
3. Kelsen’s theory ceases to be ‘pure’ the moment one tries to analyse the grundnorm because then one will
have to draw upon subjects other than law like sociology, history and morality.
4. This theory ignores natural school.
5. Sociolgical experts criticized this theory on the ground that it lacks practical significance.
Merits:
• Kelsen recognised international law as law.
• It is considered as one of the best theories.
• Kelsen has uplifted the status of law by treating law as separate body of knowledge.

Jeremy Bentham was the pioneer of analytical jurisprudence in Britain. According to him ‘a law’ may be
defined as a combination of signs, declarative of volition, assumed or adopted by a sovereign, in a state,
concerning the conduct to be observed in a certain case by a certain person or a class of persons, who in the
case in question are or are supposed to be subject to his power.

Thus, Bentham’s concept of law is an imperative one. As per Bentham Law is a command that gives pain and
pleasure. As per the concept of pleasure Law should give happiness, and law also gives pains as it creates
obligations on Individuals.
As per him the objective of law is promotion of happiness to greatest number of persons.
As per Bentham, utility means a charecterstic through which evil can be prevented and good can be ensured.
This utility of law is considered as pain and pleasure.

As per Bentham happiness of the community can be ensured by achieving 4 goals:

Subsistence, Abundence, Equality, Security for Citizens.
BENTHEM BOLTA HAI, KI LAW EK,
COMBINATION HAI, JISMAIN, SAHI KYA HAI,
GALAT KYA HAI, AUR JO SARKAR ADOPT KARTI HAI!

Bentham said that every law may be considered in eight different respects:

1. Source:
The source of a law is the will of the sovereign.

2. Subjects:
These may be persons or things. Each of these may be active or passive subjects, i.e., the agent with
which an act commences or terminates.

3. Objects:
The goals of a given law are its objects. For example the object of Company Law is amend and consolidate
the law relating to Companies.

Dushyant Jain^^ 15- -

4. Extent:
Direct extent means that a law covers a portion of land on which acts have their termination indirect
extent refers to the relation of an actor to a thing.

5. Aspects:
Every law has ‘directive’ and a ‘sanctional’ part. The “directive” part suggests the will of Soverien in
different situations (for example if yu have passed special resolution file MGT 14 with ROC) and the
“Sanction” part relates the force of a law (for example if you don’t file the form in 30 days you will have
to pay penalty) . The four aspects of the soverign will are command, prohibition, non-prohibition and non-
command and the whole range of laws are covered under it.

6. Force:
The motivation to obey a law is generated by the force (may be in form of penalties) behind the law.

7. Remedial appendage:
These are a set of subsidiary laws addressed to the judges through which the judges cure the evil
(compensation), stop the evil or prevent future evil.

8. Expression:
A law, in the ultimate, is an expression of a sovereign’s will. The connection with will raises the problem
of discovering the will from the expression.

Criticism of Bentham’s theory of law

1. Due to Bentham’s strait-jacketing of laws into an imperative theory- all laws have to be either command
or permission, it does not take proper account of laws conferring power like the power to make contracts,
create title etc.
2. Bentham did not give a fair treatment to custom as a source of law. He said customs could never be
‘complete’.
3. Bentham’s theory did not allow for judge made laws and hoped that such laws would be gradually
eliminated by having ‘complete laws’.
4. To judge an action according to the pleasure- pain criterion is to judge it subjectively. The theory did not
provide how a subjective criterion of pain and pleasure can be transmuted into an objective one.
5. It is not always true that an increase in the happiness of a certain segment of society will lead to an
increase in the overall happiness level because it might be associated with a diminution in the happiness
of some other rival section of the society.
6. No place of ethics, values and morals in this theory.
Benefits:
• It created a way for sociological school of jurisprudence.
• More importance is given to security of honour, property and status of a person.
• He focused on codification of customs due to which legal reform took place.

Merits Demerits
He has given more focus on security as it is related to He failed to create balance between individual and
protection of Honour, Property and status of person. social interest.
It created a way for sociological school of Lesislation is one of the sources of law but not only
jurisprudence. the source of law.
He linked philosophy with practical legal prepositions. His thoey favors capitalism.

Que: The sovereign power of making laws should be wielded, not to guarantee the selfish desires of
individuals, but consciously to secure the common good. Critically examine this statement of Bentham.

Dushyant Jain^^ 16- -

 CHAPTER: 2
CONSTITUTION OF INDIA

SALIENT FEATURES OF THE INDIAN CONSTITUTION

1) It declares India to be a sovereign state – It means we are an independent country and the no other
external power can rule the country.
2) A democratic country (people elect their own representatives).
3) Secular country (the word secular was added in the constitution in the year 1976 by 42nd amendment).
4) Socialist country – It means control of the Govt. in the means of production.
5) Republic state – head of the Govt. is an elected person not a monarch or any dictator.
6) Constitution gives independence to the judiciary.
7) Constitution describes relation of Govt. with the people of the country.
8) Constitution describes relation of two state Govt. & relation of state Govt. with Central Government by
way of distribution of power between state & central Govt. is also given.
9) Constitution of India constitutes 448 articles 12 schedules & divided into 25 parts.
10) Thus, constitution is a document ruling the whole country.
11) Constitution describes the basic structure of the government.

PREAMBLE
The preamble contains the fundamentals of the Constitution. It contains the purpose and objectives of the
constitution. It declares India to be Sovereign, Socialist, Secular, Democratic, Republic and secures to its
citizens;
✓ Justice: Social, Economic and Political
✓ Liberty of thought: expression, belief, faith and worship
✓ Equality of status and opportunity
✓ Fraternity, assuring the dignity of individual, and the unity and integrity of the nation.

Dushyant Jain^^ 17- -

BASIC STRUCTURE
Basic structure means the form of the Government. There are two forms of Govt. unitary and federal. Unitary
is followed in Canada, China, France, Japan federal is followed in USA.
Many times the question has been raised as to, whether our constitution and Govt. is federal or unitary,
federal means an agreement, which defines the powers of two sets of the Governments i.e. national and
regional. Unitary means the supreme power belongs to the Central Government and there is no constitutional
division of power between the national and regional Governments. The question arises whether Indian
Constitution is federal or unitary.

The constitution of India is basically federal but also has some unitary features:

a) The majority of judges of Supreme Court in the case of Keshavananda Bharati V/s. State of Kerala,
decided that Indian constitution is federal.

b) Later on some controversies were put up whether the structure is unitary or federal.

c) To decide this issue, we will have to look at the contents of the constitution & the features of unitary &
federal systems.

FEATURES OF FEDERAL SYSTEM

1) Dual Government –
India has this characteristic as we have central & state Govt.

2) Distribution of Powers-
India satisfies this feature by distributing powers between Central & State Govt. through various lists viz.
state list, unitary list and concurrent list.

3) Supremacy of constitution-
India has this feature too, as the constitution is supreme document ruling the country.

4) Independence of judiciary–
Judicial powers are separate from executive.

5) Written constitution–
We also have a written constitution.

6) Rigid procedure for amendment of constitution–

We also have a very rigid and difficult procedure for making an amendment in to the Constitution. For
amending the provisions of constitution, a Constitution Amendment Act has to be passed.

By above discussion we can say that India satisfies majority of the features of federalism However, there are
some peculiarities of Indian federalism:

i) Mode of Formation:
In American system all the independent states, by an agreement, founded a new central polity &
surrendered a fixed part of their powers to the newly formed polity. India followed Canadian mode by
which the autonomous units were created & they were combined to form a Central Govt.

ii) Position of states in federation:

In federal system number of safe-guards are provided for protection of interests of state, as they were
independent before formation of federal system. However, in India, states were not independent units.
So the powers are also exercised by union e.g. residuary powers or concurrent list.

Dushyant Jain^^ 18- -

iii) Citizenship:
America has a dual citizenship system, India has a single citizenship system (under dual citizenship an
individual has two citizenships i.e. one for the state and one for the country).

iv) Residuary powers:

Residuary powers remains with the states in federal system, however in our country the residuary powers
are exercised by the Union in India.
(Residuary powers means, the power that is neither specified in state list or the concurrent list)

CONCLUSION
India is a quasi-federal state as it has features of both federal & unitary system.

Que: Examine how far the essentials of federal polity is incorporated in Indian Constitution.

Fundamental Rights:

The Constitution wants to give to the people “liberty of thought, expression, belief, faith and worship;
equality of status and of opportunity; and fraternity assuring the dignity of the individual”. With this object,
the fundamental rights are given in Part III of the Constitution.

The Concept of Fundamental Rights

Political philosophers in the 17th Century believed that the man by birth has certain rights which were
universal and inseparable, and he could not be deprived of them.

The Declaration of American Independence 1776, stated that all men are created equal, that have rights, such
as, life, liberty and the pursuit of happiness.

It was thought that these rights should be fixed in such a way that they may not be interfered even by
Legislature.

With this in view, some written Constitutions (especially after the First World War) guarantee rights of the
people and stop every organ of the Government from interfering with the same.

The Position in England: The Constitution of England is unwritten. No Code of Fundamental Rights exists. In
England doctrine of the sovereignty of Parliament exists and there is no legal check on the power of the
Parliament which so it is free to make any law.

The protection of individual freedom in England is not protected by constitution but on the basis of public
opinion, good sense of the people, strong common law, traditions favouring individual

Dushyant Jain^^ 19- -

liberty, and the parliamentary form of Government. Moreover, the participation of U.K. in the European
Union has made a difference.
(England main constitution nai hai par kanoonon ke dwara aur janta ke opinions ke aadhar par protection de
jati hai moolbhoot adhikaron ko)
The Position in America:
The USA wanted to protect the basic rights of people from the parliamentary cruelty. The power is given to
the Courts to interfear whenever parliament intends to take away the basic rights of the people by making
laws. In the United States ‘Judicial Supremacy’, exists as opposed to the ‘Parliamentary Supremacy’ in
England.

The Courts in the United States are competent to declare an Act of Congress as unconstitutional on the
ground of contravention of any provision of the Bill of Rights (fundamental rights).

The Position in India:

In India, the Simon Commission and the Joint Parliamentary Committee had rejected the idea of Fundamental
Rights.

The Nehru Committee recommended the inclusion of Fundamental Rights in the Constitution for the country.

The demand of the people was not met by the British Parliament under the Government of India Act, 1935.

But due to enthusiasm of the people, Fundamental Rights were included in the Statement of May 16, 1946
made by the Cabinet Mission-(which became the basis of the present Constitution) to the effect that the
Constitution-making body may adopt the rights in the Constitution.

When Constituent Assembly began to work in December, 1947,the fundamental rights emerged are contained
in Part III of the Constitution the title of which is “Fundamental Rights”.

The Supreme Court in the case of Pratap Singh v. State of Jharkhand, decided that Part III of the
Constitution protects substantive (essential) as well as procedural rights and are protected by the Judiciary.

Part III of the Indian Constitution guarantees six categories of fundamental rights.

No fundamental right is complete every right has reasonable restrictions.

From the point of view of persons to whom the rights are available, the fundamental rights may be classified
as follows:
(a) Articles 15, 16, 19 and 30 are guaranteed only to citizens.

(b) Articles 14, 20, 21, 22, 23, 25, 27 and 28 are available to any person on the soil of India – citizen or
foreigner.

(c) The rights guaranteed by Articles 15, 17, 18, 20, 24 are absolute limitations upon the legislative power.

ARTICLE 12
DEFINITION OF A STATE
JO BHI SARKARI HAI WO SAB STATE HAI,
STATE KE UPAR KAFI SARE OBLIGATIONS HAI!
1) The word state is defined under Article 12 of constitution & it includes,
a) The Govt. and parliament of India,
b) The Govt. and Legislature of each state.
c) All local and other authorities,

Dushyant Jain^^ 20- -

 i) Within territory of India,
ii) Under the control of Govt. of India.

2) Local authority means Municipal Corporation, district boards, panchayats port trust, mining settlement
board etc.

3) In Electricity Board of Rajasthan V/s. Mohanlal, SUPREME COURT held that -- Other authorities include
all the authorities that are created by the constitution. e.g. electricity board, office of CAG, Election
Commission of India.

4) In case of AngurBalaPurulit was held that all the electricity authorities all included under state.

5) In University of Madras V/s. Shantabai, it was all held that all the universities are included in the
definition of state because they discharge functions of the Govt.

6) In Bidi supply Co. V/s. Union of India, it was held that if the authorities were under the control of Govt.
of India, they shall be included in the definition of state irrespective of their geographical location. E.g.
Foreign embassies.

7) In Sukhdev Singh V/s. Bhagatram& R.D. Shetty V/s. Indian Airport Authority, it was held that Airport
authority is also a state.

8) In SatishNayak V/s. Cochin Stock Exchange, it was held that stock exchanges are not state as they do not
discharge any function of the state.

9) In Ajay Hasia V/s. Khalid Mujib, The SUPREME COURT held that under the given circumstances the
corporations or authorities will become state:
a) If the entire share capital of a corporation is held by the Govt.
b) If the financial assistance provided by the Govt. is such that it will meet all the expenditure of
corporation. E.g. IIT, NavodayaVidyalaya, housing boards.
c) If the corporation enjoys monopoly status granted by the Govt. such corporation enjoys the status of
state. E.g. Railway, RBI.
d) If the functions of the corporation are of public importance & closely related to Govt. e.g. airports,
defense, nuclear power etc.
e) Existence of deep & pervasive control of the Govt. in any corporation will make it state. E.g. Govt.
departments.
f) If a department of Govt. is transformed to a corporation then such corporation would be a state.
10) Zee Telefilms V/s. Union of India, it was held that BCCI is not state. As no financial assistance is
provided by the state and also it does not discharge the functions of the Government.

Que: Explain the test laid down by the Supreme Court of India for determining whether an entity is an
instrumentality or agency of the state.

Dushyant Jain^^ 21- -

ARTICLE 13
JUSTIFIABILITY OF FUNDAMENTAL RIGHTS
Fundamental rights are the basic rights granted by the constitution to every citizen of the country. These
rights are contained in part III of the Constitution of India.

The word ‘law’ according to the definition given in Article 13 itself includes – “... any Ordinance, order, bye-
law, rule, regulation, notification, custom or usage having in the territory of India, the force of law.”
EXISTING LAWS – Article 13(1)
The laws which were in force at a time when the fundamental rights were enacted.
Eg. Contract Act, Negotiable Instrument Act, Partnership Act.

FUTURE LAWS – Article 13(2)

It means the laws which were enacted after fundamental rights.

DOCTRINE OF SEVERABILITY
JO LAW CONSTITUION KE AGAINST HAI,
WO POORA INVALID NAHI HOGA
a) It is given in Article 13 of Constitution of India.
b) Doctrine of Severability is related to the provisions of law which are inconsistent or does not support the
fundamental rights.
c) According to this doctrine if any provision or provisions of any law are inconsistent with the fundamental
rights, in this case only such provisions which are inconsistent with fundamental rights will become invalid
rest of the law will remain valid and intact, if it is not inconsistent with the fundamental rights.
d) A.K. Gopalan V/s. State of Madras, In this case the Supreme Court declared section 14 of the Preventive
Detention Act as invalid as it was against the article 22 of the fundamental rights relating to protection
against arrest and detention.

DOCTRINE OF ECLIPSE
JISE TUM SOCH RAHE THE KI WO MAR GAYA,
WO SIRF SO RAHA HAI, ZINDA HO JAEGA AGR CONSTITUION MAIN CHANGE AAYA TO
1) This is contained in Article 13 (1) of the Constitution of India. According to this doctrine the laws which
were inconsistent with the fundamental rights remained invalid but they did not die altogether.
2) If any amendment is made in the constitution due to which the invalid part becomes consistent with the
fundamental rights, in this case such invalid part will again become valid.
Case laws:
Bhikaji Narain Dhakras V/s. State of M.P.
MP Govt. passed an act called C.P and Berar Motor Vehicles Act, 1947, the act gave power to the M. P
Govt. to regulate & control public transport business. It restricted the freedom of private bus operators
to do public transport business.
But when the constitution was passed the fundamental rights gave freedom to trade & business.
➢ And the C.P. & Berar Motor Vehicles Act became invalid.
➢ An amendment was made in the constitution which gave power to state Govt. to create monopoly in
its favor in the matter of public transport.
➢ After this amendment C. P. Berar & Motor Vehicles Act 1947, became valid.

Dushyant Jain^^ 22- -

DOCTRINE OF WAIVER

It is contained in Article 13 of the COI According to this doctrine, a person is the best judge himself to decide
whether he wants to avail or not to avail fundamental rights given to him by the Constitution.
➢ If a person denies any Fundamental Rights, he cannot claim it as per American Constitution.
➢ In India whether a person can waive his Fundamental right was decided in the Basheswar Nath V/s. CIT.
In this case it was held that an individual / citizen cannot waive his F.R. granted to him by the Constitution on
the grounds of public policy.

ARTICLE 14
RIGHT TO EQUALITY
1) Equality before Law
2) Equal Protection of Law.

EQUALITY BEFORE LAW

1) It is a negative concept, which ensures that there is no special privilege in favour of any person & all
persons are treated equally & subject to ordinary laws of the land.
2) Whatever may be the status of the person all persons are treated equally by the law –

Case Kalyan Sarkar V/s. Rakesh Ranjan.

In this case it was decided by the Supreme Court that the members of the parliament & influential politicians
are not above the law & while in a police custody are to be kept in the same prison like an ordinary prisoner.

We can conclude that before law everybody is equal.

President, State Governors & Foreign Diplomats are the exceptions to the above rule.
(Privilage is not for person but for the post)

QUE:Article 14 of the Constitution of India says that state shall not deny to any person equality before the law
or the equal protection of laws within the territory of India. Explain it. Refer the relevant Judgements.

EQUAL PROTECTION OF LAW

1) It is a positive statement which ensures that all the persons will get an equal treatment in the similar
situations both in case of privileges & liabilities.

2) Equal laws should be applied to all the people.

Case Law :State of West Bengal V/s. Anwar Ali Sarkar.
In this case it was decided by the court that though equality before law & equal protection of law appears
to be contradictory but both the expressions means one thing & both provide a single meaning & single
objective.

DOCTRINE OF REASONABLE CLASSIFICATION

BHAI APNE CONSTITUTION MAIN CLASSIFICATION,
KIYA HUA HAI UNEQUAL LOGON KE LIYE
The Constitution of India permits a reasonable classification in legislations so that the “equals may be treated
equally & unequal may be treated differently”

The Article 14 allows classification but prohibits class legislation, it means on valid ground classification can
be made but class legislation is the law that provides privilege to specific class of persons without any
justifiable ground, so tosum up we can say if privilages or rights are provided to persons on reasonable
grounds by any law we can say its classification but if privilages are granted in unjustified manner without any
lawful gorund to some persons, it will mean class legislation, Constitution allows classification

Dushyant Jain^^ 23- -

but prohibits class legislation. This rule was established in the case Ram Kishan Dalmiyan Vs Justice
Tendulkar.
(matlab agar uchit reasons ke chalte different treatment diya to wo classification hai aur bina uchit karan ke
different treatment diya to wo class legislation hai)
For example we can not provide the benefit of Labour Laws to a Company Secretary who is working as a
Practicing Company Secretary, so we must make reasonable classification in each law so as to achive some
specific objectives.

Classification in terms of applicability of law is essential so that all equals may be treated equally for example
all 3 years child must start their education from Nursery and not directly from class 12.

According to this doctrine a classification may be made by the parliament for the purpose of achieving
specific objective classification can be made between the people to whom the protection should be granted &
to whom protection should not be granted.

The classification to be valid must satisfy the following 2 conditions.

1) It must be made on intelligible ground (intelligible differentia) & with specific reason.
2) Classification should result in the achievement of the objectives.
For example, in the Contract Act, 1872 a classification has been made between the persons who are major &
minor & a special protection has been provided to the minors. The object is to protect the minors, so when
the reasaoble classification is made the minors are protected. The contract act makes a classification which is
reasonable.
In the case of P. Rajandran v. State of Mysore, a provision for district-wise distribution of seats in State
Medical colleges on the basis of population of a district to the population of the State was held to be void.
The Supreme Court in State of Bihar v. Bihar State ‘Plus-2’ lectures Associations, held that now it is well
settled and cannot be disputed that Article 14 of the Constitution guarantees equality before the law and
gives equal protection of laws. It prohibits the state from denying persons or class of persons equal
treatment; provided they are equals and are similarly situated. It however, does not forbid classification. In
other words, what Article 14 prohibits is discrimination and not classification if otherwise such classification is
legal, valid and reasonable.
Que: Discuss the rules with respect to permissible classification as evolved in various decisions and have been
summarised by Supreme Court in Ram Kishan Dalmiya V. Justice Tendolkar, AIR 1958 SC, 538.

Classification may be made on the following ground:

1) Geographical classification
Some privileges & exemptions, can be granted to people who stay in a tribal area or any backward region
case laws. M.P. Oil extraction V/s. State of M.P.

2) Classification in favour of a state

The term person in article 14 does not include state therefore a classification that treats the state
different from the persons will be a valid classification.

SagirAhenmad VS. State of U.P

In this case it was decided that a monopoly created by state in its favor with reference to

Dushyant Jain^^ 24- -

 the motor transport business will not violate the provisions of article 14.

3) Special courts & special procedures

Some special courts are formed by legislature for some special offences e.g. TADA COURT. These Courts
are created under special laws for special objects.

4) Single Personal Law

Case Law: CharanjitLalChowdhary V/s. Union of India.
SINGLE PERSON LAW
CASE LAW

Charanjit Lal Chowdhary V/s. Union of India. In this case it was held that the law will be valid even if it
applies to a single individual if that individual is treated as a different class.
The petitioner was CLC as shareholder of Sholapur Spinning & Weaving Company Ltd. The Company SSWCL
was functioning well but later on, on account of mismanagement of the funds by the directors, the Company
was about to be closed down. Later on, the Government thought if the Company will stop functioning the
production of essential commodity will be affected & large amount of unemployment will be caused.

The Government decided to take over & control the management of the Company & for this purpose the
Government passed an act Sholapur Spinning & Weaving Company Emergency Provisions Act, 1950. The
shareholders were denied the voting rights & also the right to attend meetings of the Company. The
Petitioner contended that he was not given equal protection of laws if he compares himself with the
shareholders of other Companies.
The Supreme Court held that the law will be valid even if it applies to a single individual in some special
circumstances, if single individual is treated as a class himself (i.e. the shareholders of Solapur Spinning and
Weaving Company)

To Conclude we can say Article 14 allows classification but it does not allow class legislations, i.e in same law
on reasonable grounds classification can be made i.e unequals my be treated differently but for each class of
persons separate laws can not be made for providing special benefits or provilages on unreasonable grounds.

In the case of RK Garg Vs Union of India, the Government made a law called as Special Bearer Bonds
(Immunities and Exemptions) Act, 1981, which gave option to all black money holders to invest their black
money in the Special Bonds without any question being asked, this law was challenged as it discriminated and
affected the honest tax payers and supported the black money holders, the Supreme Court decieded that it is
a reasonable classification as it had the objective of bringing the black money in to the Economy.

In the case of UP Suger Corporation Limited Vs Sant Raj Singh, it was decided that classification also may be
made on the basis of professional qualification for example the persons with higher qualification can be given
better remuneration. It does not affect article 14.
Que: 'A' a state in the Union of India made provisions for district-wise distribution of seats in state medical
colleges on the basis of population of a district to the population of the state. Decide the validity of this
classification with the help of relevant case law.

Equality is a comparative concept. A person is treated unequally only if that person is treated worse than
others, and those others (the comparison group) must be those who are ‘similarly situated’ to the
complainant. (Glanrock Estate (P) Ltd. v. State of T N.

Legislative classification
The Supreme Court in a number of cases has supported the view that Article 14 does not rule out
classification for purposes of legislation. Article 14 does not forbid classification or differentiation which rests
upon reasonable grounds of distinction (it means law can make a reasonable classification)
ARTICLE 15

Dushyant Jain^^ 25- -

PROHIBITION OF DISCRIMINATION ON GROUNDS OF RELIGION ETC.
As per Article 15(1) there is a complete Prohibition of discrimination on the grounds of Religion, race, caste,
sex place of birth.

Article 15(2) lays down that no citizen shall be stopped from entering in to shops, hotels, places of public
entertainment on the ground of Religion, race, caste, sex place of birth.

Article 15(3) the State can make special provision for women and children.

Article 15(4) permits the State to make special provision for the advancement of –
(a) Socially and educationally backward classes of citizens;
(b) Scheduled casts; and
(c) Scheduled tribes.

Article 15(5) permits the State to make special provision for the advancement of any socially and
educationally backward classes of citizens or for the Scheduled Castes or the Scheduled Tribes in relation to
their admission to educational institutions including private educational institutions, whether aided or
unaided by the State, other than the minority educational institutions.

Further, Article 15(6) provides that nothing in this article (article 15) or relating to freedom of trade in article
19 or article 29, shall stop the State from making, –
(a) any special provision for the advancement of any economically weaker sections of citizens other than the
classes mentioned in clauses (4) and (5); and
(b) any special provision for the advancement of any economically weaker sections of citizens other than the
classes mentioned in clauses (4) and (5) if provisions relate to their admission to educational institutions
including private educational institutions, whether aided or unaided by the State, other than the minority
educational institutions referred to in clause (1) of article 30, which in the case of reservation would be in
addition to the existing reservations and subject to a maximum of ten per cent. of the total seats in each
category.

Explanation. – For the purposes of Article 15 and Article 16, “economically weaker sections” shall be such as
may be notified by the State from time to time on the basis of family income and other indicators of
economic disadvantage.

ARTICLE 16
EQUALITY OF OPPORTUNITY IN MATTERS OF PUBLIC EMPLOYMENT
SARKARI NAUKARI MAIN SAB KO BARABARI SE MAUKA MILEGA
Article 16(1) guarantees to all citizens equality of opportunity in matters relating to employment or
appointment of office under the State.

Article 16(2) prohibits discrimination against a citizen on the grounds of religion, race, caste, sex, descent,
place of birth or residence.

Article 16(3) states that there should be equality or equal opportunity should be provided by the state in the
matters of public employment.

Exceptions to the general rule:

1) Parliament can make law related to reservations of job for the people residing in any territory or in any
backward part of the country.
2) Reservations can be made for upliftment of any backward class.
3) Reservations can be made in respect of promotions.
4) If a law states that particular religious office shall be held by person belonging to the

Dushyant Jain^^ 26- -

 specific religion then that law shall not be invalid.
5) Parliament can also make laws that particular vacancy in any state will be filled by appointing a person
from the same state.
6) If the reserved vacancies are not filled up in any year, then such vacancies can be filled in succeeding
year and when such vacancies are carry forwarded they shall not be the part of overall limit on
reservation of 50%. (agar reserved class ke vacany nai bhrti to use agle sal bhara jaega aur yeh unfilled
vacancies ko alag treat kiya jaega aur 50% ki limit main yeh pichle sal vali vacancies nai aayengi)
7) Apart from the maximum reservation limit of 50% reservations can be made up to 10% in favor of people
belonging to economically weaker sections.
In the case of Secy. of State of Karnataka v. Umadevi, it was decided that following equality in public employment is
the basic feature of constitution.

ARTICLE 17
ABOLITION OF UNTOUCHABILITY
1. Now there is a complete prohibition of untouchability & untouchability is punished.
2. Untouchability is punishable up to 3 months.
Insitigation to social boycott is not untouchability – Davarajiah Vs Padamanna
In 1955 Parliament enacted the Untouchability (Offences) Act 1955. In 1976, the Act was amended and
renamed as the “Protection of Civil Rights Act, 1955” making changes in the existing law namely, all offences
to be treated as non-compoundable and offences punishable upto three months to be tried summarily;
punishment of offences enhanced; preaching of untouchability or its justification made an offence; a
machinery envisaged for better administration and enforcement of its provisions
ARTICLE 18
ABOLITION OF TITLES
Now no one can use titles such as Raja, Maharaj, Zamindar etc.
Article 18 is a prohibition rather than a fundamental right.
An Indian citizen shall not accept any title from a foreign state without approval of the president.
State can grant only academic or military titles.
National Awards do not violate article 18.

British Government used to confer titles upon persons who showed special allegiance to them. Many persons
were made Sir, Raj Bahadur, Rai Saheb, Knight, etc. These titles had the effect of creating a class of certain
persons which was regarded superior to others and thus had the effect of perpetuating inequality. To do away
with that practice, now Article 18 provides as under:
(i) No title, not being a military or academic distinction, shall be conferred by the State.
(ii) No citizen of India shall accept any title from any foreign State.
(iii) No person, who is not a citizen of India shall, while he holds any office or trust under
the State, accept without the consent of the President, any title from any foreign
State.
(iv) No person, holding any office of profit or trust under State shall without the consent of
the President, accept any present, emolument or office of any kind from or under a
foreign State
ARTICLE 19
RIGHTS RELATING TO FREEDOM
It is the most important Fundamental right granted to the citizen by the constitution. This is divided into 6
parts:

Dushyant Jain^^ 27- -

 FREEDOM OF SPEECH & EXPRESSION 19(1) (a)

FREEDOM OF ASSEMBLY 19 (1) (b)

FREEDOM OF ASSOCIATIONS 19 (1) (c)

FREEDOM OF MOVEMENT 19 (1) (d)

FREEDOM OF RESIDENCE 19 (1) (e)

FREEDOM TO TRADE & OCCUPATIONARTICLE 19 (1) (g)

FREEDOM OF SPEECH & EXPRESSION 19(1)(a)

This freedom means a right to express opinions and ideas freely through words (written or spoken), signs,
prints, pictures etc.
This freedom is divided into following 2 parts:
b) Expression of an opinion by any individual,
c) Freedom given to media to publish the opinions of any individual.

CASE LAW
a) Cricket Association of Bengal V/s. Ministry of Information & Broadcasting.
The SUPREME COURT held that freedom of speech & expression includes freedom to communicate through
any media i.e. print, electronic & audio-visual.

b) Benet Coleman V/s. Union of India.

In this case law the Newsprint Control Order which fixed the maximum number of pages in the newspaper
(10 pages) with an object to stop the monopoly of big news paper & to grow the small newspapers was
declared as unconstitutional by the Supreme Court as it an unreasonable restriction on the freedom of
Press.

However it shall be remembered that the freedom of press may also be restricted under article 19(2)
- general restriction on article 19

c) Maneka Gandhi V/s. Union of India.

The SUPREME COURT decided that freedom to press is basic nature of freedom of speech & expression.

d) Hamdard Dawakhana V/s. Union of India.

In this case the SUPREME COURT decided that commercial advertisements do not come under the purview
of freedom of speech & expression; but is covered under freedom of trade & commerce. But later on in
TATA Press Ltd. V/s. MTNL. In this case it was decided that commercial speech in any form printed,
electronic or audio-visual comes under article 19 i.e. freedom of speech & expression.

e) Navin Jindal Vs Union of India

In this case the SUPREME COURT held that flying the national flag is an expression of respect towards the
flag & the country. So this right has been covered under the freedom of speech & expression.

Dushyant Jain^^ 28- -

 Drammatic Performance is also the part of freedon of speech and expression – K.A Abbas Vs Union of
India.

In the case of TELCO Vs State of Bihar, it was said that company is not a citizen and hence no fundmental
rights are granted to it and the Court will not lift the corporate veil to protect the right of shareholders
but in the case of RC Cooper Vs Union of India (also known as Bank Nationalisation case) the Supreme
Court decided that if any law affects the rights of shareholder as well as Company then the Courts can
provide a relief.

The right to know, ‘receive and impart information’ has been recognized within the right to freedom of speech
and expression (S.P. Gupta v. President of India)

In K.A. Abbas v. Union of India, the Court held that censorship of films including (pre-censorship) is justified
under Article 19 of the Constitution but the restrictions must be reasonable.

PERMISSIBLE RESTRICTIONS
1) Sovereignty & integrity of India.
2) Security of the state.
3) Friendly relations with foreign states.
4) Public Order (Public peace).
5) Decency or Morality or
6) Contempt of court (Disobedience of court)
7) Defamation or (say something bad about someone)
8) Incitement to an offence.
The restrictions imposed under article 19 (1)(a) shall be subject to following conditions:
1. Restriction to be imposed by a Law.
2. Restriction to be reasoable.
3. Restriction to be imposed for achieving the objects given in article 19.

In case any person is aggrieved by restriction he can approach the courts for claiming of his rights.

On the grounds such as, the objective of restriction, its duration, the urgency behind restriction, the coditions
that were existing at the time of imposing of restrictions are the basic factors that Court considers to check
the reasonableness of restrictions.

The Courts just check the reasobaleness of restrictions and not the law which provides for restrictions. It has
been established that if restrictions are imposed for carrying out the duties given in directive principles than
it amounts to a reasonable restriction. In the American Constitution, it has been said “due process” should be
followed for imposing restrictions.
In the case of Lord Krishna Sagar Mills v. Union of India, it was decided that, In deciding the reasonableness of a law,
the Court will not only see the surrounding circumstances, but all contemporaneous legislation passed as part of a
single scheme.
The phrase ‘reasonable restrictions’ connotes that the limitation imposed upon a person in the enjoyment of a right
should not be arbitrary or of an excessive nature.

1) FREEDOM OF ASSEMBLY 19(1)(b)

Right of citizens to assemble peacefully & without arms. This right gives the right of public meetings. The
State can restrict this right on the grounds of sovereignty and and integirity of India and

Dushyant Jain^^ 29- -

 public order. Calling a public meeting and putting views before it by speaking and expressing is the right
under this article.

2) FREEDOM OF ASSOCIATIONS 19(1)(c)

Under this freedom also public meetings can be held and processions can be taken without arms and also
associations can be formed.

Association means meeting of people for a common purpose e.g. charity, Club, Trust, Unions etc.
The freedom of association also includes a right not to form association, however this position was cleared
by Andhra Pradesh High Court in the case of, Sitharamachary Vs Senior Inspector of School, by stating
that a school teacher can not be compelled to beome the member of school teachers association.

The State can restrict this right on the grounds of sovereignty and and integirity of India, morality and
public order.

In the case of O.K Ghosh Vs Joseph, the Supreme Court said that, the right of forming an association for
achieving a particular object or for running a particular associations in not the part of freedom of
association.

QUE: Explain the freedom of association under the Constitution of India. What reasonable restrictions
have been imposed on this freedom under Article 19 of the Constitution of India ?

3) FREEDOM OF MOVEMENT 19(1)(d)

A right to move freely throughout the territory of India is another right guaranteed under Article 19(1)(d).
Restrictions which can be imposed by state:
1) In the interests of the general public.
2) For the protection of the interests of any scheduled tribe.
A law authorising for externment (kisi ko nikal dena, tadipar kar dena) should be reasonable.

4) FREEDOM OF RESIDENCE 19 (1) (e)

Article 19(1)(e) of the constitution of India guarantees to a citizen a right to reside and settle in any part of
the territory of India. The freedom removes internal barriers on the citizens and they can freely reside and
travel in any part of the country. However the state can put reasonable restriction on the freedom granted
under this article In the interests of the general public or For the protection of the interests of any scheduled
tribe.
In the case of Ebrahim Vs State of Bombay, it was decided that Certain areas may be prohibited for certain
kinds of persons such as prostitutes.
In the case of State of U.P. v. Kaushaliya, it was decided that, , certain areas may be banned for certain kinds of
persons such as prostitutes.

Article 19(1)(f) giving a right to acquire and hold property – Deleted by 44th Amendment to Constitution.
5) FREEDOM TO TRADE & OCCUPATIONARTICLE 19 (1) (g)
Article 19(1)(g) of the Constitution of India gives the individual a freedom to carry on any trade business &
profession.
CASE LAW

In the case of Safdarjung Hospital V/s. K.S. Sethi it was decided that trade includes buying & selling
barter or commerce or any skilled work etc.
✓ But the term business is wider than the term trade.
✓ “What is business & what is not” can be decided by applying common sense.
✓ Business includes trade.

Dushyant Jain^^ 30- -

 ✓ In the freedom of trade & business, reasonable restrictions can be imposed by the parliament e.g.
1) In some case Govt. has created monopoly for itself,
2) There is a restriction on dealing in narcotic drugs

PROFESSION
Profession means an occupation requiring an intellectual skill & a prescribed education qualification. There is
a freedom that any person may engage himself in any kind of profession.

However the state can impose restrictions in practice of profession on the following grounds:

1) By prescribing educational or technical qualification for practicing any profession, oron carrying of
occupation, trade or business e.g. The Government can make law and stat that in order work as a CS a
person should have membership of ICSI.
2) The Government (state) or corporation owned by state can carryout any trade, occupation or profession
and may restrict the citizens wholly or partially from carrying out any trade profession or occupation. For
example RBI Act, 1934 states that currency note printing activity will be carried out by the RBI.
3) In the interest of general public also there can be reaosonable restrictions on this freedom.
So state by making a law can impose restrictions on the freedom granted under article 19(1) (g).

MONOPOLY
SARKAR APNE FAVOR MAIN MONOPOLY KAR SAKTI HAI,
PAR WO UNREASONABLE NAI HONI CHAHIYE
The state has been given a right under the constitutional amendment act to create monopoly in its favor.
However, there must be reasonable grounds for creation of monopoly. If monopoly is created on unreasonable
ground then such monopoly will be invalid.

CASE LAW: Chintamana Rao V/s. State of M.P.

➢ MP Govt. passed Madhya Pradesh Act, As per the Act, during agricultural season no person Could be
employed for bidi manufacturing.
➢ Due to this no person could employ himself with bidi manufacture even the old man and women and
children could not get employment because it was diffuclt for them to carry agricultural activities. This
caused large scale unemployment. The Supreme Court held that, the monopoly created for agriculture
sector was unreasonable.

In the case of Association of Registration Plates Vs Union of India, it was decided that State is free to create
monopoly in its favour, however the benefit of such monopoly must be in favour of state and not in faovr of
some limited class of persons.

ARTICLE 20
PROTECTION IN RESPECT OF CONVICTION FOR OFFENCES
A) Protection in respect of ex-post facto laws
Ex post facto laws mean the laws which are made after the commitment of any offence. According to this
rule, if a person has committed any wrong act then he should be punished for that act according to the
law of land at that time. If due to any amendment in law, punishment has been increased for that act it
should not be applicable to the person who committed the crime before the amendment.

For example in 1994 I abused Mohan and in 1994 abusing was not offence, In 1996 a law was made and
abusing was made offence so I will not be punished for the abusing which I did in 1994.

Case Law: Kedar Nath V/s. State of West Bengal.

Dushyant Jain^^ 31- -

 In this case a person was convicted under prevention of corruption Act, 1947. In the year 1949 by an
amendment the punishment for a corruption was increased. It was decided by the court that the
increased imprisonment was not applicable to Kedar Nath.

In the case of Shiv Bahadur Singh Vs State of Vindhya Pradesh it was decided that the protection in
respect of ex post facto laws is available in respect of imprisonments, fine and penalties and not in
respect of procedureal laws.

B) Protection against double jeopardy

According to this rule, no person shall be prosecuted & punished more than once for a single offence.
Case Law: Maqbool Husain V/s. State of Bombay
In this case, a person’s goods were confiscated by the custom authorities as he was travelling with
undeclared goods. The prosecution was started against him under the Custom Act 1878 and another
prosecution was started against him under FERA Act, 1947. The Supreme Court decided that the
prosecution under FERA Act, was a valid prosecution.

C) Protection against self-incrimination

Article 20(3), according to this rule, no accused shall be compelled to state something which goes against
him. Every person is presumed to be innocent till any contrary is proved & it is the duty of prosecution to
proof the guilty commitment by the accused.
Case Law: In case of M. P. Sharma V/s. Satishchandra, it was decided that right of protection from self-
incrimination will be available to a person if the following conditions are fulfilled:
1) A person must be accused.
2) He is being compelled to give an evidence against himself.

In the case of Selvi Vs State of Karnataka it was decided that, this protection is also available to a
witness who believes that if he states something he will be exposed to criminal proceedings.

ARTICLE 21
PROTECTION OF LIFE & PERSONAL LIBERTY
1) This article of the constitution has received the maximum no. of interpretation.
2) Article 21 states that no person shall be deprived of his life or personal liberty except, according to the
procedure established by law.

CASE LAW (LIFE)

1) Kharak Singh V/s. State of U.P. :
In this case it was decided by the SUPREME COURT that life means something more than animal existence.
It means life with human dignity.

2) Life also means those things which make the life meaningful so the right of couple to adopt a child also
comes under life in Philips Alfred Malvin V/s. Y.J. Gonsalvis.

3) Aruna Shanbaug V/s. Union of India (2011)

In this case it was decided by the court that right to live does not include right not to live.

4) Olga Tellis Vs Bombay Municipal Corporation, in this case it was decided that right to livelihood is the
right of life as no person can live without the means of living, that is the means of livelihood.

5) Unnikrishnan Vs State of Andhra Pradesh, in this case it was decided that life includes education & now
the right of education has been declared as a fundamental right under article 21.

6) In the case of Swapnil Tripathi and Ors. vs. Supreme Court of India and Ors, it was decided that live-

Dushyant Jain^^ 32- -

 streaming of court proceedings are important so as to allow administration of justice in transparent manner and
also due to the effect it has on public at large. It is important to understand the significance of live-streaming as
an extension of the principle of open justice and open courts.

PERSONAL LIBERTY
It means a freedom; it means to live the life according to one’s own wish.

CASE LAWS
1. A. K. Gopalan V/s. State of Madras:
In this case the SUPREME COURT gave a very narrow & restrictive meaning to personal liberty & it was
held by the SUPREME COURT that personal liberty is limited only to the body of the person.
The SUPREME COURT said that a person can be deprived of his life & personal liberty if following
conditions are satisfied:
a) There must be a law &
b) The restriction should be made according to the procedure given in law.
This decision of SUPREME COURT was criticized later or

2. Maneka Gandhi V/s. Union of India :

1) In this case the judgment given by SUPREME COURT in case of A. K. Gopalan was over ruled.
2) The SUPREME COURT held that a person can be deprived of his personal liberty if the following
conditions are satisfied.
i) There must be law.
ii) According to the procedure established by the law.
iii) The procedure should be fair & reasonable & the principal of natural justice should be followed.

3. Sathwant Singh Sawani V/s. APO New Delhi

Personal liberty includes right to travel across the world & restriction can be imposed on this freedom by a
procedure est. by the law.
Denial of passport amounts to deprivation of personal liberty.

4. State of Maharashtra Vs Amdhulkar Narain, in this case it was decided that the right to live the life with
privacy when a person likes to live in privacy is a fundamental right.

ARTICLE 21A
RIGHT TO EDUCATION
The state shall provide free & compulsory education to the children of the age of 6 to 14 years.
In the case of State of Tamil Nadu v. K. Shyam Sunder the Court decided that right of a child should not be
restricted only to free and compulsory education, but should be extended to have quality education without
any discrimination on the ground of their economic, social and cultural background.
In Fahima Shareen RK v. State of Kerala the High Court of Kerala on September 19, 2019 said that ‘Right to
Internet Access’ as a fundamental right.
The Court declared that the right to have access to Internet becomes the part of right to education as well as
right to privacy under Article 21 of the Constitution of India.

ARTICLE 22
PROTECTION AGAINST ARREST & DETENTION
AGAR TUM HONE WALE HO ARREST,
TO ARTICLE 22 KAREGA TUMHE PROTECT!!
Article 22 grants protection to every citizen from arrest & detention. However the few persons are excluded
from this protection.
1) Alien enemies.

Dushyant Jain^^ 33- -

2) The person who are arrested or detained under preventive detention.
3) To other person.
The following protections will be provided by the constitution against arrest & detention:
1) Inform the person the ground on which he is being arrested or detained.
2) Such person shall have a right to consult and to be defended by a legal practitioner (lawyer).
3) No person can be detained in the police custody for more than 24 hours unless he has been produced in
front of a magistrate.

PREVENTIVE DETENTION

AGAR AAP KOI OFFENCE KARNE WALE HAI,

TO AAP KO OFFENCE SE ROKNE KE LIYE, DETAIN KIYA JATA HAI

It means detaining a person without approaching the court in police custody. The objective of preventive
detention is not to punish a person but preventing a person from committing any unlawful activity. A person
is kept under preventive detention because the police authorities are of the opinion that if such person is left
free he can commit a crime. Parliament & state legislatures can make a law on preventive detention for the
security of the Govt. / State.
Que: What do you mean by preventive detention ? Article 22 contains certain safeguards against preventive
detention. Explain.

SAFEGUARD AGAINST PREVENTIVE DETENTION

a) Under preventive detention a person cannot be detained for a period of not more than 3 months.

If a person has to be detained for more than 3 months an advisory board should be made of the H.C. judges &
if before the expiration of 3 months if the advisory board is of the opinion that the period of preventive
detention should be increased, than such period of 3 months can be increased, however the maximum period
of preventive detention has been reduced to a period of 2 months by the 44th amendment Act to the
constitution, nut such changes are not notified till now so we will consider it as 3 months only.

b) The person who has been detained shall be communicated with the reasons of detention & give him the
earliest opportunity of making a representation / being heard.
The objective of Preventive Detention is:
1. To suppress crime
2. To maintain public order and peace
3. To stop a person from commit an offence.
4. To protect people and maintain harmony
Que: State the justifiable grounds for Parliament and State Legislature to pass law of preventive detention
and briefly explain safeguards against such preventive detention laws.

Dushyant Jain^^ 34- -

ARTICLE 23 & 24
RIGHT AGAINST EXPLOITATION

Article 23 & 24 provides an individual a protection from exploitation. It means if a person is being exploited
in any manner he gets constitutional remedies.

1) Prohibition of traffic in human beings & forced labour

i) Traffic in human beings means buying & selling of human being like animals / goods. The constitution
puts a complete ban on trafficking in human beings.
ii) No person shall be compelled to work without his will or without wages & traditional system of
beggary has been completely prohibited.

2) Prohibition of employment of children

A child below the age of 14 shall not be employed to work in any factory or mines. Legislature must make
laws to protect the children and labours. Refer to the employment of Children Act, Factories Act, etc.

ARTICLE 32 OF CONSTITUTION OF INDIA, PART III

RIGHT TO CONSTITUTIONAL REMEDIES
AGAR KOI KARTA HAI FUNDAMENTAL RIGHTS KO VIOLATE,
SUPREME COURT JAKAR KARO US LALLU KO TARGET
1) Constitutional Remedies means the remedies provided by the constitution.
2) It is a well-established principle of law that where there is a right there is a remedy (ubi jus ibi remedium)
& if, no remedy is provided for enforcement of a right the right is of no use.
3) So for the enforcement of fundamental rights, the right of constitutional remedies has been included in
the constitution.
4) If a person is stopped from making any use of Fundamental Rights., such person has got a constitutional
remedy, i.e. to approach the apex court of the nation.
5) Justice Patanjli Shastri stated that the Supreme Court cannot refuse to entertain a case where the
plaintiff is seeking a protection against infringement of Fundamental Rights. In discharging the duties
assigned to it, this Court has to play the role of ‘sentinel on the qui vive’ (State of Madras v. V.G. Row,
and it must always regard it as its solemn duty to protect the said fundamental rights ‘zealously and
vigilantly’.
6) In the case of Romila Thapar Vs Union of India, it was decided that Article 32 empowers the Supreme
Court to issue orders which enforce the fundamental rights.
Case Law:
MenakaGandhi V/s. Union of India
Kharak Singh V/s. State of U.P.
A. K. Gopalan V/s. State of Madras.
(here we can give reference to all the case laws that we have covered in articles 14-32, where rights of
people have been protected
7) The SUPREME COURT grants a protection of F.R. by way of a written order like
a) Habeas Corpus,
b) Quo warrants,
c) Certiorari,
d) Mandamus,
e) Prohibition.
From the above discussion on Article 32 it can be concluded that if the Fundamental Rights are violated /
restricted the aggrieved party may approach to the Apex Court of the country.

In discharging the duties assigned to it, this Court has to play the role of ‘sentinel on the qui

Dushyant Jain^^ 35- -

vive’ (State of Madras v. V.G. Row) and it must always regard it as its solemn duty to protect the said
fundamental rights ‘zealously and vigilantly’.

In the case of Nithya Anand Raghvan Vs State of NCT Delhi, it was decided that the writ of habeas corpus
can not be used for implementing the directions given by the Foreign Courts given against the person in
jurisdiction of foreign court and to convert the jurisdiction of Foreign Court to the Supreme Court.
Assam Sanmilata Mahasangha v. Union of India, the Court held that article 32 which has been described as the
‘heart and soul’ of the Constitution guarantees the right to move to the Supreme Court for enforcement of all
or any of the fundamental rights conferred by Part III of the Constitution. This article is therefore, itself a
fundamental right.

The right guaranteed by Article 32 shall not be suspended except as provided in the Constitution. Constitution
does not contemplate such suspension except by way of President’s order under Article 359 when a
proclamation of Emergency is in force.

The right given under article 32 shall not be suspended in any case except in the case of proclamation of
emergency by the President of India.

The power of Supreme Court to issue directions may also be assigned to other Courts by the Parliament
without affecting the powers of Supreme Court.
In Assam Sanmilata Mahasangha v. Union of India, the Court held that article 32 which has been described as the
‘heart and soul’ of the Constitution guarantees the right to move to the Supreme Court for enforcement of all or any
of the fundamental rights conferred by Part III of the Constitution, this article itself is a fundamental right.
In the case of Centre for PIL v. Union of India, the decided held that before a citizen can claim a writ of quo warranto
he must satisfy the court that the office in question is a public office and it is held by a person without legal authority
and that leads to the inquiry as to whether the appointment of the said person has been in accordance with law or
not. A writ of quo warranto is issued to prevent a continued exercise of unlawful authority.
ARTICLES 33, 34 and 35 SUPPLEMENTARY PROVISIONS

Article 33 authorises Parliament to restrict the application of fundamental rights in relation to members of
armed forces, para-military forces, police forces and similar forces.

Article 34 is primarily concerned with granting protection by law in respect of acts done during operation of
martial law. Constitution does not have provision of martial law.
Parliament may by law indemnify any person in the service of the Union or of State or any other person, for
an act done during martial law.

Article 35 provide that wherever Parliament is empowered to make a law restricting a fundamental right
Parliament alone can do so, (and not the state legislature).
AMENDABILITY OF FUNDAMENTAL RIGHTS
FUNDAMENAL RIGHTS KO AMEND KARO BUT,
BASIC STRUCTURE MAIN KADI MAT KARO
Many times a question has been raised in SUPREME COURT that the F.R. given in Part III of the
constitution are amendable or not.

CASE LAWS
1) Shankri Prasad V/s. Union of India.
In this case the first amendment made to the F.R. was challenged. In this case the SUPREME COURT
decided that the power to make an amendment in the F.R. was given in Article 368 of the Constitution of
India & the parliament was empowered to make an amendment in the constitution.

Dushyant Jain^^ 36- -

2) The same judgment was given by the SUPREME COURT in case of Sajjan Singh V/s. State of Rajasthan.

3) I.C. Golakhnath V/s. State of Punjab.

In this case the SUPREME COURT held that the parliament by passing a constitutional Amendment Act can
amend any part of constitution as well as F.R. but the amendment shall not take away the rights of the
people.
To cancel the effect of GolakNath’s case, the parliament passed 24th Amendment Act, 1971, according to
which the power was given to parliament to make amendments in F.R. which can take away rights of the
people.
24th Amendment was challenged in the court in KeshavanandBharti V/s. State of Kerala.
The SUPREME COURT held that the parliament can make any amendment to F.R. but cannot amend or
alter the basic structure of the constitution.

Indira Gandhi V/s. Raj Narain :

In this case the Allahabad H.C. dismissed the election of Indira Gandhi on ground of corrupt practices in
meanwhile parliament passed 39th amendment Act to the constitution according to which the power of
SUPREME COURT to interfere in the elections of Prime Minister’s was withdrawn.

In the same case, the SUPREME COURT held that the elections are related with basic structure of the
constitution & hence they cannot be amended by the parliament.
The parliament can make any amendment to constitution as well as F.R. but basic structure of
constitution cannot be amended.

To neutralize the effect of Supreme Court decision the parliament passed 42nd Amendment Act to the
Constitution of India, by which the power of Court to interrupt in any amendment made by parliament to
the constitution after or before the 42nd amendment was withdrawn.

In the case of Minerva Mills vs. Union of India, the Supreme Court stated that the 42nd amendment
relates to the basic structure of Constitution of India and hence it’s unconstitutional.

In the case of L. Chandra Kumar v. Union of India the Supreme Court decided that power of judicial
review is an integral and essential feature of the Constitution.

In GVK industries v. The Income Tax Officer the Supreme Court decided that Under our Constitution,
while some features are capable of being amended by Parliament, as per the amending power granted by
Article 368, the essential features - the basic structure - of the Constitution is beyond such powers of
Parliament.
DIRECTIVE PRINCIPLES
The Constitution guarantees two kinds of F.R.
1) It is contained in Part III of the Constitution & can be enforced in court of Law; these rights are known as
F.R.
2) The second kind of F.R.s is contained in part IV of the Constitution of India & these cannot be enforced in
court of law. These rights are known as Directive Principles.
a) Fundamental Rights are available to citizens of the country.
b) But Directive Principles are available to state.
c) Fundamental Rights provide various privileges to the citizens of the country.
d) Directive Principle guides the state in management & administration of affairs of the state.
e) If any law restricts or limits Fundamental Rights it will become invalid.
f) If any law is against the Directive Principle it is not declared as invalid.
g) The courts are not competent to compel the state to carry out any D.P. or make any law for carrying
out D.P.
h) The courts are competent to compel the Govt. to carry out the F.R.

Dushyant Jain^^ 37- -

 i) The directive principles of state policy have to conform to and run as subsidiary to Fundamental
rights.

DIRECTIVE PRINCIPLES
1) State to provide social welfare.
2) State to provide protection to its people.
3) State must promote education. State to promote & build infrastructure.
4) State should protect monuments & place of national importance.
5) State should protect environment, forest & wildlife.
6) State should make the policy that treats men & women equally.

ARTICLE 51
FUNDAMENTAL DUTIES (42ND AMENDMENT 1971)
When the Constitution has provided certain rights to citizens of the country, the citizens also have some
duties towards the nation & those duties are contained in Article 51A of the Constitution of India of
Fundamental Rights.
1) To protect the public property & control the violence.
2) To protect sovereignty, unity & integrity of India.
3) To abide by Constitution & respect its ideals & institutions, the National Flag & the Flag & National
Anthem.
4) To cherish the ideas which motivated or inspired our national struggle for freedom.
5) To promote harmony & the spirit of command brotherhood amongst the people of India.
6) To develop the scientific temper, humanism & the spirit of inquiry & reform.
7) To protect & improve the national environment. Including forest, lakes, rivers & wild life & to have
compassion for living creature.
8) To value & preserve rich heritage of our composite culture.
9) To defend the country & render national service when called upon to do so.
10) To provide opportunities for education to one’s child, as the case may be, ward between the age of 6 to
14 years.
11) To strive towards excellence in all spheres of individual & collective activity.

ORDINANCE MAKING POWERS

PRESIDENT: Article 53
President is the head of the republic,
He has the supreme powers of the country he also exercises the executive powers of the Central Govt.: The
powers which can neither be exercised by Govt. nor by judiciary is known as executive power.
Power to appoint Prime Minister, Chief Justice of the Supreme Court.

EXECUTIVE POWERS
(i)Administrative power, i.e., the execution of the laws and the administration of the departments of
Government. (ii) Military power, i.e., the command of the armed forces and the conduct of war.
(iii) Legislative power, i.e., the summoning; prorogation, etc. of the legislature.
(iv) Judicial power, i.e., granting of pardons, reprieves etc. to persons convicted of crime. These powers vest
in the President under each of these heads, subject to the limitations made under the
ORDINANCE MAKING POWER
➢ Normally the president exercises the power to make ordinance on advice of his council of
ministers.
➢ The president can exercise his ordinance making power only when both the houses of the
parliament are not in session & there exist an emergency to pass the law.
➢ The president cannot be compelled to make an ordinance.
➢ The ordinance passed by the president must be put & approved in the next session of the
Parliament.

Dushyant Jain^^ 38- -

 ➢ If within 6 weeks from the date of start of parliament session, if the ordinance is not approved by
the Parliament, the ordinance becomes invalid.
➢ 6 weeks will be counted from later date if the houses of Parliament start a session on different
dates.

CASE LAW
Gurudev Dutt V/s. State of Maharashtra.
The SUPREME COURT decided that the ordinance passed by the president will stand on the same footing as the
law passed by the parliament.

POWERS OF GOVERNER
➢ Governor is head of the executive power of the state.
➢ Governor appoints the Chief Minister of the state.

EXECUTIVE POWER

ORDINANCE MAKING POWERS OF THE GOVERNOR

If the governor wants to pass any ordinance related to state law then he has the same powers as the president
enjoys for whole of India, (the Governor will exercise the power on the advice of council of ministers and
when house of legislature is not in session and he can not be compelled for making the law, If within 6 weeks
from the date of start of parliament session, if the ordinance is not approved by the State Legislature, the
ordinance becomes invalid, 6 weeks will be counted from later date if the houses of Legislature, start a
session on different dates) but in the following cases the Governor cannot pass an ordinance without
instructions of the President.
a) An ordinance which requires prior permission of President as provided in Constitution of India.
b) Where it is necessary to take permission of the president according to the governor.
c) Where the State legislature deems it necessary to take the assent of President before approving the
ordinance.

LEGISLATIVE POWERS OF THE UNION & STATE

[Link] Sets of Government

The Government is divided in Central and State Government which are not superior or subordinate to each
other but act in their own respective area.

The Central Government has jurisdiction on every citizen of the Country while the state government has
jurisdiction on every citizen of the country who resides in a particular state.

Dushyant Jain^^ 39- -

The powers are very well divided between the union and the state by the Constitution. It should not be
considered that the states are the delegatees of the union’s power as both state and union have their own
powers.

[Link] Distribution
The parliament has the power to make laws for whole of the Country while state has the power to make laws
for whole or any part of the state.

[Link]
• can make laws for whole of India.
• Can also make laws for territories beyond India.
• In case of AH Wadia Vs Income Tax Commissioner, it was decided that in case, extra territorial laws
are made by parliament, the domestic tribunals have no jurisdictions on such laws.
• Union territories are also administered by Central Governemnt. As per article 239(1) every union
territory shall be administered by the President through an administrator appointed by him.
• As per article 246(4) parliament can make laws for union territory even if the matter is covered in
state list.
[Link] Legislature
• State Legislature can make laws for the state only.
• State legislature can also make laws which will apply beyond the territories of the state, if there is a
nexus or connection between the state and the subject matter of the law which goes beyond the
state.
• In the case of state of bombay Vs RMDC it was decided that connection or nexus between the state
and the subject matter of law will be valid when 2 conditions are fulfilled:
i)the connection must be real and not illusionary
ii)the liability created by law must be important for that connection,

In the above case, a newspaper in the name of “Sporting Star” was published and printed at Bangalore in
Mysore (now Karnataka) State. It contained crossword puzzles and engaged in prize competitions. It had wide
circulation in the State of Bombay (now Maharashtra) and most of its activities such as the sending invitations,
the filling up of the forms and the payment of money took place within that State. The State of Bombay
imposed a tax on the newspaper. The publishers challenged the validity of the law on the ground that it was
invalid in so far it covered a subject matter falling beyond the territory of that State because the paper was
published in another State. The Supreme Court, applying the doctrine of territorial nexus, held that the nexus
was sufficient between the law and its subject-matter to justify the imposition of the tax. So in this way, the
state laws may also have a limited extra-territorial operation and it is not necessary that such law should be
only one relating to tax-matters

[Link] of Subject Matter of Legislation

In the USA residuary powers are given to the State.
In Australia, same as USA, a short list is given which provides poer to union, then concurrent list is given
which provides powers to union and state and then residuary powers are given to the state.
In Canada 3 lists are given which provides powers to the Union, State and Concurrent.
India follows Canadian Mode as:

List Union List State List Concurrent List

No of Entries 97 66 47
Matters and Subjects National Importance Regional Interest Local Interest and
National Importance
Example Defense, Naval, Airforce, Police, Prison, Public Marriage, Divorce,
Import, Export, Foreign Health, Sanitation Criminal Laws, Labour

Dushyant Jain^^ 40- -

 Exchage etc Laws etc.

Apart from this enumeration of subjects, there are a few notable points with respect to these lists:
1. Tax is separated from other subjects and it is given at the end of union list and
state list and the subject of tax is not in the concurrent list.
2. In each list there is an entry of fees with respect to matters given in the list.
3. There is also an entry of “offences against laws with respect to any matter in the
list” in list 1 and 2, while general law on crime is in concurrent list.

4. Legislative Powers of Union and State with Respect to Legislative Subject

(a) With respect to the subjects given in the State List, the legislature of a State has
exclusive power to make laws.
(b) With respect to the subjects enumerated in the Concurrent List, Parliament and the
State Legislatures both have powers to make laws. Thus, both of them can make a
law even with respect to the same subject and both the laws shall be valid in so
far as they are not contradictory to each other.
(c) However, in case of contradiction, the law made by Parliament shall prevail over
the law made by the State Legislature. It is almost a universal rule in all the
Constitutions where distribution of legislative powers is provided that in the
concurrent field the Central law prevails if it conflicts with a State law.
However, our Constitution recognises an exception to this general or universal rule.
The exception is that if there is already a law of Parliament on any subject
enumerated in the Concurrent List and a state also wants to make a law on the same
subject then a State can do so provided that law has been reserved for the
consideration of the President of India and has received his assent.
Such law shall prevail in that State over the law of Parliament if there is any
conflict between the two.
However, Parliament can get rid of such law at any time by passing a new law and
can modify by amending or repealing the law of the State.
(d) With respect to all those matters which are not included in any of the three lists,
Parliament has the exclusive power to make laws. It is called the residuary legislative
power of Parliament. The Supreme Court has held that the power to impose wealth-
tax on the total wealth of a person including his agricultural land belongs to
Parliament in its residuary jurisdiction (Union of India v. H.S. Dhillon).

5. POWERS OF THE PARLIAMENT TO MAKE LAWS ON STATE LIST

In some circumstances the parliament can pass laws on the matters given in the state list such circumstances
are discussed hereunder.
1) IN THE MATTERS OF NATIONAL INTEREST (Article 249)
The Parliament by passing a resolution by 2/3rd majority can make law for whole of the country or for any
particular state.
National interest can vary in different circumstances, it can be related to :
a) Security of the state,
b) Inflation,
c) Deflation,
d) For protecting resources of the state,
e) To control riots.

Dushyant Jain^^ 41- -

 NOTE:-
The law passed by Parliament for the state will remain valid for a period of one year. However, a fresh
resolution can be passed at the end of one year to give extended life to the law of Parliament and that
way the law of Parliament can be continued to remain in force for any number of years.
2) DURING PROCLAMATION OF THE EMERGENCY (Article 250):
a) During the emergency the parliament shall have the powers to make laws for whole of India or any
territory of India with respect to all powers given in state list.
b) These laws passed by the parliament will be valid for 6 months.
c) If the president is satisfied that there is an emergency related to security of the country or any part of
the country or chances of any war or some financial emergency the President can declare emergency
on the recommendation of Parliament. e.g. emergency declared by Indira Gandhi.
d) Article 353 provides that while a proclamation of emergency is in operation, the Parliament shall have
the power to make laws conferring powers and imposing duties or authorising the conferring of powers
and the imposition of duties upon the Union or officers and authorities of the Union as respects that
matter, notwithstanding, that it is one which is not enumerated in the Union List.

3) BREAKDOWN OF CONSTITUTIONAL MACHINERY IN THE STATE (Article 356 and 357):

a) When the President is satisfied on the report of governor of the state that the constitutional
machinery in the state has collapsed, the President can take the charge of the state or authorize the
governor to take the charge of the state.
b) The power to control the state will remain with President / Governor for a period of 6 months.
However, this period can be renewed for another period of 6 months by passing a fresh order.
c) Order by President, should be passed for a further period of 6 month subject to overall period of 3
years.
d) Under the Constitution of India, the power is really that of the Union Council of Ministers with the
Prime Minister as its head. The satisfaction of the President contemplated by this Article is subjective
in nature. The power conferred by Article 356 upon the President is a conditional power.
e) The action of the President under Article 356 is a constitutional function and the same is subject to
judicial review. The Supreme Court or High Court can strike down the proclamation if it is found to be
mala fide or based on wholly irrelevant or extraneous grounds.

4) ON THE REQUEST OF 2 OR MORE STATES (Article 252) :When two or more states request the Parliament
to make any law for them, the Parliament can make laws for such state. But such request should be
approved by the Legislature of both the states.

If request is made as above, the parliament can make law on that subject as regards those States.

The law so made may be adopted by other States also, by passing resolutions in their legislatures. Once,
however, such law has been made, the power of those State legislatures which originally requested or
which later on adopted such law is curtailed as regards that matter, and only Parliament can amend,
modify or repeal such a law on similar request being made by any State or States.

If any of the consenting States makes a law on that subject then its law will be invalid to the extent to
which it is inconsistent with a law of Parliament.
To take an example, Parliament passed the Prize Competitions Act, 1955 under the provisions of the
Constitution.

5) Parliament can also make laws on the matters contained in state list for:

Parliament has exclusive power with respect to foreign affairs and entering into treaties and agreements
with foreign countries and implementing of treaties and agreements and conventions with foreign
countries.

Dushyant Jain^^ 42- -

 But a treaty or agreement concluded with another country may require national implementation and for
that purpose a law may be needed. To meet such difficulties, the Constitution authorises Parliament to
make law on any subject included in any list to implement:
a) any treaty, agreement or convention with any other country or countries, or
b) any decision made at any international conference, association or other body.
RULE OF INTERPRETATION OF CONSTITUTIONAL PROVISIONS
RULE OF PITH AND SUBSTANCE
1) Parliament and State Legislature get the power of making the laws from the lists mentioned in the
Constitution of India i.e. Union List, State List and Concurrent List.
2) It may happen some time, mostly on the matters stated in the Concurrent list that, Parliament as well as
State Legislature both have made laws, and if we look closely then we may find that either Parliament or
State Legislature has exceeded its powers.
3) The rule of pith and substance means that where a law in reality and substance falls within an item on which the
legislature which enacted that law is competent to legislate, then such law shall not become invalid merely
because it incidentally touches a matter outside the competence of legislature.
4) For example the laws made by the parliament may touch the state subject or vice versa and in this case
such laws will not be invalid only on the goround that it relates to the subject contined in the other list.
5) According to the rule of pith & substance, the rule which affects the law making power of some other
body will remain valid.
Case Law : D.N. Banerjee V/s. D. N. Mukherjee :
a) Parliament passed industrial dispute act which was applicable to the workers of whole of India but the
municipal corporation raised an objection & said that it has got its own laws for resolving the dispute
between the workers.
b) The Supreme Court held that the law passed by the Parliament will be held to be valid.

In the case of G. Chawla Vs State of Rajasthan, the State Legilature of Rajasthan Passed a Law on on
restriction of use sound amplifiers as per the entry number 6 in state list which relates to health and
sanitation, but this law was challenged on the ground that sound amplifiers come in entry 81 of union list
which relates to post, telegraphs, wireless and other modes of communication, the Supremer Court decided
that the law passed by Rajasthan Legislature is valid as it focuses on public health by restricting the use of
sound amplifiers.

COLOURABLE LEGISLATION
JO NAHI HO SAKTA DIRECTLY,
USE NAI KARO INDIRECTLY
1) It is a rule of interpretation of constitutional provisions.
2) According to this rule, what you cannot do directly the same thing cannot be done indirectly.
3) The laws cannot be violated by adopting an indirect method.
4) The prohibition cannot be given different colours.
5) So if the legislature can not make law on any subject as such subject does not fall within its powers as per
the Union, State or Concurrent list then in this case such legislature can not adopt indirect methods to
make laws on that subject.
6) The legislature can not violate the constitutional prohibition by adopting indirect method.
7) This principle is relevant only on the questions relating to legislature competence (legislature ki law
banane ki powers ke case main hi is doctrine ko use karenge)

Kameshwar Singh V/s. State of Bihar :

The Bihar Land Reforms Act, 1950 provided that the unpaid rents by the tenants shall be given to the
state and one half of the rent shall be paid by the State to the landlord or zamindar as compensation.

According to the provision in the State List under which the above law was passed, no

Dushyant Jain^^ 43- -

 property should be acquired without payment of compensation.

The question was whether the taking of the whole unpaid rents and then returning half of rent back to
them who were entitled to claim, (i.e., the landlords) is a law which provides for compensatioin.

The Supreme Court found that this was a colourable (indirect) exercise of power of acquisition by the
State legislature, because “the taking of the whole rent and returning a half means nothing more or less
than taking of without any return and this is naked confiscation, no matter in whatever baseless form it
may be named”
Plenary Powers
The first and foremost rule is that if legislative power is granted with respect to a subject and there are no
limitations imposed on the power, then it is to be given the widest scope that its words are capable of,
without making any word or provision non important. In the case of Jagannath Baksh Singh v. State of U.P, it
was decided that a general word in an entry to list shall be given the widest interpretation and it shall include
all the subsidiary and ancilliary words.

So, a legislature to which a power is granted over a particular subject may make law on any aspect or on all
aspects of law, it can make a retrospective law or a prospective law and it can also make law on all matters
ancillary to that matter.

For example, if power to collect taxes is granted to a legislature, the power not to collect taxes or the power
to remit taxes shall be presumed to be included within the power to collect taxes.

In the case of Jagannath Baksh Singh v. State of U.P, it was decided that, the words that give legislative powers in
constitution must be given most liberal construction.

Harmonious Constructio n: Different entries in the different lists are to be interpreted in such a way that a
conflict between them is avoided and each of them is given effect

WRIT JURISDICTION OF High Courts (CONSTITUTIONAL REMEDIES)

TYPES OF WRITS
JAB AAP KE FUNDAMENTAL RIGHTS KO PAHUCHTA HAI NIKSAAN,
WRITS KE ZARIYE AAP KO MILTI HAI RELIEF!
Writ means an official order by High Court or Supreme Court for enforcement of Fundamenal Rights. These
writs are issued by Supreme Court under article 32 for the protection of fundamental rights.

Under article 226 High Courts can be approached for the protection of fundamental rights. The remedy under
article 226 is not fundamental right where as the remedy under article 32 is a fundamental right.

In all the below mentioned writs we can directly approach the Supreme Court under aticle 32 but normally
Supreme Court before accepting the writ asks the parties, the reasons as to why they did not approach High
Court first. So it’s better to approach the High Couts.

HABEAS CORPUS
a) These writs are issued by the courts for protection of personal liberty. When any person has been
detained by the authorities, the court questions the authority about the grounds on which such a person
has been detained.
b) If the courts find that the reason for detention is insufficient, the court can issue the writ of habeas
corpus & pass an order for release of the person.
c) Under the Article 32 & 226 of COI, any person can move to the SUPREME COURT / H.C. for issuance of this
writ. If H.C. has rejected the writ an appeal can be made to the SUPREME COURT

Dushyant Jain^^ 44- -

d) The applicant may be the prisoner or any person acting on his behalf to safeguard his liberty for the issuance of
the writ of Habeas Corpus as no man can be punished or deprived of his personal liberty except for violation of
law and in the ordinary legal manner
Case Law :A. K. Gopalan V/s. State of Madras.

MANDAMUS
a) This writ is issued by High Courts and Supreme Courts.
b) Mandamus means a command / instruction.
c) The writ of Mandamus is issued when and person, authority, court, Government fails to perform the
functions which they are legally bound to perform, but they do not perform.
In these cases, the Court can issue a command/instruction for discharging of the function.
Case Law :State of Maharashtra V/s. M.P. Vashi.
In this case it was decided that the court can direct the officers of the Govt. to carry out the directive
principles given in the C.O.I.
Covered under Article 32 & 226 of Constitution of India. It does not lie against president, Governor or private
persons.
In the case Gujarat State Financial Corporation Vs Lotus Hotel, in this case the GSFC refused to finance the
project of Lotus Hotels after entering in to an agreement, the High Court of Gujarat issued a writ of
Mandamous and asked GSFC to issue funds as promised.

PROHIBITION
a) This writ is issued by High Court and Supreme Courts.
b) It is just opposite to writ of Mandamus.
c) Writ of Mandamus is issued to command on activity or to initiate an action, but writ of prohibition is
issued to restrict or restrain any activity.
d) When an inferior court exercises a jurisdiction which is not legally vested in it, or violates some rules or
laws the superior court can issue writ of prohibition & stop the inferior court from exercising such
jurisdiction.
e) This writ is issued before exercise of judgement by the Lower Courts.

WRIT OF CERTIORARI – It means to be ceritified.

This means setting aside a judgement or decree passed by an inferior court.
Through this writ the High Court or Supreme Court calls for the record of the cases decided by the lower
courts and if they find that lower court has not given the justice properly than decisions of lower courts can
be quashed by the Superior Courts.
This writ is issued in the following cases :
a) When any inferior court has passed a judgment which is in excess of its powers.
b) When there is a material defect in the judgment passed by the inferior court.
c) When any inferior court has passed a judgment which is not vested in it.
d) Where the inferior court has contravened the rule of natural justice.
In all the above mentioned cases, superior court can quash the judgment passed by the inferior court by
issuing writ of certiorari.
In the case of AK Karpik Vs Union of India, the decision of lower Court was quased by the High Court.
In the case of The King v. Electricity Commissioners, it was decided that this writ is available to any person,
wherever any body of persons having legal authority to determine questions affecting the rights of subjects and
having the duty to act judicially in excess of their legal authority.

WRIT OF QUO WARRANTO

a) It is issued by the courts to check legality of a claim in relation to any public office.
b) Quo Warranto – Means “by what Authority”
c) The person who asserts to hold a public office can be asked to give proofs or the grounds on

Dushyant Jain^^ 45- -

 basis of which he holds the office.
d) This writ is issued when:
➢ The office is a public importance.
➢ Office is created by constitution.
➢ Any person makes a claim to hold that office.

FREEDOM OF TRADE, COMMERCE & INTERCOURSE

1) Travel from one place to another place to do a business is called inter course.
2) Trade & commerce means exchange of goods & services for profit motive.
3) Every citizen of India has been give a right or freedom of trade & comer under Article 301 – 306 of COI.
4) Later on Article 306 was repealed.
5) Article 301 gives complete freedom to individuals to carry on any kind of business & the parliament has
got a limited power to impose a restriction on freedom of trade, commerce & intercourse.
E.g. at the time of unprecedented increase in prices of onion, the Govt. had put a ban on the exports of
onion.
The freedom guaranteed by Article 301 is not made absolute and is to be read subject to the following
exceptions as provided in Articles 302-305.
Parliament to impose restriction in the Public interest

According to Article 302 Parliament may, by law, impose such restrictions on the freedom of trade, commerce
and intercourse as may be required in the public interest.
Parliament to make Preference or Discrimination
Parliament cannot by making any law give preference to one State over the other or make discrimination
between the States except when it is declared by that law that it is necessary to do so for the purpose of
dealing with a situation arising from scarcity of goods in any part of the territory of India [Article 303 (1) and
(2)].
Power of the state legislature
The Legislature of a State may by law: impose on goods imported from other States or the Union territories
any tax to which similar goods manufactured or produced in that State are subject, so, however, as not to
discriminate between goods so imported and goods so manufactured or produced; and
impose such reasonable restrictions on the freedom of trade, commerce or intercourse within the State as
may be required in the public interest.
However, no bill or amendment for making a law falling in this provision can be introduced or moved in the
Legislature of a State without the previous sanction of the President. [Article 304]
In Kalyani Stores v. State of Orissa, (AIR 1966 SC 1686) Supreme Court held that Article 304 enables State
legislature to impose taxes on goods from other States, if goods produced within the state are subjected to
such taxes. A subsequent assent of President is also sufficient, as held in State of Karnataka
v. M/s Hansa Corpn., (1981) AIR SC 463.
saving of Existing laws
The law which was already in force at the commencement of the Constitution shall not be affected by the
provisions of Article 301 except in so far as the President may, by order, otherwise direct (Art 305).
saving of laws providing for state Monopoly
The laws which create State monopoly in any trade, etc. are saved from attack under Article 301, i.e., they
are valid irrespective of the fact that they directly impede or restrict the freedom of trade and commerce.
So, if the State creates a monopoly in road, transporters cannot complain that their freedom of trade and
commerce has been affected or if the State created monopoly in banking then other bankers cannot complain
that their freedom of trade and commerce has been restricted.
The last provision (Article 307) in Part XIII authorises Parliament to appoint by law such authority as it
considers appropriate for carrying out purposes of Articles 301 to 304 and to confer on the authority so
appointed such powers and duties as it thinks necessary.

Dushyant Jain^^ 46- -

DELEGATED LEGISLATION
LAW BANANE KO POWER PARLIAMENT,
EXPERT BODIES KO DELEGATE KARTA HAI!
As law making bodies of our country are already overburdened so in some cases the power to make & regulate
the law can be delegated to some other authorities by the Constitution.
Benefits of Delegation:
1) Expertise of the bodies which make the law.
2) Reducing the burden of law making bodies of the country.
There are two types of legislation:

CLASSIFICATION OF SUBORDINATE LEGISLATION

1) Executive Legislation :
This system empowers the executive to make rules and orders which do not require express confirmation
by the legislature. Thus, the rules framed by the Government under the various Municipal Acts fall under
the category, powers are also given to Central State Government by various laws to make rules and
various statutory bodies are also given powers to make reules or regulations by various laws. Like SEBI
exercises powers under SEBI Act, 1992.

2) Judicial Legislation :
Powers are given to various HC’s to make their own rules in respect with the procedures to be followed
with the court. Such rules have been framed by the High Courts under the Guardians of Wards Act,
Insolvency Act, Succession Act and Companies Act, etc.

3) Municipal Legislation :
Powers are given to various Municipal Corporations to make rules & laws for their area & their
jurisdiction.

4) Autonomous Legislation :
Powers are given to the various autonomous bodies like universities, hospitals, etc. to make their own
rules.

5) Colonial Legislation :
Sometimes a part of the country may be treated as a colony & powers are given to such

Dushyant Jain^^ 47- -

 colonies to make their own laws & rules.

The principals regarding delegation are based on varios court decision as the Constituion does not directly
mentions about delegation, some principals laid down by the Court with regard to delegation are as follows:

a) The basic function of legislature is to make the policy of the law and making the law a binding rule of
conduct. So the Legislature legislature must make policy and it must provide guidance to rule making
bodies for carrying out the declared policy.

b) The legislature makes the policy of the law and through this policy the legislature decides the matters
that can be delegated, and the scope of delegation.

c) If the delegation is made byt no standard o guidance has been provided in respect of delegation , than
such delegation of the power is invalid.

d) In order to know, whether any guidance or standard has been provided or not by the parlianment, the
preamble of law (for which delegation is made) must be taken in account.

e) The relevant provisions of law for which delegation is madde must also be considered to know the
standards and guidance of delegation.

f) Delegated legislation may take different forms, viz. conditional legislation, supplementary legislation
subordinate legislation etc., but each form is subject to the one and same rule that delegation made
without indicating intelligible limits of authority is constitutionally incompetent.

Conditional legislation means a law that provides for control or restecitions, however such law will come
in to force only which some of the conditions as specified by the parliament are fulfilled.

IMPORTANT POINTS
✓ In the case of State of Bihar v/s Bihar state plus two lecturers association, it was decided that a legal
and reasonable classification may also be based on educational qualification
✓ In the case of Ram Kishan Dalmiya v/s Justile Tendulkar, it was decided that article 14 forbids class
legislation but does not forbid classification
✓ In the case of [Link] v/s union of India, it was decided that pre-censorship of films is justified under
Article 19(1)(a)
✓ At present, the term personal liberty extends to variety of matters like write to bail, not to be handcuffed
except under very cases, right to speedy trail, right to free legal aid .
✓ The judiciary:
In India there are basically 3 kinds of courts –
1. Supreme court
2. High court
3. Sub-ordinate court

Supreme Court is the highest court in the country and is created by constitution
✓ Prior to independence, the council was the highest appellate authority
✓ High court and Supreme Court are created under constitution and they enforce fundamental rights and
hence they are state and also they got funding from government
✓ The high court in (British) India were established under Indian High court Act 1861 (passed by U.K
parliament ).High courts are also created by constitution and some of the High courts in India existed even
before the creation of constitution.
✓ There are various sub-ordinates civil and criminal courts, these courts are not created by constitution but
under the laws of the state government.

Dushyant Jain^^ 48- -

✓ Besides court there are many other tribunals created under various laws such as security Appellate
tribunals, Income tax appellate Tribunals etc.
✓ For the trial of cases of corruption, there are special judges appointed under criminal law amendment
Act, 1952.
✓ In England ,the parliament may delegate all its powers to an outside authority
✓ In the case of Delhi laws Act 1912, it was decided that essential legislative functions cannot be delegated
✓ In USA, all the powers have been separated and there exist a doctrine of separation according to which,
each authority should make laws on the matters that are assigned to it.

LEGISLATIVE FUNCTIONS
BILL – Just Read one or two times!
A Bill is a draft statute which becomes law after it is passed by both the Houses of Parliament and assented to
by the President. All legislative proposals are brought before Parliament in the forms of Bills.

Types of Bills and their Specific Features

(i) Bills may be broadly classified into Government Bills and Private Members’ Bills depending upon their
initiation in the House by a Minister or a Private Member.
(ii) Content wise, Bills are further classified into:
a) Original Bills which embody new proposals, ideas or policies,
b) Amending Bills which seek to modify, amend or revise existing Acts,
c) Consolidating Bills which seek to consolidate existing law/enactments on a particular subject,
d) Expiring Laws (Continuance) Bills which seek to continue Acts which, otherwise, would expire on a
specified date,
e) Repealing and amending Bill to cleanse the Statute Book,
f) Validating Acts to give validity to certain actions,
g) Bills to replace Ordinances,
h) Money and Financial Bills, and
i) Constitution Amendment Bills.
(iii) However, procedurally, the Bills are classified as
a) Ordinary Bills
b) Money Bills and Financial Bills
c) Ordinance Replacing Bills and
d) Constitution Amendment Bills.

(iv) Money Bills are those Bills which contain only provisions dealing with all or any of the matters specified in
sub-clauses (a) to (f) of clause (1) of article 110 of the Constitution. Financial Bills can be further
classified as Financial Bills Categories A and B. Category A Bills contain provisions dealing with any of the
matters specified in sub-clauses (a) to (f) of clause (1) of article 110 and other matters and Category B
Bills involve expenditure from the Consolidated Fund of India.

Except Money Bills and Financial Bills, Category A, which can be introduced only in the Lok Sabha, a Bill
may originate in either House of Parliament. As per the provisions of article 109 of the Constitution, the
Rajya Sabha has limited powers with respect to Money Bills. A Money Bill after having been passed by the
Lok Sabha, and sent to Rajya Sabha for its recommendations, has to be returned to Lok Sabha by the
Rajya Sabha, with in a period of fourteen days from the date of its receipt, with or without
recommendations.

It is open for the Lok Sabha, to either accept or reject all or any of the recommendations of the Rajya
Sabha. If the Lok Sabha accepts any of the recommendations of the Rajya Sabha, the Money Bill is deemed
to have been passed by both Houses with the amendments recommended by the Rajya Sabha and
accepted by the Lok Sabha.

Dushyant Jain^^ 49- -

 If the Lok Sabha does not accept any of the recommendations of the Rajya Sabha, the Money Bill is
deemed to have been passed by both Houses in the form in which it was passed by the Lok Sabha without
any of the amendments recommended by the Rajya Sabha. In case a Money Bill is not returned by the
Rajya Sabha to the Lok Sabha within a period of fourteen days from the date of its receipt, it is deemed to
have been passed by both Houses in the form in which it was passed by the Lok Sabha after the expiry of
said period.

(v) Financial Bill Category A can only be introduced in the LokSabha on the recommendation of the President.
However once it has been passed by the LokSabha, it is like an ordinary Bill and there is no restriction on
the powers of the RajyaSabha on such Bills.

(vi) Financial Bill Category B and Ordinary Bills can be introduced in either House of Parliament.

(vii) Ordinance replacing Bills are brought before Parliament to replace an Ordinance, with or without
modifications, promulgated by the President under article 123 of the Constitution of a subject. To
provide continuity to the provisions of the Ordinance, such a Bill has to be passed by the Houses of
Parliament and assented to by the President within six weeks of the reassembly of Parliament.

(viii) As per the procedure laid down in the Constitution, Constitution Amendment Bills can be of three types
viz.,
a) requiring simple majority for their passage in each House;
b) requiring special majority for their passage in each House i.e., a majority of the total membership of a
House and by a majority of not less than two-thirds of the members of that House present and voting
(article 368); and
c) requiring special majority for their passage and ratification by Legislatures of not less than one half of
the States by resolutions to that effect passed by those Legislatures (proviso to clause (2) of article
368). A Constitution Amendment Bill under article 368 can be introduced in either House of Parliament
and has to be passed by each House by special majority.

(ix) Under provisions of article 108 of the Constitution, if after a Bill passed by one House and transmitted to
the other House:-
a) is rejected by the other House; or
b) the Houses have finally disagreed as to the amendments to be made in the Bill; or
c) more than six months elapse from the date of its receipt by the other House without the Bill being
passed by it, the President may, unless the Bill has elapsed by reason of a dissolution of the Lok
Sabha, summon them to meet in a joint sitting for the purpose of deliberating and voting on the Bill. If
at the joint sitting of the two Houses, the Bill, with such amendments, if any, as are agreed to in joint
sitting, is passed by a majority of the total number of members of both Houses present and voting, it
shall be deemed to have been passed by both Houses. However there is no provision of joint sittings on
a Money Bill or a Constitution Amending Bill.

(x) After the dissolution of Lok Sabha all Bills except the Bills introduced in the Rajya Sabha and pending
therein, lapse.

LAW MAKING PROCESS (HOW A BILL BECOMES AN ACT)

(i) A Bill undergoes three readings in each House of Parliament. The First Reading consists of the Introduction
of a Bill. The Bill is introduced after adoption of a motion for leave to introduce a Bill in either of the
House. With the setting up of the Department-related Parliamentary Standing Committees, invariably all
Bills, barring Ordinance replacing Bills; Bills of innocuous nature and Money Bills, are referred to the these

Dushyant Jain^^ 50- -

 Committees for examination and report within three months. The next stage on a Bill i.e., second reading
start only after the Committee summits its report on the Bill to the Houses.

(ii) The Second Reading consists of two stages: the ‘first stage’ consists of discussion on the principles of the
Bill and its provisions generally on any of the following motions: that the Bill be taken into consideration;
that the Bill be referred to a Select Committee of the RajyaSabha ; that the Bill be referred to a Joint
Committee of the Houses with the concurrence of the LokSabha; that it be circulated for the purpose of
eliciting opinion thereon; and the ‘second stage’ signifies the clause-by clause consideration of the Bill as
introduced or as reported by the Select/Joint Committee. Amendments given by members to various
clauses are moved at this stage.

(iii) The Third Reading refers to the discussion on the motion that the Bill (or the Bill as amended) be passed
or returned (to the LokSabha, in the case of a Money Bill) wherein the arguments are based against or in
favour of the Bill. After a Bill has been passed by one House, it is sent to the other House where it goes
through the same procedure. However the Bill is not again introduced in the other House, it is laid on the
Table of the other House which constitutes its first reading there.

(iv) After a Bill has been passed by both Houses, it is presented to the President for his assent. The President
can assent or withhold his assent to a Bill or he can return a Bill, other than a Money Bill, for
reconsideration. If the Bill is again passed by the Houses, with or without amendment made by the
President, he shall not withhold assent there from. But, when a Bill amending the Constitution passed by
each House with the requisite majority is presented to the President, he shall give his assent thereto.

A Bill becomes an Act of Parliament after being passed by both the Houses of Parliament and assented to
by the President.

PARLIAMENTARY COMMITTEES
The parliament has lot of work so it delegates its work to parliamentary committees consisting of experts.

The Committees work as a link between the parliament, executive and the public.
The need of committees arise due to 2 main reasons:
1. To keep a watch on the Executive
2. To reduce the work volume of the parliament as the parliament cannot scruitinize every matter.
Committees also has expertise.

The Committee considers in-depth analysis of the matter and public is also involved in the decisions of the
committee as the committee also invites suggestions from the public.
Committees prevent misuse of the power by the Executive.

It may, however, be remembered that Parliamentary control in the context of the functioning of the
Committees may mean influence, not direct control; advice, not command; criticism, not obstruction;
scrutiny, not initiative; and accountability, not prior approval. This, in brief, is the object of the Committee
System.

There are 2 types of Committees

AD HOC AND STANDING COMMITTEE

Ad hoc Committees are appointed for a specific purpose and they cease to exist when they finish the task
assigned to them and submit a report. Apart from the Ad Hoc Committees, Each House of Parliament has
Standing Committees like the Business Advisory Committee, the Committee on petitions, the Committee of
Privileges and the Rules Committee, etc.

Dushyant Jain^^ 51- -

OTHER COMMITTEE
These committees act as Parliament’s ‘Watch Dogs’ over the executive. These are the Committees on
Subordinate Legislation, the Committee on Government Assurances, the Committee on Estimates, the
Committee on Public Accounts and the Committee on Public Undertaking and Departmentally Related
Standing Committees (DRSCs).

IMPORTANT SECTION:-
[Link]. Articles Heads
1. Article 12 State
2. Article 13(1) Existing law
3. Article 13(2) Future law
4. Article 14 Equality before the law and equal protection of the law
5. Article15 Prohibition of discrimination on ground of religion etc.
6. Article 16 Equality of opportunity in matter of public employment.
7. Article 17 Abolition of untouchability.
8. Article 18 Abolition of titles.
9. Article 19(1)(a) Freedom of speech and expression.
10. Article 19(1)(b) Freedom of assembly.
11. Article 19(1)(c) Freedom of Association.
12. Article 19(1)(d) Freedom of movement.
13. Article 19(1)(e) Freedom of residence.
14. Article 19(1)(g) Freedom to trade and occupation.
15. Article 20(1) Protection against ex-post facto laws.
16. Article 20(2) Protection Against double jeopardy
17. Article 20(3) Protection against self-incrimination.
18. Article 21 Protection of life and personal liberty
19. Article 21A Right to education.
20. Article 22 Safeguards against preventive Detention.
21. Article 23 Prohibition of traffic in human beings and force labour.
22. Article 24 Prohibition of employment of children.
23. Article 25 Right to freedom of Religion.
24. Article 26 Freedom to manage religious affairs.
25. Article 27 Freedom as to payment of tax for promotion of any religion.
26. Article 28 Freedom as to attendance at religious instruction or religious
worship in educational institution.
27. Article 29 Protection of interest of minorities.
28. Article 30 Right of minorities to establish and administer education
institution.
29. Article 31A Saving law providing for acquisition of estate.
30. Article 31B Validation of certain Acts and regulation.
31. Article 31C Saving of laws giving effect to certain directive principles.
32. Article 32 Right to constitutional remedies.
33. Article 51A Fundamental duties.

Dushyant Jain^^ 52- -

 CHAPTER: 3
INTERPRETATION OF STATUTES

KANNON KO SAHI TARAH SE SAMJHNE KE NIYAM KO HUM,

INTERPRETATION OF STATUES KAHTE HAI
1. In Maxwell book of interpretation of statues the word “statues” is defined as the “will of legislature”
legislature means law making body.
2. As per Bouvier’s law dictionary “statues” means a law established by the legislative power.
However the word statue is not used in Constitution of India, & it uses the word “Law”. So We can use the
words law and statue interchangeably.

STATUTES ARE COMMONLY DIVIDED IN FOLLOWING CLASSES:-

1. CODIFYING LAW:-
A law which codifies the unwritten law.

2. DECLARATORY LAW:-
A law that does not amend an existing law but provides explanation relating to an existing law.
Ex. General clause act, 1897.

3. REMEDIAL LAW:-
These laws are rules made by judges (non statutory) in order to provide remedies to aggrieved party –
Remedial laws may also alter the common law.

4. AMENDING LAW:-
A law that amends any existing law.
Ex. Companies Amendment act, 2017.

5. CONSOLIDATING LAW:-
A law that consolidates all the previous law in it.

6. ENABLING LAW:-
A law that removes previous restrictions.

7. DISEABLING LAW RESTRAINING LAW:-

A law that puts a restriction on any act which was previously allowed.

8. PENAL LAW:-
A law that provides punishments for various act and misconduct.

BASIS FOR
INTERPRETATION CONSTRUCTION
COMPARISON

Dushyant Jain^^ 53- -

BASIS FOR
INTERPRETATION CONSTRUCTION
COMPARISON

Meaning We try to get the meaning Legal effect of provision considering the
of law in true sense. intention of law maker is drawn.

Determines Linguistic meaning Legal effect

Used when Court complies with simple Legal text exhibits confusing meaning and the
meaning of the legal text. court has to decide whether the words used in
the legal text covers the case or not.

NEEDS FOR AND OBJECT OF INTERPRETATION :-

1. Justice Denning L.J. in case of Seaford Court Estates Ltd Vs Asher, stated that, “English language is
not as perfect as mathematics , it is not possible to provide an interpretation which is perfect in all
regards and there is always a scope of ambiguity (confusion) mostly the draftsman of parliament are
criticized for ambiguity in any law.

2. Hence it becomes very important for all of us to interpret the law in correct and fair manner in order
to get a remedy by law. The duty of the Court is to make interpretation and punish the guilty.

3. A judge is fettered or restricted by the written law so he must just interpreat the language and
nothing else.

4. Lot of time of judges will be saved if the laws were drafted with clarity and unambiguity.
5. In case the laws are not clearly drafted the judige can not just fold his hands and blame the dreafters
of law, rather he must do the interpretation and find the intention of the parliament, which he will do
from the language of the law and other social conditions and mischief and remedies in the particular
case.
6. While interpreting the judge must ask a question that if in his place the makers of law were
interpreting the law, how would have they interpreted the law.
7. A judge must not alter the material of which it is woven, but he can and should iron out the creases.
8. The object of interpretation has been explained in Halsbury’s laws of England as, the object of
interpretation of a written document is to interpret the intention of the author of the law who wrote
it and as a result the interpretation must be as near as possible to the apparent intention of the
parties to the case as per the law.
9. The court will ascertain the intention of the parties by the words used by the parties that are written
on the instrument and from what was intended to be written but could not be written.
10. The courts give interpretation to what is expressed between the parties as to know the intention of
the parties.
11. So the object of interpretation is to know the real intention of the parties in relation to any case and
also to know the intention of the law makers of the law that applies to a particular case.

Que: In the interpretation of a statute a Judge must not alter the material of which it is WOven, but he can
and should iron out the creases. Comment
Meaning of Interpretation of Statues
1. It is judicial process of fixing, in accordance with certain rules and

Dushyant Jain^^ 54- -

 presumptions, the true meaning of the Acts of the Parliament
2. The object of interpretation is to see what is intended by the words used by the
lawmaker. But, sometimes it is very difficult to understand the meaning without
making further inquiry. So, it becomes necessary to find out the correct meaning by
applying various rules of interpretation.
3. There is a clear distinction between Interpretation and Legislation.
4. The court only interprets the law and does not legislate it.
5. If the provision of law is misused and subjected to the abuse of the process of law,
it is the Legislature which will amend modify or repeal it by following proper
procedure.
6. Therefore, statutory interpretation is an exercise which requires the court to
identify the meaning borne by the words in question in the particular context
CASUS OMISSUS RULE
According to definition of Merriam-Webster, casus omissus rule is a situation which is not present in law or
omitted from law and hence its governed by the common law.

There are two basic rules of interpretation:

1. Every word in a statute to be given meaning.
2. The court cannot read anything into a statute or rewrite a provision which is unambiguous. A court
generally interprets the law against rewriting.

It is the effect of the general rule of literal construction that nothing is to be added to or taken out from a
statute unless there are adequate grounds to justify the such addition or omission

When the laws are clear there is no need for interpretation, for example there is no need to interpreat the
word “or”

The judge while making interpretation, has a limited power to add to, alter or ignore statutory words in law.

INTERPRETATION OF DEFINITION CLAUSE

Usually, every statute has a definition section (also called ‘interpretation clause’) which provides definitions
of various words and phrases used in the statute.

In order to keep the definition relevant the words “unless the context otherwise required” are used in the
provisions relating to definition. These words means that the definition is only conclusive unless otherwise
context requires.

Further, the definitions may be exhaustive definitions and inclusive definitions. In exhaustive definitions, a
restricted meaning is provided for a particular word and in inclusive definitions, there is a scope of further
reading into of the words according to the context.

Example

Exhaustive Definition: “abridged prospectus” means a memorandum containing such salient features of a
prospectus as may be specified by the Securities and Exchange Board by making regulations in this behalf.
(section 2(1) of the Companies Act, 2013.

Inclusive Definition: As per section 2(22AA) of the Income-tax Act, 1961 “document” includes an electronic
record as defined in clause (t) of sub-section (1) of section 2 of the Information Technology Act, 2000

PRINCIPLES OF INTERPRETATION:

Dushyant Jain^^ 55- -

 Primary Rules
 The Primary Rule: Literal Construction

 The Mischief Rule or Heydon’s Rule

 Rule of Reasonable Construction i.e. Ut Res Magis Valeat Quam Pareat

 Rule of Harmonious Construction

 Rule of Ejusdem Generis

Other Rules of Interpretation

 Expressio Unis Est Exclusio Alterius

 Contemporanea Expositio Est Optima Et Fortissima in Lege

 Noscitur a Sociis

 Strict and Liberal Construction

1. Primary Rules of Interpretation:

1. RULE OF LITERAL CONSTRUCTION:-
As per this rule, word, phrase, sentence which is a
part of any law should be interpreted in its plain,
natural, ordinary, grammatical, popular or
dictionary meaning.
This rule has to be applied in all cases of
interpretation till the time natural, ordinary,
popular or dictionary meaning destroys the purpose
or objective of law or makes other provisions of law
redundant:-
NAND PRAKASH VOHRA VS. STATE OF HIMACHAL
PRADESH-
The other principals of literal construction are:-
a) Every word in law should be given a meaning
and no unnecessary word should be used.
b) If any word is not present in the statue, it should not be interpreted.
c) The burden of providing that the words are not correct or the interpretation is not correct as per
dictionary meaning is on the party, who challenges such interpretation.
Example: When any section says 45 days, then we mean it 45 calender days and not 45 working days – we
interpret in the plain manner.
IN CASE OF SARBJIT RICK SINGH VS. UNION OF INDIA:-
It was decided that interpretation of any law should be done in a manner that gives effect to all it’s
provisions.
In the case of State of Himachal Pradesh Vs Pawan Kumar, the Supreme Court stated that, one of the
basic principals of interpretation of statues is that the law should be interpreted as per the plain, literal
and grammatical meaning of the word + if grammatical or plain meaning is not used than it must be
proved by the party who challenges such interpretation that, such interpretation is opposed to the
intention of law makers and shows any absurdity (unreasonable)
(beta normanlly yeh rule kahta hai ki law ke words aap uski dictionary meaning ya plain meaning main
samajhiye aur yeh rule tab tak use kigiye jab tak plain meaning se kuch ulta pulta interpretation na nikal
jaye)
This rule is also known as golden rule of interpretation.

Dushyant Jain^^ 56- -

2. HAYDON’S RULE OR MISCHIEF RULE:-
AISA KARO LAW KO INTERPRET JIS SE MIL JAYE RELIEF,
AUR KAM HO JAYE MISCHIEF

As per this rule, whenever interpretation of any

provision is to made, 4 things are to be considered:-
a) What was the common law before passing of
the law by parliament.
b) What was the mischief and defect for which
the common law did not provide.
c) The remedy provided by the parliament.
d) The true reason of remedy provided by
parliament.

SMITH VS. HUGHES:-

In this case the court interpreted the meaning of the
word “street “ and decided that the word street used
in Street Offences Act 1959 , includes a Balcony too as per the principals laid down in Heydon’s rule.

In the case of UMED SINGH VS. RAJ SINGH, the court decided that the interpretation must be made in the
manner , which supresses the mischief and advance a remedy, however this does not mean that natural
and ordinary meaning is to be ignored.

In the case of SODRRA DEVI, Supreme court decided that the rule in the Heydon’s case apply when the
words in question are ambiguous and capable of more than one meaning.
This rule is also known as purposive rule of interpretation.

(Bhai simle si cheej hai yeh rule apply karne ke pahle 4 cheeje deko, common law kya that, kon s agunah
tha jiske bare main common law shant tha, parliament ne kya kiya aur parliament ne kis reason se remedy
di fir aisa interpret karo ki mischief kam ho aur remedy mil jaye!)

3. RULE OF REASONABLE CONSTRUCTION – UT RES MAGIS VALEAT QUAM PAREAT:-

DICTIONARY MEANING KE SATH,
APNE COMMON SENSE KA BHI KARO UPYOG
“It may rather become operative than null”
Normally the words are interpreted in ordinary, popular, dictionary, or grammatical meaning. However
exclusive reliance on the natural, popular dictionary meaning may not give a true interpretation all the
time . So as per the rule of reasonable construction, we must also apply our common sense, also consider
the intention of law makers to make a correct interpretation.

Normally laws are made to supress the mischief but if dictionary or plain meaning is not able to supress
the mischief then the court may ignore the dictionary meaning and make an interpretation which will
supress the mischief and provide remedy to the aggrieved party.

In the case of TIRATH SINGH VS. BACHITTAR SINGH, It was decided that if, the natural or ordinary
meaning of a statute (law) provides an inconvenience or absurdity or hardship of justice, an interpretation
can be made which modifies the meaning of words or even a sentence.

In the case of GITHA HARIHARAN, the supreme court interpreted the word ‘after’ in hindu minority and
guardianship act, when provisions of the act stated that “the Right of mother to be guardian is after
father ‘ . The court said if the mother is given a right after father, it will violate the

Dushyant Jain^^ 57- -

 constitution of India (right of equality) so word after should be interpreted as equal.
In the case of Newman Manufacturing Ltd Vs Marrables, it was decided that, if court believes that
ordinary or natural meaning of any word is not clear than, interpretation must be made as per purpose,
policy and intention of law.

(Kai bar dictionary meaning ya plain meaning se sahi interpretation nai milta to yeh rule use kar sakte hai
common sense use kar ke)

4. RULE OF HARMONIOUS CONSTRUCTION:-

AGAR EK HI LAW MAIN DO PROVISIONS, CONTRADICTORY, CHEEZEN BOLTE HAI,
TO YEH RULE HOGA LAGUU

According to this rule, one provision of law should be interpreted in harmony with the other provision of law,
where there is head on clash between the provisions of
same law, the court should give interpretation which
should avoid clashes between section and give the best
possible meaning.

In the case of Raj Krishna Vs Pinod Kanugo, it was

decided that, It is the duty of the Courts to avoide any
inconsistency between the two provisions of the same
law.

If the interpretation makes one of the provisions dead, it

is not a harmonious construction.

(Samajhiye agar ek law main do provisions hai aur wo dono opposite hai matlab ek bolta hai ki aisa kar sakte
hai par dusra bolta hai ki aisa nai kar sakte to aap ko aisa interpretation nikalna hai ki donon ko meaning mil
jaye aur unka jhagda khatam ho jaye)

In the RAMKRISHNA’S Case:

Section 33(2) of People’s Representation Act, stated that the government servant may nominate candidate for
election. However 123(8) of People’s Representation Act , stated that the government servant can’t assist
the candidate for election except by voting. The court decided that the government servant can assist the
candidate for election by voting and may also nominate him, as per Harmonious Construction.

In DADI JAGANNATHAN’S CASE:- It was decided that-: the court must start with the presumption that the
legislature did not make any mistake. The court must interpret or carry out the obvious intention of law.
The court should not make any addition or deletion in law.

5. EDJUSDEM GENERIS (It means types of species):-

When law lists specific persons or things and refers to them in general, in such manner that the specific
word forms a class, then in this case the general word shall also include only those words which are of the
same class as established by specific words.

(jab kisi law main kuch specific words likhe hue hai aur fir ek general word se unhe describe kiya hai to
general word ke andar job hi words aayenge wo specific works ke class ke hi honge)

For example in any law it is stated that “this provision applies to plant, machinery, and all heavy goods,
now in this case specific words are used such as plant, machinery and general word is also used as heavy
goods now in this case whenever we have to interpreat the word heavy goods we can not

Dushyant Jain^^ 58- -

 use the interpretation that is not heavy good such as heavy goods can not include a mobile phone)

Specific words must belong to same kind of species.

In the case of JAGE RAM VS. STATE OF HARYANA: it was decided that the rule of Edjudem Generis will
apply if the following condition is satisfied:-

1. Law or provision of law uses specific words.

2. Specific words are referred to as general words.
3. Specific words form a class.
4. General words need to be interpreted.
Advantages
• there is no requirement for the draftsmen to write an full or exhaustive list of everything that is
included

• the act can cover circumstances which might not have been covered by the draftsmen

• it allows the act to adapt to changes in society

Disadvantages

• it is not always predictable what the judges will consider to be the same category as the specific
words

• it allows for judicial law-making which is not desirable

QUE:Explain the rule of ‘Ejusdem Generis’ under the Interpretation of statute.

Que: The rule of Ejusdem generis must be applied with great caution. Critically examine the merits and
demerits of this rule.

Literal Heydons Rule Reasonable Harmonious Edjesdum Generis

Construction Construction Construction
Use Dictionary Before interpreting When dictionary When there is When we have to
Meaning any word aaply 4 meaning destroys conflicting interpreat the
rules the purpose of law, provisions in the specific words
we apply common same law we use which are described
sense and intention this interpretation under general
of law makers words we use this
interpretation.

OTHER RULES OF INTERPRETATION:-

1. EXPRESSIO UNIOS EXCLUSIO ATERIS:-

AGAR ACCHA INTERPRETATION AAEGA,
TO KHARAB INTERPRETATION JAEGA!
It means express mention of one thing implies exclusion of other. As per this rule, whenever we get a
better interpretation of any word, we must ignore the previous meaning of the word and adopt the new
meaning.
This rule is normally used when plain meaning creates confusion.
Ex:- If we get a better meaning of the word by applying the rule of reasonable construction, then we must
consider the meaning suggested by reasonable construction and should leave the meaning

Dushyant Jain^^ 59- -

 suggested by literal construction.

In the case of PARBHANI CO-OPERATIVE TRANSPORT SOCIETY VS. REGIONAL TRANSPORT AUTHORITY:-
It was decided that this rule doesn’t apply when language of law is very clear.

2. CONTEMPORANEA EXXPOSITIO EST OPTIMA ET FORTISSIMO IN LEGE:-

This rule is used when the meaning of any word given in law has been changed over the period of time.
As per this principal “Contemporaneous exposition is best and strongest in law”. When the word used in
law have been changed in course of time, interpretation of the word shall be made as per it’s meaning
represents the true intention of law makers.
So we must use the contemporary menaing that existed at the time when law was made
(is rule ke hisab se wo meaning hi consider kigiye jo us vakt thi jab law bana tha)

STATE OF MADHYA PRADESH VS. G.S. DALL AND FLOWER MILLS:-

In this case the court decided that the state can’t interpret any law in order to widen it’s power.

R.S. NAYAK VS. A.R. AUNTULEY:-

In this case the court interpreted sec 121 of IPC 1860 and said that MLA’s are not public servant as, when
IPC was enacted MLA were not included in the definition of public servant.
However, if any wrong meaning is attached to any word , the court can give the correct interpretation if
new interpretation doesn’t affect any title to the property or any transaction already entered.

3. NOSCITUR A SOCIIS:-

This rule means “known by it’s associates”. As per this rule meaning of any word in a law should be known
by it’s accompanying words or sorrounding words or associatewords. This rule is normally used in cases
when word in any law suggests more than one meaning.

“It also means that when 2 or more words have same meaning they can be understood in cognate (same)
sense – Maxwell”

In the case of CIT Vs Bharti Cellular, The Supreme Court interpreted the word “technical service” used in
section 194J of Income Tax Act, and said as the meaning of word technical service is not given in income tax
act but the word technical service involves consultancy by human being so in order to provide technical
services there has to be a human element. The meaning of technical service was discovered by the use of
principal of noscitur a sociis.

When 2 or more words have a similar meaning, they can be coupled together in cognate sense.

In the case of FOSTER VS. DIPHWYS CASSON, a law stated that explosives products shall be carried in case or
canister . However, the defendant used a cloth bag. The court had to decide whether cloth bag comes into
definition of case or canister . By applying the principle of Noscitur a sociis, the court decided that the word
“case or canister” to show the strength in the terms of carrying the explosive , the cloth bag can’t come
under the definition of case or canister.

This rule cannot apply:-

a. When it causes confusion.
b. When different circumstances exist.
c. When the words are used in different content.
d. A sufficient reason can be given for different of proceeding and succeeding words.

Dushyant Jain^^ 60- -

This rule should not be confused with the rule of edjesdum generis where we interpret the specific words
which belong to same class.
(agar ek word law main use kiya hai aur us ka similar word bhi use kiya hai to aap donon ki menaing ek hi
tarah ki rahiye)

4. STRICT CONSTRUCTION:-
BHAI APNA DIMAK MAT LAGAO,
JAISA LIKHA HAI VAISA INTERPRET KARO
When there is a mandatory duty upon any person and such person breaches such duty, law will strictly apply
to such person.

This rule has a limited applicability now a days. If an interpretation suggests 2 alternate constructions out of
which one provides a remedy, and the other does not provides a remedy, the courts will use the
interpretation which provides a remedy.

In one of the cases, the IPC punished a person who was proved to be guilty of stabbing the accused had given
injury to other party by “biting”, the court interpreted the word stabbing strictly and held “biting” is not
covered in the scope of “stabbing”.

For example the tax laws must be interpreted strictly. In the case of Harshad Mehta, it was observed by the
Court that when laws are interpreted strictly, nothing should be left to presumption and one has to look fairly
at the language used in law.
Example: if the companies act requires any form to be filed within 30 days then the 30 days must be
interpreted as 30 calender days and even if delay of 2 day is made it will be considered as contravention as
per the particular provision.

Strict interpretation is also known as Litra Legis.

(kanoon main jaisa likha hai vaisa interpret karo apna dimak mat lagao)
5. LIBERAL CONSTRUCTION:-

While interpreting welfare laws, widest interpretation shall be used. The courts should extend the scope of
law in order to provide remedy. This rule states that the court must interpret the words or language in the
law to promote the public good.
It is also known as sociological interpretation or beneficial interpretation. Here the court widens the meaning
of any word given in law to provide benefits to the parties who need benefits on account of their condition.

(victims ya dukhi logon ke fayde ke liye law ke scope ko badhaya ja sakta hai)
AIR INDIA STATUTORY CORPORATION V/S UNITED LABOUR UNION:-
In this case, the court interpreted section 20 of contract labour act and said that the employment in which
the appropriate government prohibits the contract labours, such contract labours shall be absorbed by the
employers, there was no provision of absorption of contract labour, but the court gave a liberal interpretation
to section 20.

In the case of Comptroller And Auditor General Of India V/S K.S. Jagannathan, the court decided that
constitution of India shall be interpreted in such a manner that members of Schedule Cast and Schedule Tribe
gets the maximum benefits.

INTERNAL AND EXTERNAL AIDS IN INTERPRETATION

A. Internal aids in Interpretation:-
LAW KO SAMJHNE KI MADAT,
LAW SE HI MILEGI!

Dushyant Jain^^ 61- -

1. TITLE:-
There are two types of title:-
LONG TITLE SHORT TITLE
It contains full name of act of the law and a title that These are abbreviated title on short title.
represents the purpose of law. The purpose of short title is to facilitate ease
of reference.
Ex:- Companies act 2013 act to consolidate and amend the Ex:- Short title of Companies Act is
law relating to companies. Companies Act, 2013

Title are stated before preamble . Initially, England didn’t recognise the title as an aid of interpretation,
but now they have recognised long title as an aid to an interpretation.
The long title generally covers law and its purpose so we can also consider it as preamble. Long title can not
override the clear provisions of law.

In ASHWIN KUMAR GHOSH CASE:-

The court decided that title is a part of law. Short titles are used for description and identification of law,
whereas long titles may be used as an aid to interpretation.

In the case of Union of India Vs Elphinston Spining and Weaving Company Limited, it was decided that the
long title alone or along with the preamble is good guide regarding the abject, scope and purpose of law.

2. PREAMBLE:-
It begins before the section and after the title. It is a part of law, it is an aid in interpretation, it
suggests(unlocks) the legislative intent. If the law and it’s provisions are very clear, then there will be no
need to refer preamble.

If preamble is not separately given in any statue then it can also be the part of long title.

However the morden laws do not have preamble due to which the importance of preamble is declining and
instead of preamble long titles are given in morden laws.

ANIT DAS VS. STATE OF BIHAR:-

The court decided that, preamble states, what the act law intends to deal with, if the provisions of law are
not clear, then the courts are suggested to look into preambles.

In BURAKAUV COAL CO. CASE:-

The court decided that if meaning of provisions is clear, preamble can be disregarded.
Preamble suggest the true intention of law makers or the object and purpose of the law.

3. HEADING:-
It is a short nomenclature or caption. There are two types of heading:-
Short heading Long heading
They are prefix to a section. They are prefixed to group of section.
For example : Section 4, Memorandum of For example: Chapter 11 of Companies Act,
Association, in companies act. which includes section 149 to 171 under the
title Appointment and Qualification of
Directors.
There are 2 opinions on heading:-
It is key to interpretation of clauses, unless Reference of heading be made only when the
the wording of heading is inconsistent with statute are ambiguous.
the contents of provisions.

Dushyant Jain^^ 62- -

CIT VS. AHMEDBHAI UMEDBHAI:-
IN this case the court decided that heading or titles cannot be used to restrict the plain meaning of law.

BHINKA VS. CHARAN SINGH:-

In this case, heading of section, 180 of UP tenancy act stated “Ejectment of person without title”. The
section contains “a person who retains the possession of property without consent of the person who is
entitled to admit, may be ejected.”

In this case, the court ignored the heading as heading talks about ejection of person without title and section
talks about ejection of any person who occupies the possession without the consent of owner (person entitled
to admit)

4. MARGINAL NOTES:-
The headings or the notes that are put at one side of section are called as marginal notes. These heading
decides the effect of the sections. In past marginal notes, were considered as source of interpretation, but
now, by majority of views, the marginal notes cannot be considered as source of interpretation. Marginal
notes are insterted by drafters and not by legislators.
In the case of SHRIKANT PADAMRAJE R. KADAMBANDE VS. CIT:- The court
decided that marginal notes cannot control the meaning of section, when
they are clear. However, it must be noted that they are the part of law, and
the key pointer to the intention of law maker.

In the case of BANGAL IMMUNITY CO. LTD:-

It was decided that marginal notes attached to article of constitution are part
of constitution and can be used for interpretation for article of constitution.
(section ke side main likhte hai yeh batane ke liye ki section kab se lagu hua tha ya fir section ke bare main
aur jada clarity dene ke liye)

5. INTERPRETATION CLAUSES:-
Every law contains definitions. These definitions explain the words, which are used in law. The interpretation
clause or the definition given to any word provides a meaning to the word in law.

The kinds of definitions:-

1. RESTRICTIVE:-
When the word defined as “means”. Ex:- definition of company given in companies act 2013.
2. EXTENSIVE:-
When the word is defined as “it includes but not limited to”.
3. INCLUSIVE AND EXCLUSIVE:-
This kind of definition includes one thing and excludes the other thing. Ex:- the definition of GOODS given
in sale of goods act, 1930.

6. PROVISO:-
In the words of HIDAYTULLA J. proviso are used to qualify (condition) a statement or provide exceptions.
Exceptions or conditions are provided in law through:-
PROVISO EXCEPTIONS SAVE AS
Proviso are used to remove It restricts the meaning of It preserves from destruction
special cases from the general section. certain rights, privileges and
statement. damages.

7. ILLUSTRATION:-
Illustrations are the examples given in the law itself, in order to explain the provisions of any

Dushyant Jain^^ 63- -

law. Illustrations are the part of the law and they explain the intention of law. It explains the meaning of a
provision and become the parcel of section.
Illustration cannot curtail or expand the scope of the section. If there is any conflict between the illustration
and section, the section shall prevail.

Mahesh Chandra Sharma v. Raj Kumari Sharma

It was held that illustrations are parts of the Section and help to explain the principles of the section.

8. SCHEDULES:-
Laws are basically divided In section and schedules. Schedules are attached to a law. They are part of law to
which they are attached. They contain the details, which cannot be included in sections, schedules may go
beyond sections.
If there is a conflict between schedule and the law, the law has upper head.

In the case of RAMCHAND VS. SALE TAX OFFICER :- It was decided that the language of schedule in order to
be clear must contain the heading of section, to which it relates.

EXTERNAL AIDS TO INTERPRETATION:-

It means a remedy in interpretation from outside the law.

1. PARLIAMENTORY HISTORY:-
LAW PAS KARTE WAQT JO DISCUSSIONS HOTE HAI PARLIAMENT MAIN,
US SE BHI SAMJHATA KI LAW KE PEECHE NEEYAT KYA HAI
Parliamentary history means the discussions that were held in the parliament at the time of passing a
particular law.
In England parliamentary history, is not considered as a remedy of interpretation.

However, in India it has been decided by the court in multiple cases that parliamentary history, may be
considered by the Courts for proper understanding of law.

In S.S. Suryavanshi case:- The case was to interpret section 53A, of transfer of property act, 1882, which
was included on recommendation of special commitee formed by government, in the discussion made in
parliament , it was decided that the purpose of introducing the section 53A is to protect the buyers of
immovable property on the ground of non- registration , the court considered the discussion made in the
parliament and the report of special committee.

In order to interpret the constitutional provision, the court considered the decision made in the constituent
assembly.

2. REPORTS OF COMMITTEE:-
Basically, laws are made on the report of committees that are appointed to draft the particular law, after the
discussions that are held in the parliament.

To check the background of any law, a reference can be made to the report of the committee that drafted
the law. However, the parliament in order to avoid the mischiefs, changes the actual report of the
committee, so the reports of committee cannot be always relied.

In the case of MUHAMMAD HANIF QUERESHI VS. KUSUM KUMARI:- the court on the question of banning of
slaughtering of cows, referred the report of GOSAMVARDHAN COMMITTEE.

3. Reference to other status (Pari materia)

Dushyant Jain^^ 64- -

This concept of Pari materia can be covered under the following parts:-
a. Pari materia:-
EK JAISE LAWS PARI MATERIA KAHLATE HAI
Laws are considered as pari materia (latin word, same nature) if they relate to same object, same subject
matter, same persons or same things.
As per Viscount Symonds, the pari materia laws can be used for interpretation for understanding meaning
of one or more word in pari materia law.

For example, in order to know the menaing of the word company used in SEBI Act, 1992, we can refer to
the Companies Act, 2013 (for the purpose of definition of company in SEBI Act, 1992, the Companies Act,
2013 can be considered as pari materia law)

In the case of BABU KHAN VS. NIZAN KHAN:- The court decided that while interpreting a provision given
in any law , the court can consider the similar provision in pari materia law.

Through the concept of Pari Materia, ambiguous provision of one law can be interpreted through the other
law.
b. EARLIER LAWS:-
Earlier laws cannot be used to interpret later laws and later laws cannot be used to interpret previous
laws.
c. REPEALLED LAWS:-
The repealed laws should not be used for interpretation of any law, however the court may refer to
repealed laws if the Court considers the repealed law to be pari-materia.
d. RULES AND REGULATIONS:-
The rules and regulations made by the government can also be considered as a source of interpretation.

DICTIONARY:-
When any word is not defined in the act, it is permissible to refer to dictionaries to find out a general sense in
which the word is used in the law. Whenever, the dictionary meaning is used, it should be borne in mind that
the purpose of law and intention of law maker should not be affected by the dictionary meaning.

In cases where the word has a legal or technical meaning , such words must be interpreted as per the
intention of law makers.

“Meaning of any word given in Pari Materia law will be given more weightage then the dictionary meaning.”

USE OF FOREIGN DECISIONS

Now a days, in order to have a uniformity in International jurisprudence, the court refers to foreign decisions
and the foreign courts also refer to Indian decisions. However at the time of using foreign decisions, the
language of Indian law should be given first priority.
For example we use the case of Saloman Vs Saloman Ltd to understand the concept of separate legal entity.
We use the case of Reylands Vs Fletcher to understand the rule of strict liability in torts.
PRESUMPTIONS
While interpreting the laws following presumptions are to be kept in mind:-
a. The law is never against state.
b. The law never punishes a person who does not have a guilt intension.
c. The word Mensrea is normally used for interpreting the criminal laws.
d. Indian laws are not interpreted in the manner foreign laws are interpreted.
e. Principle of natural justice shall be followed before passing any decision .
f. Law is never against public policy.
g. Law always suppress mischief.

Dushyant Jain^^ 65- -

h. Law always provide remedy to aggrieved party.

LEGAL TERMINOLOgIES & LEGAL MAXIMS

A priori: From the antecedent to the consequent.

Ab initio: From the beginning.

Absolute sententia expositore non indiget: Plain words require no explanation.

Actio mixta: Mixed action.

Actio personalis moritur cum persona: A personal right of action dies with the person.

Actionable per se: The very act is punishable and no proof of damage is required.

Actus Curiae Neminem Gravabit: Act of the Court shall prejudice no one.

Actus non facit reumnisi mens sit rea: An act does not make a man guilty unless there be guilty intention.

Actus reus: Wrongful act.

Ad hoc: For the particular end or case at hand.

Ad idem: At the same point.

Ad valorem: According to value.

Aliunde: From another source.

Amicus Curiae: A friend of court member of the bar who is appointed to assist the Court.

Animus possidendi: Intention to possess Audi alteram partem: Hear the other side. Benami: Nameless.

Bona fide: Good faith; genuine.

Caveat: A caution registered with the public court to indicate to the officials that they are not to act in the matter mentioned in the caveat
without first giving notice to the caveator.

Caveat emptor: Let the buyer beware.

Caveat actor: Let the doer beware.

Caveat venditor: Let the seller beware.

Certiorari: A writ by which records of proceeding are removed from inferior courts to High Court and to quash decision that goes beyond its
jurisdiction.

Cestui que trust: The person who has the equitable right to property in India he is known as beneficiaries.

Consensus ad idem: Common consent necessary for a binding contract.

Contemporanea expositio est optima et fortissima lege: A contemporaneous exposition or language is the best and strongest in Law.

Corpus delicti: Body/gist of the offence.

Cy pres: As nearly as may be practicable. Damnum sine injuria: Damage without injury. De facto: In fact.

De jure: By right (opposed to de facto) in Law.

Dehors: Outside; foreign to (French term).

De novo: To make something new; To alter. Dies non: Day on which work is not performed. Deceit: Anything intended to mislead another.

Del credre agent: Is a mercantile agent who in consideration of extra remuneration called a del credre commission undertakes to indemnify his
employer against loss arising from the failure of persons with whom he contracts to carry out their contracts.

Delegate potestas nonpotest delegari: A delegated power cannot be delegated further.

Delegatus non potest delegare: A delegate cannot delegate.

Dictum: Statement of law made by judge in the course of the decision but not necessary to the decision itself.

Dispono: Convey legally.

Dushyant Jain^^ 66- -

Ejusdem generis: Where there are general words following particular and specific words, the general words must be confined to things of the
same kind as those specified.

Estoppel: Stopped from denying.

Ex parte: Proceedings in the absence of the other party.

Expressio unius est exclusio alterius: Express mention of one thing implies the exclusion of another or which is shortly put.

Ex turpi causa non oritur actio: No action arises from an illegal or immoral cause.

Fatum: Beyond human foresight.

Fait accompli: Things done and no longer worth arguing against; an accomplished act.

Factum probandum: Fact in issue which is to be proved.

Factum probans: Relevant fact.

Ferae naturae: Dangerous by nature.

Force majeure: Circumstance beyond one’s control, irresistible force or compulsion. Generalia specialibus non derogant: General things do not
derogate from special. Habeas corpus: A writ to have the body to be brought up before the judge.

Ignorantia legis neminem excusat: Ignorance of law excuses no one.

Injuria sine damno: Injury without damage.

Interest reipublicae ut sit finis litium: State or public interest requires that there should be a limit to litigation.

Ipso facto: By the very nature of the case.

In promptu: In readiness.

In posse: In a state of possibility.

In limine: Initial stage; at the outset.

In lieu of: Instead of.

Inter alia: Among other things.

Inter se: Among themselves.

In specie: In kind.

Inter vivos: Between living persons.

Intra vires: Within the powers.

In personam: A proceeding in which relief is sought against a specific person.

Indicia: A symbol; token; mark.

Innuendo: Allusive remark.

Jus in personam: Right against a person.

Jus in rem: Right against the world at large.

Jus non scriptum: Unwritten law; Customary Law.

Jus scriptum: Written Law.

Lex Marcatoria: The law merchant, is a body of legal principles founded on the customs of merchants in their dealings with each other, and
though at first distinct from the common law, afterwards became incorporated into it.

Lex fori: The law of the forum of court.

Lis: A suit cause of action.

Lis pendens: A pending suit.

Locus standi: Right of a party to an action to appear and be heard on the question before any tribunal.

Dushyant Jain^^ 67- -

Mala fide: In bad faith.

Mandamus: A writ of command issued by a Higher Court to a Lower Court/Government/ Public Authority.

Mens rea: Guilty mind.

Manesuetae natureae: Harmless by nature.

Mesne profits: The rents and profits which a trespasser has received/made during his occupation of premises.

Misnormer: A wrong name.

Mutatis-mutandis: With necessary changes in points of detail.

Noscitur a sociis: A word is known by its associated, one is known by his companions.

Obiter dictum: An incidental opinion by a judge which is not binding.

Onus Probandi: Burden of proof.

Pari passu: On equal footing or proportionately.

Per se: By itself taken alone.

Persona non-grata: Person not wanted.

Per incuriam: Through want of care; through inadvertance.

Prima facie: At first sight; on the face of it.

Profit a prendre: A right for a man in respect of his tenement.

Pro bono publico: For the public good.

Pro forma: As a matter of form.

Pro rata: In proportion.

Posteriori: From the consequences to the antecendent.

Puisne mortgage: Second mortgage.

Pari causa: Similar circumstances, with equal right.

Pari materia: Relating to same person or thing.

Qui facit per alium facit per se: He who acts through another is acting by himself.

Quo warranto: A writ calling upon one to show under what authority he holds or claims an office.

Quia timet: Protective justice for fear. It is an action brought to prevent a wrong that is apprehended.

Quid pro quo: Something for something.

Ratio decidendi: Principle or reason underlying a decision.

Res judicata: A decision once rendered by a competent court on a matter in issue between the parties after a full enquiry should not be
permitted to be agitated again.

Res ipsa loquitur: The things speak for itself. Respondent superior: Let the principal be liable. Res sub judice: Matter under consideration.

Res gestae: Facts relevant to a case and admissible in evidence.

Rule nisi: A rule which will become imperative and final unless cause to be shown against it.

Scire facias: Your cause to know.

Status quo: The existing state of things at any given date.

Scientiet volenti non fit injuria: Injury is not done to one who knows and wills it.

Spes successionis: Chance of a person to succeed as heir on the death of another.

Supra: Above; this word occurring by itself in a book refers the reader to a previous part of the book.

Dushyant Jain^^ 68- -

Suppressio veri: Suppression of previous knowledge.

Sui juris: Of his own right.

Simpliciter: Simply; without any addition.

Scienter: Being aware of circumstances, the knowledge of which is necessary to make one liable, as applied to the keeper of a vicious dog,
means no more than reasonable cause to apprehend that he might commit the injury complained of.

Sine qua non: An indispensable condition.

Situs: Position; situation; location.

Suo motu: On its own motion.

Stare decisis: Precedent. Literally let the decision stand.

Sine die: Without a day being appointed. Travaux preparatotries: Preparatory records. Tortum: Civil wrong actionable without contract.
Uberrimae fide: Of utmost good faith.

Ubi jus ibi remedium: Where there is a right there is remedy.

Ultra vires: Beyond the scope, power or authority.

Ut lite pendente nihil innovertur: Nothing new to be introduced during ligitation.

Usufructuary: One who has the use and reaps the profits of property, but not ownership.

Ut res magis valeat quam pereat: The words of a statue must be construed so as to give a sensible or reasonable meaning to them.

Vis major: Act of God.

Vigilantibuset, non dormientibus, jura subveniunt: The laws help those who are vigilant and not those who are slumber or lazy.

Vice versa: The order being reversed; other way round.

Volenti non fit injuria: Damage suffered by consent gives no cause of action.

READING A BARE ACT & CITATION OF CASES

Reading a bare Act

Bare Act is the text of the legislation passed by the Parliament or State Legislature. It is essential for
professionals working with regulatory framework to understand a Bare Act.

Reading a bare act may look easy but it becomes difficult due to the use of legal language. Therefore, reading
a bare act requires skills such as interpretation, knowledge, logic and command over the language in which
the act has been written.

The purpose of reading a bare act is to understand the correct meaning of a provision. A professional should
read the bare act after keeping in consideration the object of the statute. Few important rules are as under:

1. A Bare Act should be read according to the context

2. Definition clause of the Act & pari materia statutes and General Clauses Act may be referred to

3. Literal interpretation should be given initially

4. Break the sentence but understand a provision as a whole

5. Read – understand – apply rule would be beneficial

6. Read the updated version of the bare act, for example in case you are reading companies act from
bare act, you must purchase the latest edition of bare act.

Dushyant Jain^^ 69- -

Citation of Cases

Citation means reference to a statute, reported case, regulation etc. The decisions of Higher Court are having
binding force on the subordinate courts. So we need to refer decided cases in our pleadings, to made before
the authorities and courts.

Citations are also used by the authors in referring the cases in the books and publications.

Generally, law reports are referred by the professionals in their pleadings. The examples of the law reports
used are as under:

1. All India Reporter (AIR)

2. Supreme Court Cases (SCC)

3. Supreme Court Journal (SCJ)

4. Supreme Court Reports (SCR)

5. Delhi Law Times (DLT)

Equivalent Citation is also an important mean to refer the cases which means parallel citations. They are used
to refer to the citations of same cases published in other journal.

The citation generally gives an indication to the name of the parties, year of judgement, volume number,
Abbreviated title of journal, page number.

PROSPECTIvE AND RETROSPECTIvE OPERATION

When laws are made by legislature, they affect rights and liabilities of people, the applicability of law may be
either restrospective or prospective.

A law will be considered as retrospective if the parliament expressly or by implication made the law effective
from back date which is specified.

Amendment made to a law will be considered as retrospective if law expressly statest that it has
retrospective application.

In the case of Nabenda Datta Vs Arbindam Mukherjee it was decided that interpretation of law can not be
made in such a manner that defeats the provisions of law.

AND or OR

Throght the word and we connect 2 or more items, if 2 or more situations are connected by and then all the
conditions must be combined.

If 2 conditions are separated by and, in that case we have to follow or comply just one of the conditions or
situations.

However it may happen that and is understood as or and vice versa.

Proviso

Provisos are used to qualify a general statement.

Provisos can be in the form of conditions, exceptions and non obstante (notwithstanding) clause.

Provisos can not be separated provisons of which they are the part and provisos can not destroy or nullify the

Dushyant Jain^^ 70- -

objects of the provision which they are part of.

Provisos make exclusions from general statements

Provisos and provisions should be interpreated harmoniously and non of them must be made redundant.

Deeming Provisions

If the provisions of some law contains the word deemed or deeming, then the provisions become deeming
proivsions. Through deeming provisions we consider something as something which is originally something
else. We basically assume a fact which does not exist in reality.

Repugancy Provisions

Repugant means contradiction, if in the law 2 provisions are contradictory we must reconcile the meaning of 2
provisions and interpreat them harmoneosuly.

However if repugancy is not possible then one more popular rule, which says that if two sections are
repugnant, the last one must prevail.

Conflict Between General Provision and Special Provision:

In case there is a conflict between general and special provision the meaning of both must be reconciled to
avoid any conflict, if both meaning can not be reconciled then also the general rule shall prevail.

The general rule covers large matters in general and specific provisions covers only specific situations so we
can say universal things to not detract from universal things.

Social Beneficial Construction

This rule is followed at the time of interpreating welfare laws. Under this rule if there is a choice to the
courts to select between wider interpretation and narrow interpretation of provision, the court will select
wider interpretation.

Interprtation of Procedural Laws

Basically procedural laws are used to enforce substative laws. At the time of interpeating the procedural laws
it has to be kept in mind that that it the procedural law is violated as some of the procdure given in
procedural law has not been followed in this case also the rule of fair hearing must not be affected.

Interpetation of Tax and Fiscal laws

The tax laws must be interpreated in strict manner.

Conflict Between Statues, Rules and Regulation

It is a well settled rule of interpretation that whenever a rule, regulation or prescribed form under a law
conflicts with the provisions of law the latter shall prevail.

Doctrine of Substantial Compliance

Substantial compliance means the compliance with substantial or essential requirements of the law or a
contract which fulfils the purpose or objective of law.

As per Black Dictionary substantial performance means a person in good faith complies with essential
requirement of law or contract, even though he does not precisely meet all the requirements but the
performance will be considered as complete if the purose of law or contract is accompalished.

Dushyant Jain^^ 71- -

Doctrine of Impossibility of Performance

This doctrine is based on a principle that “no one is bound to do what is impossible”

In the case of Rajkumar Dey Vs Tarapude Dey, the Supreme Court said that, in case the arbitral award could
not be registed within the time of registration as it was deposited in the Court, the Court said that the days
for which the award was deposited with the court shall not be counted in the days within which the award
was to be registered.

USE OF “MAY” AND “SHALL”

The words “shall” or “may” used in a provision depends on the nature of compliance and gravity of non-
compliance. The standard rule is that the provision containing ‘shall’ is mandatory and the provision
containing ‘may’ is either permissive or discretionary.

CASE LAW

P.N. Chockalingam Pillai vs A. Natarajan And Ors.: (2001) 3 MLJ 661

The supreme court said that shall suggests mandatory and may suggests directory.

STRICT CONSTRUCTION OF PENAL STATUTES

Generally, penal provisions should be construed strictly.

But at the same time it is one of the settled principles of interpretation of statutes that when two
interpretations are possible of a penal provision, that which is less onerous should be preferred.9

BRIEF OF GENERAL CLAUSE ACT, 1897

It is a consolidating act as it consolidates the provisions of General Clauses Act,1868 and General Clauses Act,
1887.

The aim of this law is to define different words in general sense so that definition is relevant for other laws as
well.

Importance of General Clauses Act,1897

It guides to the courts regarding basic rule of interpretation. Various words are defined so that definition
word is not repeated in other laws.

It does not affect the definition in given in the other laws.

The Central Acts passed by Parliament to which the General Clauses Act, 1887 applies:

a) Acts passed in Parliament.

b) Acts passed by Governer General in Council before commencement of Act.
c) Act passed by Bominion legislature between “15th August, 1947 and 26th Jan, 1950”.
In the case of chief inspector of mines Ms. K C Thapur, it was decided that, whatever General Clauses
Act states in respect of meaning of words with regards to legal principle it has to be read in every act
to while it applies.
a) Important provision of General Clauses Act, 1897
1)Unless anything repugent is contained in the subject and the context the definition of below
mentioned words shall apply to all Central Acts.
2) Words Affidevit, Barrister, District Judge, Father, immovable property, imprisonment, magistrate.

Dushyant Jain^^ 72- -

 b) The definition of below mentioned words as given in General Clauses Act, 1847 shall apply to all Indian
Laws unless there is anything repugent in context.

c) To any Indian Law if any reference is given to “revenues of Central and State Government” then it
should be interpreted as consolidated fund of India or consolidated fund State.

d) Effect of Repeal of any Law

so if any law has been or regulation has been repealed, then such repeal shall not:

1)Revive anything- Not in force or existing at the time at when repeal took place.

2) Shall not affect the previous operation of any law which is repealed or any action already taken.

3) does not affect the right privileges, obligations, liability occurred under the law which is repealed.

4) affect investigation, legal proceedings, or remedy in respect of rights, privileges, obligations, penalty
etc.

5) the investigation, legal proceedings, penalty, forfeiture and other action may be continued as if the
Act has not been repealed.

e) Repeal of Act making Amendment in Law.

If by a repeal Act any Ammending Act is repealed, then such repeal of amending shall not affect the
provisions of amending Act which are in operation at the time of repeal.

f)Revival of repealed enactment

If repealed law is wholly or partially revived then it’s purpose and reasons shall be stated.

g) CALCULATION OF TIME
If any law requires any action to be taken in the court or in any office on a certain day and within
prescribed time, and in this case if the court or the office is closed on that date or on last date of
prescribed time, in this case it shall be considered that action is taken in due time if it is done on next
day after the holiday.
h) Interpretation of Genders and numbers
-words suggesting masculine gender shall includes females
-words in singular shall inludes plurals and vice versa.

i) Power to issue and making of rules will also include the power to amend, vary or rescind the rule.

j) Recovery Fines: As per Sec 63-70 of IPC, 1860 courts are empowered to recovering of fines, so all the
Central laws wherever the fine are levied, it shall be assumed that the courts have power to issue warrant ans
do all the necessary acts for recovery of fines.

k) Punishment under two or more laws:

If act of the person is punishable under two or more laws then he shall be punished under two or more laws
but the person can not punish twice on same offence.

l) service by post

In Any law, if words serve, give, issued are used then it shall be done by properly addressing andvposting by a
registered post the letter which contains the document.

Unless it is proved that the letter could be delivered even by ordinary post.

Dushyant Jain^^ 73- -

Que: Discuss the provisions related to effect of repeal of any enactment under the General Clauses Act, 1897

CHAPTER: 4
ADMINISTRATIVE LAW

JO KANNON SARKAR KO SHAKTIYAN DETE HAI,

WO KANOON ADMINISTRATIVE LAWS KAHLATE HAI!

Dushyant Jain^^ 74- -

 Administrative laws are the laws that defines roles,
powers, obligations and functions of government
and its office.
It is the law that deals with functions of
Government towards the public.
As per Kenneth Culp Davis, an American scholar,
the administrative laws are the laws that deals
with the powers and functions of the government
bodies except the court and law making bodies.
(Sarkar apni zimmedariya public ke liye kaise
discharge karegi yeh administrative laws batate
hai)

SARKAR KO KAISA CHALANA CHAHIYE APNA KAAM

KAAJ,
YEH BATATE HAI, ADMINISTRATIVE LAWS
Ivor Jennings defined administrative law as the
law relating to administration. It determines the organization, powers and duties of administrative
authorities. This formulation is too broad and general as it does not differentiate between administrative and
constitutional law. It excludes the manner of exercise of powers and duties.

Administratve Law deals with the following Matters:

• Who are the administrative authorities?
• What are the powers exercised by those authorities?
• Procedure to be followed while using the power.
• What are the remedies available if fundamental rights are affected by administrative laws?
• What limits are to be followed while exercising the powers.

NEED FOR ADMINISTRATIVE LAW

Three main organs or parts of legal system:-
A. Legislative :- which makes laws
B. Executive :- which implements laws
C. Judiciary:- which makes sure that the laws are implemented in a correct manner.
At present due to lack of time with the above institutions we have seen the government bodies do not
discharge their functions in a proper manner and the court are also not able to timely direct the government
to discharge its duties in a correct manner.
The solution is to make good administrative laws that clearly defines the powers, functions and obligations of
the government towards the citizens.
(Solution yahi hai ki aise laws bana digiye jis se Sarkar ke upar jimmedari aaye, so jo kanoon Sarkar ke upar
ximmedari dalte hai unhe hum administrative laws kah te hai)

For example:- The Government officers did not share information with the public and every citizen did not
have resources to approach the court, to get an order which directs the government to provide a particular
information and hence the parliament of India passed a Right to Information Act, which ensures that
information are shared by public authorities.
Government ne Band kar diya, Apni duties ko sahi tareeke se karna Discharge,
Isliye Hame Chaiye, Administrative Laws
As the State does not have only the duty to protect its citizens but also has various other duties towards the
citizens, so administrative laws are needed so that the states are in the position to better discharge their
duties towards the citizen.

Development produces great economic and social changes and creates challenges in

Dushyant Jain^^ 75- -

the field of health, education, pollution, inequality etc. These complex problems cannot be solved except
with the growth of administration. States have also taken over a number of functions, which were previously
left to private enterprise. All this has led to the origin and the growth of administrative law.

We need administrative laws as the 3 organs of the state i.e the Legislative (the body that makes the laws) is
not able to make good quality laws due to limitation of time and the other factors. Second is Executive, i.e
the Government whose duty is to implement the law is also not able to implement the laws in correct
manner. Third is Judiciary, which has become much expensive and time consuming.

So due to all these factors, study of administrative laws has become much more important.

The Administration Deals with:

1. It makes policies,
2. It executes, administers and adjudicates the law
3. It exercises legislative powers and issues rules, bye- laws and orders of a general nature.
(Administration means Government – so Government ka kaam hai, Policy banana + law apply karna +
legislative power bhi discharge karna jaise ki rules aur regulations banana)
The Purpose of Administrative Law is to make sure that the citizens are not aggrieved by the action of
administration.

Lets Check more features of administrative laws:

a. The increasing administrative functions have created a new complex (area) of relation
between administration and citizen.
b. As the purpose of providing powers to administration is to improve the life of citizens, so it
must be ensured that the administration does not violate the rights of the citizens.
c. There has always been a conflict between individual liberty and Government control, as
exercise of Government control affects the liberty of the individuals. So there has to be a
check to maintain a balance between the prevate interst and government which represents the
public interest.
d. It is the demand of the people that there has to be a check on the powers of the Government s
that the Government does not exercise its powers for unwarranted or unneeded purposes.
e. The task of administration law is to ensure that the Government functions are exercised as per
legal prinicples and as per rules and resosns of justice.
f. If an individual is aggrieved by administrative action, he gets a redressal or remedy.
g. There is no antithesis (difference or contradiction) between effective Government and control
of administrative powers, which means effective government can be ensured by having a
control on administrative powers. Administrative powers are exercised by by many government
employees so if it is controlled properly it will result in effective Government.
h. The careful and proper study of administrative law becomes desideratum (need) as the
administrative law apart from providing powers to administration also controls the
administration.

SOURCES OF ADMINISTRATIVE LAW

ISMAIN HUM PADHENGE KI ADMINISTRATION KO
KISNE POWER DIYA LAW BANA NE KI
There are 4 main sources of administrative laws:-
It means from these 4 sources the roles and responisibilities of Administration is fixed or roles and
reponisibilites of the Govt. departments is defined.
1. CONSTITUTION OF INDIA
The constitution of India imposes many duties on the state:-

Dushyant Jain^^ 76- -

 Through directive principles

Through distribution of power between union and

state by way of list

The constitution also provides fundamental rights to

the citizen.

The government has to protect the fundamental rights of the citizen. Some Scholers believe that there is no
difference between constitutional law and administrative law as both are concerned with the functions of the
Government. But some Scholers believe that constitutional law describes various organs of the Government
and administrative law describes how these functions will be exercised.

2. ACTS AND STATUTES

Various laws which are passed by Indian legislature contain the roles and functions of the government. Such
laws relate to economy, taxation, security etc.

3. ORDINANCE DIRECTIONS AND NOTIFICATIONS

Ordinances are the laws that are passed by the president of India when the legislature is not in session.
The ordinances allow the administration to take necessary steps to deal with such developments.
Administrative directions, notifications and circulars are issued by the executive in the exercise of power
granted under various Acts.

4. JUDICIAL DECISION
Whenever there is dispute between the citizens and the government before the court, the court decides the
matter and after considering the case the court by its order fix the responsibility for the government.

Rule of Law
Rule of Law was developed by British Jurist A.V. Dicey. He derived this term from French Principle ‘La
principle de legalite’ which means the principle of legality. It states that the government should be governed
by Rule of Law instead of Rule of Individual.

Any dictator, monarch or one particular person should not govern the functioning of any nation. Each country
should follow legality of law.

Dicey was highly influenced by the French concept of administrative law’ (droit administratif) or the
‘administrative tribunals’ (tribunaux administratifs).

According to this, a citizen’s lawsuit against a public servant for a wrongdoing done in that capacity will be
handled by a special court rather than a regular court of law. Droit administratif contains a regulation that
was created by the judges of the administrative court rather than laws and rules created by the French
parliament.
Three major principles given by Dicey in his book “Rule of Law” are –
1. supremacy of law: It means that ordinary or regular laws shall remain supreme.

Dushyant Jain^^ 77- -

Supremacy here means absolute and pre-dominance of regular laws as against arbitrary or wide discretionary
powers.

2. Equality before the law: According to Dicey, all classes must be equally subject to the ordinary law of
the land as administered by the ordinary law courts. He states that there should be equality between people.
According to Dicey, all classes must be equally subject to the ordinary law of the land as enforced by the
ordinary law courts. It provides that all are equal before law and everyone will be subjected to the same law.

3. The predominance of a legal spirit: Legal Spirit refers to the judicial precedents upon any dispute
raised by any individual. The judgment given in any case will be the legal spirit of that particular case.

Legal Spirit basically refers to the law as set by the precedents that have evolved over time.

Rule of Law theory is criticised on the following graounds:

a) It does not differentiate between administrative descrition and arbitrary descrition.

b) More focus is given on equality of laws
c) In many cases specific tribunals are not needed but theory focuses more on tribunals.
d) No proper difference is created in ordinary courts and special courts or tribunals
e) It fails to recognise that specific laws are also needed.

Rule of Law in India the evolution of Rule of Law in India can be traced to british concept

The evolution of Rule of Law in India can be traced to British concept but the modern concept of Rule of Law
was introduced, only after the drafting of Constitution of India. Constitution of India laid the very foundation
of rule of law in India and is the essence of it.

Rule of Law is embedded in Constitution under multiple parts, important aspects are as under:

1. Preamble – the Preamble to the Constitution of India upholds the basic structure of the Constitution. It
talks about the justice, equality, liberty and dignity to all individuals. All of these aspects ensure Rule of Law
in the country.

2. Part iii- Fundamental Rights – These are the rights and fundamental or core of the Constitution of
India. They imply a duty on the state towards ensuring the welfare of its citizens. It helps to keep a check on
the actions of administrative authorities and legislature.

3. Part iv- Directive Principles of State Policy (DPSP) – These are the basic guidelines to be followed by
all especially the government of India to ensure smooth functioning of the country. They are not enforceable
by court of law. Few examples of Laws made under DPSP includes law relating to wages, labor laws etc.

Judicial Aspect
Rule of Law in India has evolved with time. It can be understood with the help of given cases hereafter. State
of Madhya Pradesh and ors. vs. Thakur Bharat singh, The Supreme Court in this case, held that section 3 of
Madhya Pradesh Public Security Act, 1959 is unconstitutional on grounds that it vest wide discretionary powers
to the District Magistrate without any proper safeguards over such powers.

ADMINSITRATIVE DISCRETION
Sarkar ki power khud ke iccha se law bana ne ki aur kaam
karne ki
As framing laws for every function of the government and its
officer is not practically possible so the government and

Dushyant Jain^^ 78- -

its officers while discharging their function exercise administrative discretion.
Discretion allows the government officers to choose the best alternative amongst the available alternative.
When the discretion is exercised:

Even if the administration is dealing with a problem on a case to case basis it can change its approach
according to the demand of situation and the demands of justice.
The government cannot function without the exercise of some discretion by its officials. It is necessary
because it is humanly impossible to make a rule for every conceivable eventuality that may arise in day-to-
day affairs of the government. It is, however, equally true that discretion is likely to be abused.
Que: The biggest check over administrative action is the power of judicial review. Elaborate

It should be It should not It should not

exercised in be against be biased
good faith constitution or
any law for
time being in
force

JUDICIAL CONTROL OVER ADMINSITRATIVE ACTION

Court hamesha sarkar ke kam main kadi karta hai
In India, the judiciary controls over the administrative functions in the following manner:
Through constitution Through statutes In ordinary or equitable
Done in 2 stages: manner
A) At the time of
delegation of discretion
B) At the time of exercise
of administrative
discretion

1) Through constitution -
Constitution is the supreme document that rules the entire country. All the organs of government get their
power from constitution. The constitution of India grants power to the legislature to enact the various laws.
The court decides whether a laws is constitutional or not & If the court believes that laws is unconstitutional
then the court may declare such laws as void. This process is known as Doctrine of judicial review which was
established by Supreme Court of America.

The Court scrutinizes the executive act for determining the issue as to whether it is within the scope of
authority or power conferred on the authority exercising the power.

The Courts attitude appears to be strict in respect of discretionary powers of the executive or administrative
authorities. The Court is not against the giving of discretionary power in the executive, but it expects that
there would be proper guidelines for the exercise of power.

Dushyant Jain^^ 79- -

The Court interferes when the uncontrolled and unguided discretion is vested in the executive or
administrative authorities or the repository of the power abuses its discretion

Any law which is Ultra virus the constitution is void.

When any uncontrolled or misguided discretion is exercised by administration or executive the court
interferes.

In case of Mansukh Lal Vitthaldas chouhan VS state of GujaratSupreme Court decided that when the
Supreme Court makes a judicial review it does not sit as a court appeal but merely reviews, whether the
decision was taken in a correct manner. The court lacks expertise to correct the administrative decision. THE
COURT JUST CHECKS THE LEGALITY.

The Supreme Court decides –

1) Whether the power are exceeded by the administration
2) Whether there is error of laws
3) Whether principle of Natural justice was ignored.
4) Whether the power is abused
5) A decision is made which should have not been made.

Judicial reviews is done in 2 stages

A) At the time of delegation of discretion – Jab kisi law ke andar Sarkar ko powers milti hai
B) At the time of exercise of administrative discretion – jab Sarkar apni powers ko exercise karti hai!

A) At the time of delegation of discretion

When the laws delegate the discretion to administrative body, the judicial reviews is made in the following
manner:

Any law can be challenged on the ground that it is violative of the Constitution and therefore laws giving or
conferring administrative discretion can thus also be challenged under the Constitution. If any law is vague &
provides wide discretionary powers to the administration then the courts can declare such law as void.
(kahi Sarkar ko milne wali power se constitution ko to nuksaan nai hora hai)
In some cases or under some laws, Statutory power is not given to administrative authorities but the power of
making rules is given to the administrative authorities through which the authority may affect the rights of
the citizens. The court can control such power of making rules.

The fundamental rights provide a basis to the judiciary in India.

Article 14 prevents unreasonable discretion given to the’ Executive’

In many cases, laws have been challenged on the ground that it violates article 14 of constitution of India.
When the administration exercises any discretion the court consider whether the classification is valid or not.

In the case of State of west Bengal vs Anwar Ali sarkar the government had formed special courts for special
category of offences to try such offence in speedy manner. However such special courts were challenged on
the ground that they violate the article 14.

The supreme court decided that the formation of special courts is not the right classification& is against
article 14.

Dushyant Jain^^ 80- -

Article 19 of constitution gives various power to the citizen ( Freedom of speech & expression, association
business, residence) & the article also allows the parliament to put a reasonable restrictions on such rights /
power of citizens.

So whenever the administrative actions unreasonably restrict any person to exercise the right given under
article 19, the court can declare such action as void.

In the case of HR Banthis VS Union of India,

The government passed law& required license for making a trading in gold. The Supreme Court declared this
action of government as invalid as it violates the freedom of business& found it unreasonable.

In a large number of cases, the question as to how much discretion can be given to the executive to control
and regulate trade and business has been raised. The general principle is that the power given to the
executive should not be arbitrary, and that it should not be left entirely to the discretion of any authority to
do anything it likes without any check or control by any higher authority

In Hari VS. Deputy Commissioner of Police, the Supreme Court justified the validity of section 57 of the
Bombay Police Act authorizing any of the officers specified therein to extern convicted persons from the area
of his jurisdiction if he had reasons to believe that they are likely to commit any offence similar to that of
which they were convicted. This provision of law, which apparently appears to be a violation of the residence,
was upheld by court mainly on the considerations that certain safeguards are available to the extern, i.e., the
right of hearing and the right to file an appeal to the State Government against the order.

B) At the time of exercise of administrative discretion

This review will be made by the court when the administrative discretion in exercised:

The court will interfere when:

1) Authority has not exercised the discretion property - Abuse of discretion
2) When the authority does not exercise any discretion – Non application of Mind

In the following cases it will be considered that the authority has abused the discretion :
A) When the authority acts with the malafide intention. Malafide (bad faith) may be taken to mean
dishonest intention or corrupt motive. In relation to the exercise of statutory powers it may be said to
comprise dishonesty (or fraud) and malice. In relation to the exercise of statutory powers it may be said to
comprise dishonesty (or fraud) and malice. A power is exercised fraudulently if it intends to achieve an object
other than that for which he believes the power to have been conferred.

Tata cellular vs Union of India, In this case, in one of the tenders invited by the Government, lower bid was
not accepted by the Government, the aggrieved party approached the court & the court cancelled the tender
on the ground that it violated article 14.

B) Irrelevant consideration -:
POWER DI KISI KAM KE LIYE MILI,
USE KISI AUR KAAM KE LIYE KIYA!
When the power given for one purpose is exercised for the other purpose, the court can interfere and cancel
the decision of the Government. In the case of State of MP Vs Ram Shankar, the services of Governemnt
teacher were terminated on the ground that he had taken part in RSS and Jan sangh Activities, Suprement
Court decided that taking away employment on account of political ideology will violate his article 14 and 16
of Consitution. Hence the order of Government was set aside on account of irrelevant consierations.

C) Leaving relevant consideration: - when the government authority takes any decision on the

Dushyant Jain^^ 81- -

basis of any irrelevant facts, the court can interfere.

D) Arbitrary orders: - If the government takes any decision without any sound reason court can interfere.
In case of Air India Vs Nargesh Mishra, the Air India (When Air India was Government Undertaking) framed a
regulation providing for termination of services of air hostess on her first pregnancy, this regulation was
challenged in the Coiurt and Court held it to be arbitrary and unreasonable.

E) Improper purpose – If the government passes any order for improper purpose or without any purpose or
object the court can interfere.
In the case of Nalini Mohan Vs District Magistrate, the law provided powers to the District Magistrate to
rehabilitate the persons displaced from Pakistan as a result of communal violence, however the power was
exercised to accommodate the persons who had come from Pakistan on medical leave. The order of district
magistrate was set aside by the Supreme Court.

F)Ignorance of Principal of Natural Justice: When the administrative discretion is exercised without
complying the rule of natural justice, the court can interfere. The principal of natural justice must be
observed and the person concerned must be heard.

G) Beyond the Powers: When the administrative action is beyond the power of administration, it is ultra vires
and the courts can declare it void.

2) In the following cases the court will interfere on the ground that the authority does not exercise its
jurisdiction – Non application of mind by the executive.

A) ACTING UNDER DICTATION

JAB SARKAR BINA DIMAK LAGAYE KISI KE ORRDER KE ANDAR KAAM KARE

When the government acts under the direction of superior authority, without application of its own mind, the
court can interfere.
Commissioner of police VsGowardhan Das Bhanji

In this case, the commissioner of police was authorised to cancel the petroleum Licenses, the commissioner of
police on the order of state government passed order & cancelled license without applying his own mind. The
court cancelled the decision of commissioner

B) Self Restriction: Sometime an authority restricts itself from taking an action on account of some rigid rules
or procedure made by such authority as result of which no action is taken, the court can interfere & cancel
such rigid rules. The authority entrusted with the discretionary power is required to exercise it after
considering the individual cases and the authority should not imposes restrictions or fetters on its discretion
by adopting fixed rule of policy to be applied rigidly to all cases coming before it. For example if the
Government Makes a rule that for having a passport a person needs to clear some kind of current affairs
exam, this might be considered as a self restriction by fixing some rule and it can be challenged.

C) Acting mechanically without due Care - When the government authority acts mechanically without any
due care, the Court can interfere.

2) THROUGH STATUES:
Many laws that are passed may contain provisions for making an appeal to the high court or Supreme Court or
a reference to the high court or Supreme Court in different situation so indirectly the administrative action
under any statute is reviewed by the high court or Supreme Court

Dushyant Jain^^ 82- -

Eg – If any party is not satisfied with the decision given by SAT (Securities appellate tribunal) then such party
may prefer an appeal to the Supreme Court as per SEBI ACT 1992

The method of statutory review can be divided into two parts:

Statutory appeals: There are some Acts, which provide for an appeal from statutory tribunal to the High
Court on point of law. e.g. Section 30 of Workmen’s Compensation Act, 1923

Reference to the High Court or statement of case: There are several statutes, which provide for a reference
or statement of case by an administrative tribunal to the High Court. Under Section 256 of the Income-tax
Act, 1961 where an application is made to the Tribunal by the assessee and the Tribunal refuses to state the
case the assessee may apply to the High Court and if the High Court is not satisfied about the correctness of
the decision of the Tribunal, it can require the Tribunal to state the case and refer it to the Court.

3) ORDINARY OR EQUITABLE REVIEW BY THE COURT –

If any injustice is done to any party due to administrative action such party can approach the court & the
court may, through injunction stop the administrative action.

TYPE OF EQUITABLE REVIEWS

JAN HIT MAIN COURT SARKAR KE KANOONON
KA AANKLAN KARTA HAI!

Injunctions:
An injunction is a preventive remedy. It is a judicial process by which one who has attacked or is threatening
to attack the rights of another is restrained from continuing or commencing such wrongful act.

In India, the law with regard to injunctions has been laid down in the Specific Relief Act, 1963.

Injunction is issued for restraining a person to act contrary to law or in excess of its statutory powers. An
injunction can be issued to both administrative and quasi-judicial bodies. Injunction is highly useful remedy to
prevent a statutory body from doing an ultra vires act, apart from the cases where it is available against
private individuals e.g. to restrain the commission or torts, or breach of contract or breach of statutory duty.
Injunction may be prohibitory or mandatory

1) PROHIBITORY INJUNCTION
Prohibitory injunction forbids the defendant to do a wrongful act, which would infringe the right of the
plaintiff. A prohibitory injunction may be interlocutory or temporary injunction or perpetual injunction.

a)Temporary or interlocutory injunction:-

This injunction is passed during the procedure these injunctions will become void as soon as final decision is
passed by the court (Section 37 for the Specific Relief Act). It is granted as an interim measure to preserve
status quo until the case is heard and decided.

Temporary injunction may be granted at any stage of a suit. Temporary injunctions are regulated by the Civil
Procedure Code and are provisional in nature. It does not conclude or determine a right. a temporary
injunction is a mere order and not a decree. The granting of temporary injunction is a matter of discretion of
the court

b) Permanent Injunction:-
When the court has finally heard the case & after such hearing the court passes it’s decree in the form of an
injunction, it may or may not have perpetual effect, which is valid for a period as mentioned In such decree,
however the parties may apply for the extension of time or can also be extended till the time up to which the
defendant complies with the injunction passed by the Court (defendant means the

Dushyant Jain^^ 83- -

person against whom. The operation of injunction may be suspended for a period when the defendant is given
a time to comply with the conditions of such injunction. Such injunction is called as permanent Injunction.

Example: Ram is a tenant at Shyam’s flat. Shyam has specifically asked Ram to not displace the prayer room,
as it had a gold statue of a deity. Ram wilfully disobeyed and tried to remove the statue. Here, the court may
grant a permanent injunction, in order for Ram to fulfil the request of Shyam.

c) Mandatory injunction: -

When in order to prohibit the negative acts the court orders a party to do some affirmative acts which the
court can enforce such kind of injunction are referred to mandatory injunction. So here the court prohibits a
party from doing wrongful act but also asks the party to do a positive act.

2) DECLARATORY INJUNCTION

Whenever any wrong is done to any party the court can make a declaration & declare the right & liabilities of
the parties. The declaration made by the court will be valid only against the party for whom such declaration
is made by the court.
Declaration may be taken as a judicial order issued by the court declaring rights of the parties without giving
any further relief. It is a discretionary remedy and cannot be claimed as a matter of right.
e.g. (Declaratory decree covered under specific relief act)

3) Damages:
The court can award damages, when any wrongful loss is caused to citizens due to the Acts of Government
Servants.

The Principal of Natural Justice

BINA SUNE KISI KO DOSHI MAT MANO,

BIASED BEHAVE KISI KE SATH KARNE KI MAT THANO,
BAS YAHI HAI NATURAL JUSTICE.

The principle of natural justice is followed since ages & is the core of legal system of any country it ensures
fair legal procedure for all. It was followed under common laws also. The principle of natural justice ensures
that the people have faith in the judicial system of the country.

In the constitution of India article 14& article 21 minimum procedures are given that the court should follow
at the time of exercising its jurisdiction.

In any law the word natural justice is not defined however every laws whether directly or indirectly provides
natural justice to the citizens

At the time of passing decision every court as well as quasi-judicial bodies must abide by the principle of
natural justice.

The principle of natural justice contain two rules

Rule against bias - Nemojudax in causasua
Rule of hearing - ‘’Audi aaltrempartem ‘’

RULE AGAINST BIAS

AGAR AAP KISI CASE MAIN RUCHI RAKTE HO,
TO KRIPYA KAR KE US CASE KE JUDGE MAT BANIYE

Dushyant Jain^^ 84- -

No person should become judge in his own case which also means the judge should not have any personal
interest in the case. Bias means an operative partiality whether conscious or unconscious in relation to a party
or issue. It is a presumption that a person cannot take an objective decision in a case in which he has an
interest. The rule against bias has two main aspects- one, that the judge must not have any direct personal
stake in the matter at hand and two, there must not be any real likelihood of bias.

Bias can be of three types:

a) PECUNIARY BIAS:- It means the judge has a financial interest in the case. Thus a pecuniary interest,
howsoever insufficient, will disqualify a person from acting as a Judge. (judge ka kisi tarah ka paise ka lalach)
In the case of Manek Lal Vs Prem Chand, it was decided that, pecuniary interest, however small, will wholly
disqualify a person from acting as Judge.
In the case of Anna Malai Vs State of Madras, the member of Regional Transport Authority issued a transport
permit in his own favor and later on transferred the permit to his son in law, however the Court quashed the
transport permit on the ground of natural justice.

b) PERSONAL BIAS:- in this kind of bias any party to the case may be related to the judge. He may be friend
of the party, or related to him through family, professional or business ties. The judge might also be hostile to
one of the parties to a case. All these situations create bias either in favour of or against the party and will
operate as a disqualification for a person to act as a Judge. (personal jhagda ya pyar)

CASE LAW: Mineral Development Coporation Ltd V State of Bihar

In this case the mining minister of Bihar cancelled the Mica License of petitioner, the court declared the
decision of mining minister of Bihar as Void, on the ground that the petitioner had a rivalry with the mining
minister, and state of Bihar did not observe the Principle of Natural Justice.

In the case of Manek Lal Vs. Prem Chand, a person had filed a case against the defendant on account of
professional misconduct in the High Court. The Chief Justice of the High Court appointed a council tribunal to
enquire in the matter. The tribunal had a chairman who had represented the plaintiff in past and also it
appeared that the chairman had forgotten the fact that he had represented the petitioner in past. The matter
reached Supreme Court and there was no real likelihood of bias, yet Chairman was disqualified to conduct the
inquiry on the ground that justice not only be done but must appear to be done to the litigating public. Actual
proof of prejudice was not necessary; reasonable ground for assuming the possibility of bias is sufficient.

C) SUBJECT MATTER BIAS

CASE MAIN TO NAHI, PAS JIS CHEEZ KE UPAR JHAGDA HAI,
US MAIN INTEREST HAI JUDGE KA
In this kind of bias the judge has a connection in the subject matter of the litigation. The connection in the
subject matter can be divided in 4 categories:
Partially connected to Departmental bias. Pre judgement of the Acting under dictation.
the issue (subject Ex. Judge has some issue. Ex. Judge is acting under
matter) personal conflicts with Ex. Before the direction of any superior
Example: One of the the department, which is conclusion of hearing the Authority who has an
Properties of Judge’s involved in the case. Judge has made an interest in the subject
relative is involved in In the case of State of opinion. matter.
the case. UP VS RS Sodhi, the
State Government by an
order authorized the
police department to
enquire in to fake

Dushyant Jain^^ 85- -

 encouters when the
allegations were made
on the local police, the
Supreme Court found it
to be the case of
departmental bias and
ordered CBI to make
enquiry.

2) RULE OF HEARING
The second principle of natural justice is audi alteram partem (hear the other side) i.e. no one should be
condemned unheard. It requires that both sides should be heard before passing the order. This rule implies
that a person against whom an order to his prejudice is passed should be given information as to the charges
against him and should be given opportunity to submit his explanation thereto. Following are the ingredients
of the rule of fair hearing:

Following are the ingredients of rule of hearing:-

a) Notice to the affected party

The court shall issue a notice of the court proceedings to the opposite party, so that the opposite can put his
point of view before the court. Unless a person knows the case against him, he cannot defend himself.
Therefore, before the proceedings start, the authority concerned is required to give to the affected person
the notice of the case against him. The notice is required to be served on the concerned person properly.
However, the omission to serve notice would not be fatal if the notice has not been served on the concerned
person on account of his own fault.

The notice must give sufficient time to the person concerned to prepare his case. Whether the person
concerned has been allowed sufficient time or not depends upon the facts of each case. The notice must be
adequate and reasonable. The notice is required to be clear and unambiguous.

b) Right to present the case and evidence

Every party has a right to present its case before the court and it can also give evidences in support of its
pleading. The reply is usually in the written form and the party is also given an opportunity to present the
case orally though it is not mandatory.

C) right to rebfute adverse evidence –For the hearing to be fair the adjudicating authority (Court) is not only
required to disclose to the person concerned, the evidence or material to be taken against him, but also to
provide an opportunity to refute the evidence or material. Such opportunity is given through:

1) Cross Examination:
Examination of a witness by the adverse party is called cross-examination. The main aim of cross-examination
is the detect falsehood in the reliability of the witness. The rules of natural justice say that evidence may not
be taken against a party unless the same has been subjected to cross-examination or at least an opportunity
has been given for cross examination

2) Legal Representation:
Providing of right of legal representation ais generally not considered as essential part of fair hearing.
However in the cases where case involves a question of law or matter which is complicated and technical or
where the person is illiterate or expert evidence is on record or the prosecution is conducted by legally
trained persons, the denial of legal representation will amount to violation of natural justice. So in these case
the parties must not be deprived of the right of legal representation.

Dushyant Jain^^ 86- -

D) Disclosure of evidence:- the party against whom any evidence is relied shall be given a full opportunity to
explain the evidence which is relied, against him

E) Speaking orders:-
ORDER ITNA CLEAR HONA CHAHIYE,
KI MATRA PAD KAR SAMAJ MAIN AAJAYE KI KYA HAI ORDER

The orders passed by the court must be with full reasons & justifications on the basis of which the order was
passed. When the adjudicatory bodies give reasons in support of their decisions, the decisions are treated as
reasoned decision. It is also called speaking order. In such condition the order speaks for itself or it tells its
own story. Reasoned decision introduces a check on the administrative powers because the decisions need to
be based on cogent reasons. It excludes or at least minimizes uncertainty.

In the case of Sunil Batra VS Delhi administration,The jail superintendent passed an order for hand fetters to
a prisoner without any reason the court declared the order of superintendent as invalid as it violated the
article 21 of constitution of India.

Exception to the rule of natural justice :-

In the below mention cases the rule of Natural justice may be ignored

1) Statutory exception:-
There may be a law that provides for exclusion of the principle of natural justice but in those cases also, the
courts follow the principle of natural justice.

The parliament can pass a law& provide for exclusion of natural justice but when it comes to natural justice
the courts as bound by constitution will always follows the principle of natural justice while deciding any
case.

2) In case of emergency: - When a prompt decision is to be taken the principle of natural justice can be
ignored. In the cases where any prompt action is required due to an emergency situation, the Administrative
Authorities can ignore the principal of natural justice, in public interest or for the public safety. However the
said decision of the administrative authorities is not final and the court may review such decision.

Maneka Gandhi vs union of india

In cases of emergency if passport is denied without following the principle of natural justice, on account of
public interest, post decisional remedy should be given to the party concerned. The Courts can review the
administrative action.

3) Interim disciplinary Actions

When interim disciplinary actions are taken, an opportunity of being heard is not required to be given.
For example, the order of suspension of an employee pending an inquiry against him is not final but interim
order and the application of the rules of natural justice is not attracted in the case of such order.

Abhaykumar VS A.K. srinivasan

In this case a student was dismissed from collage till the time criminal enquiry was pending against him
without providing any opportunity of being heard. The court justified the decision of collage.

4) Academic Evaluation:- When a student is dismissed from collage for unsatisfactory academic performance
without following the principle of Natural justice, action of collage will be considered as Justified.

5) Impracticability:- When there are many persons & it is impracticable to listen to everyone.

Dushyant Jain^^ 87- -

P. Radhakrishna VS Osmania university
In this Case exam was cancelled on the ground of mass copying & no opportunity of being heard, was given to
the students, Court Justified the action.
Que:“Though the normal rule is that a person who is affected by administrative action is entitled to claim natural
justice, that requirement may be excluded under certain exceptional circumstances.” Discuss

EFFECT OF FAILURE OF NATURAL JUSTICE

Natural justice follow kiye bina koi decision pas kiya
to kya hoga, void ya voidable
When an authority is required to observe natural justice in making an order fails to do so, should the order
made by it be regarded as void or voidable?

Void: it means the decision was never valid & it is void since beginning.
Voidable: It means the decision will be valid till the time it is cancelled by the Court.

The administrative decision should not be treated as void and nullity on the ground that natural justice has
been ignored & the party, against whom such decision is passed without following the principle of Natural
justice, has to approach the Court for getting such order cancelled.

Usually, a violable order cannot be challenged in collateral (where the order is not the main purpose of case
but related purpose) proceedings. It has to be set aside by the court in separate proceedings. Suppose, a
person is prosecuted criminally for infringing an order. He cannot then plead that the order is voidable. He
can raise such a plea if the order is void. In India, mostly the judicial thinking has been that a quasi-judicial
(orders of administrative authorities) order made without following natural justice is void and nullity.

Nawab khan vs State of Gujarat

In this case, Bombay police act authorised the police commissioner to extern any person. The police
commissioner passed an order & extern a person, however such person disobeyed such order on the ground
that principle of natural justice was ignored he was prosecuted by the court and acquitted. The government
appealed in high court. The high court said that the extern order was not void-ab-initio & such order become
void when person was acquitted by the court & such person should have followed the order passed by the
commissioners.

The matter reached Supreme Court and the Supreme Court declared the order of Commissioner as Void ab
initio on the ground that it is against article 19 of Constitution of India.

Que: Mr K was a convict and had undergone an imprisonment of 10 years on the charges of “Decoity”.
After serving the imprisonment, he received an order of commissioner of police for externing him from
the Pune District for a period of 15 days on account of coming elections. However Mr K did not abbey the
order on the gorund that he was not given any opportunity of being herard and hence the principal of
natural justice was ignored. Give Your opinon on the situation and also state whether the order of
commissioner of police is void or voidable and also give referece of any case law.
LIABILITY OF THE GOVERNMENT
The government has two kinds of liabilities toward the citizen

Dushyant Jain^^ 88- -

A) Contractual
B) Tortious

A) Contractual:- The liability of the government that arises through the contract is referred as contractual
liability, the constitution allows the government of India to enter into contract however, the contracts
entered by the government will be valid if:
1) The contract should be in the name of president of India or the governor of state
2) It should be in writing
3) The authorised person must sign contract on behalf of the Governor or President.

The president or governor shall not be personally liable for the contracts, as per article 299(2) of Constitution
of India if such contracts were entered for the purposes of Constitution or for the purposes of enactments
relating to Government of India.

If the contract with the government becomes void the government should restore all the benefits received by
it under such contract as required by section 65 of Indian Contract Act
Que: PQR Construction Co. enters into a contract with the State Government for construction of a bridge. The
contract was made in the name of the Governor. Examine the following with help of constitutional provisions : (a)
Whether the contract is valid ? (b) Is the Governor personally liable in respect of breach of the contract by the State
Government ?

EFFECT OF VALID CONTRACT WITH GOVERNMENT

Initially, the court did not issue Writ of Mandamus for enforcing the contract entered by the government.

However in case of Gujarat state financial corporation vs lotus hotel, it was decided by the court that writ
of Mandamus can be applied for government contract & the government can be ordered to fulfil its obligation
under the contract.
In the case of Shrilekha Vidyarthi vs State of UP, The court decided that the government contract can be
reviewed under article 32 & 226 of constitution of India. The contract act 1872 applies on the contracts
entered by the government.

Que: Government owned financial institution promised by an agreement to advance a loan of Rs 25 Crore to
Mr L, however at the time of disbursement of the loan, the financial institution refused to grant the loan on
the ground that it is not having adequate funds, aggrieved by this Mr. L approached to the Supreme Court and
filed a writ petition, will Mr L Succeed?
QUASI CONTRACTUAL LIABILITY OF THE GOVERNMENT
If a person supplies goods& services non-gratuitously and such goods or services are received by government
under a mistake then under quasi contract it is duty of government to return such goods.

TORTIOUS LIABILITY OF THE GOVERNMENT

Tort means civil wrong for which damages may be claimed. When the government makes a breach of its duties
towards it’s people , tort is committed.

Dushyant Jain^^ 89- -

The judicial or quasi-judicial acts done to protect the property will not create any tortious liability. The
government is protected from tortious liability while discharging any sovereign duty.

As per article 300 of constitution of India the government may be sued for the acts of its servant and
parliament or state legislature may make laws for it however no law has been made till now.

In the case of P.O. steam navigation v/s secretary of state it was decided that the state will be liable for the
tort committed by its employees.

State of Rajasthan v/s vidyavati, in this case the driver of the Government Jeep, which was used by the
Collector of udaipur, hit the person walking on the foot path by the side of public road, the injured person
died within 3 days in the Government Hospital. The representatives of the deceased sued the Governemnt of
Rajasthan and the driver and the High Court and the trial court found the driver guilty and on appeal the
Supreme Court also upheld the decisions of the High Court and the trial court.
The Supreme Court Stated the following points in the case:
1. Government will get immunity if tort takes place while discharging sovereign
functions.
2. In the United Kingdom also the principal that “King Can do no Wrong” is not
followed as section 2(1) of Crown Proceedings Act, 1947 states that the crown
shall be liable for all the legal proceedings and liabilities if the torts are
committed by its servants or agents as per the provisions of this act.
3. In India we have more advanced system then the system established in Crown
Proceedings Act, 1947, by the provisions of Government of India Act, 1958.
4. In India since the time of East India Company the common law protection
(under common law it is assumed that state can never do wrong) to the
soverign was not operative as it was operative in UK on the basis of principal
that King can never do wrong.
5. In this case the Court did not follow the common law theory and held that the
Government will be vicariously liable for torts committed by its servents.
However in many cases in order to provide remedy to the affected parties the court has decided most of the
government function are non-sovereign in nature.

The following functions of the Government are Soverign in Nature:

1) Administration of justice
2) Carrying on a war
3) Maintenance of order
4) Making of laws
5) Making international treaties
6) Repression of crime

In the case of state of Bihar Vs Abdul Majid, the Supreme Court decided that the Governemnt servant has a
right to sue the Government for the arrears of salary.
In the case of Kasturi Lal Vs state of UP, the stolen gold was recovered by UP police but the said gold could
not be recovered to its owner as one of the costables of UP police absconded with the gold. The owner of the
gold sued the UP Government, for the recovery of the gold or damages for the loss, the matter reached to the
Supreme Court and Supreme Court decided:
a. The gold was in the custody of constable.
b. Though UP Police Regulations were not complied in terms of holding the Gold but the gold was in
the coustody of the officer.
c. The act has been committed by the officer of the UP Governemnt during the course of his
employment.

Dushyant Jain^^ 90- -

 d. The claim of petitioner (owner of gold) relates to sovereign powers but still Supreme Court in this
case did not make the Government Responsible, as it was a crime by the officer of the
Govenrment.
e. The Supreme Court also asked the legislature to make a law to fix up the liablities of the
Government servants.
Distinction between Sovereign and Non Sovereign Functions:
In the case of N. Nagendra Rao Vs State of Andhra Pradesh, the following principals were established with
regard to Sovereign and Non Sovereign Functions:
7. The Legilature by making laws can state the difference between Sovereign and Non
Sovereign Functions.
8. One of the test to determine sovereign function is to see, wheater state is
answerable for such actions in the Court, for example on the matters of Defence,
war, foregin affairs, power of acquiring and retaining any territory are the
functions for which the State is answerable in the Court so these functions are
sovereign in nature.
9. The state can not play or affect the rights citizens in unfair manner and take a
protection of sovereign function, in this case the Courts can interfear.
10. The state can not consider itself above law and play with rights of citizens in unfair
manner and take the protection of sovereign functions.
11. In a welfare state, the rights of citizens duties of the officers of the state is to be
reconciled.
12. Welfare state means:
a. The welfare state does not only defend the Country or administers justice
or maintains law and order but it also regulates and controls activities of
the people in every aspect such as educational, commercial, social,
economic, political, and marital.
b. No proper system exists for specifying the sovereign and non sovereign
functions, due to which the state can not claim any immunity or protection.
13. The Court also stated that in fixing the vicarious liability of the state, if the
liability of the state is related with the negligence of its officers and if they can be
sued personally as the act was not authorized by the state and the officer also
made a breach of trust in discharge of public duty, in this case the state can also
be sued. The liability of the state is linked with its officers.

In the case of Jay Laxmi Salt Works Private Limited Vs State of Gujarat, it was decided that:
1. Injury and damages are two basic ingredients of tort.
2. These two elements may be found in case of breach of contracts also but in
case of contract the liablities are fixed by the parties but in case of torts the
liablities are fixed by law, in case of torts the duty is towards persons generally
but in case of contracts the duty is towards specific person.
3. Law of torts is a develoing law as the scope of law of torts is not only limited to
the cases of strict liabilities.
4. With changing times the liabilities in tort are strict liabilities, absolute liability
and fault liability.
5. Absolute liablity arises when any special use of any substance is made which is
dangerous for others (Reylands Vs Flethcer), In case of Strict liability there is no
intention to cause harm but still damages or injuries result. A breach of legal
duty wilfully or deliberately or maliciously, which causes harm or injury to
others results from fault liability. The mental state of a person creates a
difference in fault and strict liability.
In the case of Donoghue Vs Stevenson, the manufacturer did not take care while producing the goods due to
which consumer suffered, the Court held the manufacturer, responsible.

Dushyant Jain^^ 91- -

Damages –
In case of tort, compensation to the aggrieved party is more important than punishment to the responsible
person. the court in India are making government responsible in the case of tort that provides sovereign
immunity to the government in those cases also the government provides damages to the aggrieved party.

Bhimsingh v/s state of JAMMU AND KASHMIR

In this case MLA was arrested while on his way to Srinagar for attending legislative assembly. It was found
violation of article 21 & MLA was rewarded a damage of Rs 50,000

Saheli women resources centre v/s commissioner of police Delhi.

In this case a nine year old child was dead due to beating by the police officers; the court awarded a
compensation of Rs 75000 to his mother.

Liability of public servant

If the government servant acts beyond his authority he will be liable in the same manner as any other citizen
is liable.

Liability of public corporation

Public corporation is a statutory body which is regulated by a law it is not a department of government and its
employees are not eligible for sovereign immunity however public corporation comes under the definition of
state under article 12 of constitution of India. The public corporation will be vicariously liable for the torts of
its employees. The municipal corporation will also be liable for tort of its employee.

CHAPTER: 5
LAW OF TORTS

Tort Basically means Civil wrongs for which damages may be claimed. Section 2(m) of Indian Limitation Act,
1963 defines tort as “Tort is a civil wrong which is not a breach of trust or breach of contract”.
JAB INTENTION NAI HAI KHARAB,

PAR KISI KO PAHUCHA DIYA AAP NE NUKSAN,

WAHI TORT KAHLATA HAI SAHAB

So, Every Civil Wrong is tort?

No every civil wrong is not tort as the definition of tort expressly excludes breach of contract and breach of
trust from the definition of tort.

Dushyant Jain^^ 92- -

In the case of Jay Laxmi Salt Words (P) Ltd vs State Of Gujarat, the Supreme Court of India observed that, no
one has a right to injure or harm others intentionally or even innocently, and if someone is harmed tortious
liability will accrue.

“Tort is a species of Civil Wrong”

If a party wants to take action in tort then the following conditions are to be satisfied:

1) Wrongful Act

The aggrieved party [Plaintiff] has to prove that act committed by the defendant is unlawful and the law
punishes such act.

2) LEGAL DAMAGE

The wrongful act committed by the defendant must result in to legal damage.

There are 2 kinds of damages

Damnum Sine Injuria

Injuria Sine Damno

Damnum Sine Injuria :

NUKASAAN TO HAI PAR,

TORT LAW SE KOI MADAT NAI MILEGI!

The word damnum means a loss or harm in respect of money, comfort or health and injuria means breach
of a right given by law. In this case there is a damage or loss but no action can be taken in tort, as the
damage does not result in breach of any right or there is no injury so the damage is not regarded as legal
damage, which law protects. In cases of damnum sine injuria the law assumes, there is no loss of legal right of
the plaintiff.

Case :Gloucestor [Grammer] School Case.

If a person starts a shop in the nearby area due to which profits of another shop is reduced, in this case the
reduction in profit may be a damage but not a legal damage.

Que: Vijay used to run a grocery store. Sanjay was one of his customers. One day, Vijay and Sanjay had an
argument over something. With the intention of causing loss to Vijay, Sanjay opened a grocery store right in front
of Vijay’s shop. As a result, Vijay lost some customers, and he suffered heavy losses. Can Vijay recover damages
from Sanjay ? Explain.

Injuria Sine Damno :

TUMHE KOI INJURY NAI HUI HAI PAR FIR BHI,

Dushyant Jain^^ 93- -

TORT LAW SE TUMHE MADAT MILEGI!

In this case it is considered that, there is no damage to a party, but still there is an injury to a party and
hence aggrieved party can take an action in tort, as the damage is regarded as a legal damage. This concept
assumes that, some rights are so important that their violation is actionable tort without proof of damage.
When the private rights of an individual are violated, this principal can be used. For example the act of
trespassing on land of some other person is actionable even if plaintiff does not suffer any damage.

In the case of Ashby V/s. White The court decided that, denial of voting rights may cause a legal damage.

3) LEGAL REMEDY :

The remedy claimed by the party must be covered under the tort.

The following remedies are available under tort :-

Damages, Injunction, Detention of Chattel, Self Defense, Damage distress feasant.

4) MENS REA :
“Actus Non facit nisi mens sit Rea” The principle of mensrea is based on the above doctrine.
It means no person shall be treated as guilty unless he has a guilt intention.

However, the principal of mensrea does not apply to torts.

KINDS OF LIABILITIES UNDER TORTS

1. Strict Liability or Absolute Liability
APNE YAHA KAROGE JARRORAT SE JADA KUCH STORE,
ACCIDENT HONE PAR, DENA PADEGA COMPENSATION DENA HOGA BEJOD
In case of strict or absolute liability the defendant is liable even if he does not have any guilt intention.
Absolute liablility means a liablity even without mens rea (guilt intention), There is absolute in the licensing
of shops, hotels, restaurants and chemists establishments. The same rule also applies for cases under the
Motor Vehicles Act and the Arms Act, offences against the State like waging of war, sedition (rebel) etc.

In the interest of public safety, strict liability is imposed and whether a person causes public nuisance with a
guilty mind or without guilty mind, he is punished. If a person violates a law even without the knowledge of
the existence of the law, it can still be said that he has committed an act which is prohibited by law.
Strict and absolute liability arises in the following cases :
1. Inevitable Accidents
2. Inevitable Mistakes
3. Vicarious Liability

Inevitable Accidents:
When a person stores any dangerous goods in excess quantity and as a result of such excess quantity, if any
accident takes place, owner of such premises will be liable for such accident even though he had taken all the
measures of security.

Case :Reylands V/s. Fletcher.

In this case a contractor was appointed to construct a reservoir in the premises of a factory. When the water
was filed in the reservoir, the unused shafts which were in the soil and covered with soil, started floating in
the reservoir and the water of reservoir was deposited at the plaintiff’s coal mines due to overlow.
The court decided, that the case relates to strict liability & the owner is responsible to compensate the
plaintiff.

In the case of Read VS Llyod, it was decided by the Court, that in order to establish or apply

Dushyant Jain^^ 94- -

the rule established in the case of Raylands Vs Fletcher, two conditions must be satisfied:
a) Escape from the place of defendant of something over which the defendant had a control; and
b) Non natural use of land by the defendant.

Does the rule established in Reyland V.s, Fletcher applies in India?

In the case of MC Mehta Vs Union of India, the Supreme Court made a departure from the rule established in
the case of Raylands Vs Fletcher and decided, even if any substance is not stored in the excess quantity and
due to escape of which the plaintiff was affected, the owner will be liable.
Que) Critically examine the applicability of liability rule in the tort applied in cases of enterprises engaged in
a hazardous industry in India.

Inevitable Mistakes
These mistakes happen when a person interferes with property or reputation of some other person.
Vicarious Liability
KHANA KHAYA KISI AUR NE,
PAR BILL BHARNA HAI APNE KO!
When a person interferes with the property or reputation of some other person. “Qui facit per aliumfacit
per se”
It means “The person who acts through any other person is responsible for the acts of such person”

Vicarious liability arises in the following cases :

1. PRINCIPAL & AGENT

The principal is personally liable for the torts committed by his agent.

Lloyad V/s. Grace Smith & Co.

In this case the clerk of the firm accepted the money, and ran away, the court decided that, the owner of the
firm is responsible to the customers.
2. PARTNER

AGAR PARTNER KARTA HAI KOI TORT TO AAP KI BHI LAG JAEGI WATT!!

One partner is responsible for the tort committed by the another partner.

Harmylin V/s. Houtson& Co.

In this case a partner of the firm bribed the Government Servant, the Court held responsible and punished to
all the partners of the firm for bribing the Government Servent.

3) MASTER & SERVANT

For torts committed by servants master is also responsible and the liability is joint as well as several.

If the servant does any act which is outside the scope of his duty, but if it is proved that such act was done for
the benefit of the master or unauthorized act was specifically authorized by the master, the master will be
jointly and severally liable.

If the servant acts against the interest of the master but for the benefit of the master, master is responsible.

4. EMPLOYER AND INDEPENDENT CONTRACTOR

Dushyant Jain^^ 95- -

As a general rule, the owner or the employer is not liable for the torts committed by the independent
contractor, If it is proved that the owner or employer had taken a proper care at the time of appointing the
contractor:

However in the below mentioned cases the employer or owner will be responsible jointly as well as severally
for the torts committed by the independent contractor:

(1) In case of Strict Liability (inevitable accidents or inevitable mistakes), or

(2) When the employer authorized the contractor to commit a tort, or

(3) If the contractor is negligent.

Philips V/s. Britania Hygenic Laundry & Co.

In this case law the owner of the truck appointed a contractor to repair the truck, after such repair, the truck
met an accident and damaged a vehicle. The court held the contractor responsible for the accident.

Century Insurance Co. V/s. Northern Ireland Transport Board :

In this case, the owner of the container ordered the driver (contractor) to take the container in the
underground area where inflammable substances were kept. In that area the driver threw lit cigarette due to
which an accident occurred. The court held the owner responsible for the accident.

In the case of Bayley v. Manchester, Sheffield and Lincolnshire Rly. Co, it was decided that if the porter of a
person (coolie) forcibly removed another person from train erroneously believing that another person was in
wrong train, Court decided that for the act of porter his master will be liable.

VICARIOUS LIABILITY of the state for torts committed by its Servants:

If any tort takes place while discharging the statutory duty the state is not liable for such torts in India.
Green V/s. Chelzea Water Works :
In this case water line busted at the time of supply of water to the households by the municipal authority.
The court did not held municipal authority responsible for busting of water line.

However in UK the State is vicariously liable for the torts committed by the employees of state.

TORTIOUS LIABILITY OF THE STATE

Tort means civil wrong for which damages may be claimed. When the government makes a breach of its duties
towards it’s people , tort is committed.

The judicial or quasi-judicial acts done to protect the property will not create any tortious liability. The
government is protected from tortious liability while discharging any sovereign duty.

As per article 300 of constitution of India the government may be sued for the acts of its servant and
parliament of state legislature may make laws for it however no law has been made till now.

In the case of P.O. steam navigation v/s secretary of state it was decided that the state will be liable for the
tort committed by its employees.

State of Rajasthan v/s vidyavati, in this case the driver of the Government Jeep, which was used by the
Collector of Udaipur, hit the person walking on the foot path by the side of public road, the injured person
died within 3 days in the Government Hospital. The representatives of the deceased sued the Government of

Dushyant Jain^^ 96- -

Rajasthan and the driver and the High Court and the trial court found the driver guilty and on appeal the
Supreme Court also upheld the decisions of the High Court and the trial court.
The Supreme Court Stated the following points in the case:
6. Government will get immunity if tort takes place while discharging sovereign
functions.
7. In the United Kingdom also the principal that “King Can do no Wrong” is not
followed as section 2(1) of Crown Proceedings Act, 1947 states that the crown
shall be liable for all the legal proceedings and liabilities if the torts are
committed by its servants or agents as per the provisions of this act.
8. In India we have more advanced system then the system established in Crown
Proceedings Act, 1947, by the provisions of Government of India Act, 1958.
9. In India since the time of East India Company the common law protection
(under common law it is assumed that state can never do wrong) to the
soverign was not operative as it was operative in UK on the basis of principal
that King can never do wrong.
10. In this case the Court did not follow the common law theory and held that the
Government will be vicariously liable for torts committed by its servents.
However in many cases in order to provide remedy to the affected parties the court has decided most of the
government function are non-sovereign in nature.

The following functions of the Government are Sovereign in Nature:

1) Administration of justice
2) Carrying on a war
3) Maintenance of order
4) Making of laws
5) Making international treaties
6) Repression of crime

In the case of state of Bihar Vs Abdul Majid, the Supreme Court decided that the Government servant has a
right to sue the Government for the arrears of salary.
In the case of Kasturi Lal Vs state of UP, the stolen gold was recovered by UP police but the said gold could
not be recovered to its owner as one of the constables of UP police absconded with the gold. The owner of
the gold sued the UP Government, for the recovery of the gold or damages for the loss, the matter reached to
the Supreme Court and Supreme Court decided:
f. The gold was in the custody of constable.
g. Though UP Police Regulations were not complied in terms of holding the Gold but the gold was in
the custody of the officer.
h. The act has been committed by the officer of the UP Government during the course of his
employment.
i. The claim of petitioner (owner of gold) relates to sovereign powers but still Supreme Court in this
case did not make the Government Responsible, as it was a crime by the officer of the
Government.
j. The Supreme Court also asked the legislature to make a law to fix up the liabilities of the
Government servants.
Distinction between Sovereign and Non Sovereign Functions:
In the case of N. Nagendra Rao Vs State of Andhra Pradesh, the following principals were established with
regard to Sovereign and Non Sovereign Functions:
1. The Legislature by making laws can state the difference between Sovereign and
Non Sovereign Functions.
2. One of the test to determine sovereign function is to see, wheatear state is
answerable for such actions in the Court, for example on the matters of
Defense, war, foreign affairs, power of acquiring and retaining any territory are

Dushyant Jain^^ 97- -

 the functions for which the State is answerable in the Court so these functions
are sovereign in nature.
3. The state can not play or affect the rights citizens in unfair manner and take a
protection of sovereign function, in this case the Courts can interfere.
4. The state can not consider itself above law and play with rights of citizens in
unfair manner and take the protection of sovereign functions.
5. In a welfare state, the rights of citizens duties of the officers of the state is to
be reconciled.
6. Welfare state means:
a. The welfare state does not only defend the Country or administers justice
or maintains law and order but it also regulates and controls activities of
the people in every aspect such as educational, commercial, social,
economic, political, and marital.
b. No proper system exists for specifying the sovereign and non sovereign
functions, due to which the state can not claim any immunity or protection.
7. The Court also stated that in fixing the vicarious liability of the state, if the
liability of the state is related with the negligence of its officers and if they can
be sued personally as the act was not authorized by the state and the officer
also made a breach of trust in discharge of public duty, in this case the state
can also be sued. The liability of the state is linked with its officers. (don’t get
confused with the decision in the case of Abdul Majid, as the facts might be
different in both the cases, so when you write answer in the exam you can
write as per your wish by referring to the case laws as discussed here)

In the case of Jay Laxmi Salt Works Private Limited Vs State of Gujarat, it was decided that:
1. Injury and damages are two basic ingredients of tort.
2. These two elements may be found in case of breach of contracts also but in
case of contract the liabilities are fixed by the parties but in case of torts
the liabilities are fixed by law, in case of torts the duty is towards persons
generally but in case of contracts the duty is towards specific person.
3. Law of torts is a developing law as the scope of law of torts is not only
limited to the cases of strict liabilities.
4. With changing times the liabilities in tort are strict liabilities, absolute
liability and fault liability.
5. Absolute liability arises when any special use of any substance is made
which is dangerous for others (Reylands Vs Flethcer), In case of Strict
liability there is no intention to cause harm but still damages or injuries
result. A breach of legal duty willfully or deliberately or maliciously, which
causes harm or injury to others results from fault liability. The mental state
of a person creates a difference in fault and strict liability.
In the case of Donoghue Vs Stevenson, the manufacturer did not take care while producing the goods due to
which consumer suffered, the Court held the manufacturer, responsible.

QUE: Discuss the vicarious or tortious liability of state for the act of his servant. Refer relevant Judgements.

Exceptions to the rule of Strict Liability :

In the below mentioned cases the owner is not responsible for torts:-

Dushyant Jain^^ 98- -

1) Natural Use of Land :-Keeping water in the water tank, piping in the building, planting trees, farming,
construction, building roads etc., amounts to natural use of land. If any tort takes place due to natural
use of land, the owner is not liable.
For example if Coconut falls from the tree on a person, the owner is not responsible.

2) If consent of the plaintiff was taken for an act which became tort later on, owner will not be liable.

Example: In the case of Raylands Vs Fletcher, if owner of the factory would have taken the consent of the
owner of neighbouring coal mines for the construction of the reservoir then the owner of the factory
would not have been responsible.

3) If the tort takes place due to the default of the third party, the owner will not be liable.

Box V/s. Jubh

In this case a stranger blocked the drainage of a reservoir due to which the water overflow the reservoir,
the owner was not held responsible by the court.

4) If the tort was committed by the statutory authority at the time of discharging the statutory duties.

Green V/s. Chelzea Water Works :

In this case water line busted at the time of supply of water to the households by the municipal authority.
The court did not held municipal authority responsible for busting of water line.

5) Act of God :- If any accident takes place due to flood, earthquake, storm, Tsunami or like events, the
owner is not liable.

6) Plaintiff’s own default : If the plaintiff wilfully avoids safety instructions and due to which a tort takes
place, the owner will not be responsible.

TORTS AGAINST PERSONAL SAFETY AND FREEDOM :

BATTERY
KISI KO TOUCH BHI KARNA, BATTRY KAHLA SAKTA HAI,
AGAR USE AAP KE TOUCH SE NUKSAAN HO
When a person uses a force [however trivial it may be] such use of force is called as Battery. Intentional
application of force on other person without any legal justification.
It is touching a person, however slightly in a hostile manner or against his will.
For instance, spitting on someone’s face, cutting hair of other person without his consent or removing a
person’s hat or snatching paper from a person can also amount to battery as all these acts involve use of
force.

ASSAULT
KISI KO MARRA NAHI, PAR US KE MAN MAIN,
DAR PAIDA KIYA KI MAAR PADEGI
When a person creates an apprehension in the mind of some other person that a physical damage may be
caused, such an act becomes assault. In assault no physical harm is done but a fear is created that a physical
harm will be done.

So in assault we create a fear and in battery we actually use a force.

e.g. Pointing a loaded gun on a person may amount to assault

Dushyant Jain^^ 99- -

BODILY HARM
When a person does some act due to which the body as a person is affected or injured, such act will also
amount to tort.

FALSE IMPRISONMENT
Every person has got constitutional freedom and liberty, if any person restricts the freedom and liberty of
some other person by unlawful means. Such restriction of freedom amounts to false imprisonment and it is a
tort.

MALICIOUS PROSECUTION :-
KISI KO KARNA HAI PARESHAN,
JHUDHA CASE CHALA KAR NIKAL DO USKI JAN!
It means a false prosecution started against a person with the intention of damaging the reputation of a
person or to annoy a person.
The plaintiff who wants to take action against malicious prosecution to prove the following points :-
1) There was a prosecution.
2) The prosecution was without any legal reason.
3) The plaintiff in such prosecution acted with an improper motive.
4) The defendant in such prosecution suffered a loss or damage due to prosecution.
5) The decision in such prosecution comes in the favour of defendant.

If all the conditions are satisfied, then the defendant of malicious prosecution may take action against the
plaintiff of malicious prosecution.
Que: What is Malicious Prosecution under Law of Torts and what are its essential elements ?

NERVOUS SHOCK : Sometimes a person may suffer an injury or damage not by a physical harm but by what
he has seen or heard. Such act of defendant which has caused a nervous shock may be treated as tort.

In the Case of Wilkinson Vs Downtown, a person jokingly informed a lady that her husband has met with
accident and his legs are broken, as a result of which the lady suffered a violent shock, the court awarded the
lady, a compensation.

DEFAMATION : It means harming reputation of a person by visual, audio – visual, words or other means.
There are two types of defamation.
Libel: The defamation which is in permanent form i.e. the record of which is available
Slander: The defamation which is of temporary nature and of which no records are available.

REMEDIES IN TORT :
1. Judicial Remedies: Remedies from the court
The court can grant following remedies:
a. Compensation to the aggrieved party b. Injunction against defendant

2. Extra – Judicial Remedies: Remedies outside the court

Following are the extra judicial remedies:

Dushyant Jain^^ 100- -

SELF DEFENSE : the aggrieved party may make a self defense and stop the other party from causing physical
harm.

TRESPASS : If some person trespasses over the property of some other person then the aggrieved person may
prevent the trespass in a peaceful manner.

DAMAGE, DISTRESS, FEASANT :- In case the cattle / chattel of any person has caused damaged to any other
person or his property. In this case such aggrieved person may retain such cattle, till the time the damages
are paid to him.

STOPPING THE NUISANCE : In case any person is causing nuisance, then the aggrieved person may prevent
such nuisance in the most peaceful manner.
Que: State the remedies available in tort other than an action for unliquidated damages
Hint: unliquidated damages are fixed by Courts.
SUMMARY NOTES FOR LAW OF TORTS

1) Torts are civil wrongs which are not breach of trust or breach of contract.
2) In order to claim remedies under tort, there must be
a) wrongful act
b) wrongful act must result in legal damages, the damages may be :
• Damnum sine injuria :Damages, but no breach of right /privilege ,no injury, no action in tort
• Injuria sine damnum:Breach of right /privilege or there is an injury even if there are no damages ,
action can be taken in torts.
C) The remedies that are to be claimed from court must be covered in torts .
d) MENS REA –not required in torts .
3) Kinds of liabilities in torts :
a) Strict liability : arises in the following cases
* Inevitable accident – These accidents take place due to :
1) Escape from place of defendant any substance
2) Non natural use of land
Case law : Reylands Vs Fletcher
In case of Mehta and Union Of India ,the Supreme court departed from decision of Reylands Vs Fletcher and
stated that liabilities of tort may arise even if substance was not stored in excess Quantity.
*Inevitable mistakes –When a person interferes with reputation on property of person strict liability arises.
*Vicarious Liability –arises on account of relationships and in following relations
1) Principal and Agent
2) Master and Servant
3) Employer and Independent Contractor
(As a general rule employer is not liable for torts of Independent contractor. However, in case of strict
liability or where employer had authorised tort by Independent Contractor was negligent, employer is liable)
d) State is not liable for torts of its employees
e) Partners
4) Exceptions to the rule of strict liability – There will be strict liability but owner is not responsible
a) Natural use of land
b) Consent of Plaintiff
c) Act of God
d) Act of third party
e) Act of statutory Authority at the time of discharging statues
f) Plaintiff’s own default

5) Torts against personal freedom and safety :

Dushyant Jain^^ 101- -

a) Battery –use of force against someone without consent
b) Assualt – creating apprehension that physical damage will be caused
c) Bodily harm – giving injuries to body of a person
d) Nervous shock – tort by what a person has seen or heard
e) Malicious Prosecution – false prosecution to annoy the defendant
f) Defamation – interfering with reputation of some person. Two types :
a) Libel – Permanent form
b) slander – temporary form
g) False Imprisonment –imprisonment of person or restricting freedom without legal justification.
6) Remedies in tort :
a) Judicial (through court )
*Compensation
*Injunction
b) Extra Judicial –not from court
-Self defense
-Prevent trespass
-Stop nuisance
-Damage, Distress Feasent - Keep cattle /chattel till compensation is received.
LIAbILITY OF A CORPORATE ENTITY/COMPANY IN TORTS
Corporates contributes significantly in the growth and economic activities of any country. The quantum of
business companies are engaged in are comparably complex than the proprietors.

Therefore, the companies are exposed to the risk under Law of Torts. However, the companies are not natural
persons therefore, liability has to be fastened after considering the lifting of corporate veil. In general, the
companies are responsible for the wrongs committed by the employees.

The liabilities of the companies are fastened on the basis of principle in legal maxim “Qui facet alium facet
per se” which means He who acts through another, acts through himself.

CASE LAW
union Carbide Corporation vs. union of india, On the night intervening 2nd and 3rd of December 1984 there
occurred at Bhopal in the State of Madhya Pradesh in India the worst and the most tragic industrial disaster
known to mankind.

There was a massive escape of a night noxious and abnormally dangerous gas called Methyl Isocyanate
(hereinafter called ‘MIC’). Thousands of persons sustained serious, and permanent injuries including acute
respiratory distress syndrome, ocular and gastro-intestinal injuries and pain, suffering and mental distress.
Court upheld the No Fault Liability or Absolute Liability Rule.

Consumer Protection Act and liabilities of torts

The Consumer Protection Act has widened the scope and provides more protection to the consumer as
compared to Old Act which can be seen from the definition of the term ‘Consumer’ and ‘Unfair Trade
Practice’. The New Act has introduced the new concept of unfair contracts which includes those contracts
whose terms and conditions are in favour of the manufacturer or service provider and are against the interest
of the consumer. This concept would help to keep check on the business including banks and e-commerce
sites that take advantage of their dominance in the market. The other significant addition that has taken
place in 2019 is establishment of Central Consumer Protection Authority (CCPA) to regulate, protect and
enforce the interest of the consumer and matters related to unfair trade practice.

Ministry of Consumer Affairs, Food and Public Distribution, Government of India, in exercise of the powers
conferred has enacted the various rules including Consumer Protection (E-Commerce) Rules, 2020.

Dushyant Jain^^ 102- -

CASE LAW
Branch Manager, Indigo Airlines and Anr. v. Kalpana Rani Debbarma and ors
The Complainants/respondents were the family members and were returning from Kolkata to Agartala through
the Indigo Airlines. Boarding passes were issued to the complainants. The Airlines left all the complainants at
Kolkata Airport without informing them despite all the Complainants being the Airport premises. A written
complaint was lodged at Indigo Office at Kolkata Airport but the office staff as well as the Airport staff at
their counter did not accept the Complaint Application and forcibly snatched away their boarding passes and
further did not pay heed to their request for making alternate arrangements for their flight to Agartala. The
Complainant Approached the District Forum and was awarded with the compensation. State forum also
enhanced the compensation. Aggrieved by the decision, the Indigo Arline’s filed this Revision Petition
contended that the Airport Manager has stated that there were many announcements at regular intervals and
that the Indigo Airlines is not responsible if the passengers did not report at the gate on time.

The NCDRC held that Indigo Airlines not only forcibly taking the boarding passes from the Complainants, no
effort was made by the Airline to compensate them by arranging for their travel in the next scheduled flight
to Agartala. It is not in dispute that the Complainants were put to lot of mental agony and inconvenience as
they had to stay in a hotel for two days. The NCDRC dismissed the Revision Petitions with cost of Rs. 20,000/-
to be paid to Complainants.
According to the decision in a case Bolitho v. City and Hackney Health Authority, the factors which have to be
assessed in medical negligence are:
1. Whether the medical practitioner acted as per a practice accepted by a competent medical
practitioner.
2. If no, if the deviation from the norm can be justified as being reasonable
It must be noted that the liability of the medical practitioner is three-fold: liability under the Consumer
Protection Act, 1986 for payment of damages; civil liability for tort of negligence where the provisions of the
Consumer Protection Act, 1986 do not apply; or criminal proceedings under the Indian Penal Code, 1860.

According to Statement and Objects for the law relating to consumer protection, the emergence of global
supply chains, rise in international trade and the rapid development of e-commerce have led to new delivery
systems for goods and services and have provided new options and opportunities for consumers.

Equally, this has rendered the consumer vulnerable to new forms of unfair trade and unethical business
practices. Misleading advertisements, tele-marketing, multi-level marketing, direct selling and e-commerce
pose new challenges to consumer protection and will require appropriate and swift executive interventions to
prevent consumer detriment.

Therefore, it has become inevitable to amend the Act to address the myriad and constantly emerging
vulnerabilities of the consumers.

On analysis of the cases and object of the Consumer Protection Act, it can be said that the complaints under
the Consumer Protection are in the nature that may be covered under Law of Torts in absence of Law relating
to Consumer protections.

Tort Test for Self Practice

1) What are the torts against personal safety and freedom? Describe any 2
2) [Link] was denied the voting right by electoral officer and hence he decided to start a case in tort
against officer .Can case be started? If yes give reference to decided case law.
3) The pipeline of a factory was damaged by a terrorist due to which water spread in neighbouring area.
As a result the resident of that area demanded compensation from owner of factory .Advice
4)What are the essentials for claiming a relief for inevitable accidents ?Also refer case law

Dushyant Jain^^ 103- -

5) What are the extra judicial remedies for tort ?

CHAPTER: 8
6
CIVIL PROCEDURE CODE, 1908

JO TUMHE BEKOOF BANYE TUM KARO US KI AISI KI TAISI,

AUR DHYAN MAIN RAKHO CPC

1. This is Procedural Law.

2. Civil Procedure Code (CPC) sets out the procedure to get
justice in the civil cases.

[Link] should a company secretary study Civil Procedure Code?

Ans. A company secretary has to deal with various matters related
to Civil Laws, viz. Companies Act, Security Laws, environmental
Acts, Contract Act, Foreign Exchange Management Act, etc. So, if a
company makes breach of any civil laws, a civil liability arises in
majority of cases. To tackle the situation, the company secretary
should have knowledge of procedural requirements to get the justice
in civil cases.
Scheme of the Code:
The Civil Procedure Code is divided into 2 parts. The first part contains 158 Sections & Second part contains
Rules, orders & schedules under the Act.
It is an adjective or procedural law it deals with the procedure, mode or manner in which a person is given or
denied the rights or liabilities.

DEFINITIONS

CAUSE OF ACTION
It means Reasons for approaching the court. Basically if a party is aggrieved by some act of other party it
approaches the Court for a relief by filing a plaint in the Court, plaint is a statement in which the plaintiff
(shikayatkarta) states the cause of action and on reading the cause of action the Court decides whether to
accept the case or not. "Cause of action" basically it means the facts which plaintiff states

Dushyant Jain^^ 104- -

in his plaint to get a remedy by the Court and if these facts are denied by the defendant then the plaintiff
will have to prove these facts to get the justice in the Court.

The person who files plaint is known as plaintiff and the person against whom plaint is filed is known as
defendant.
1) It means the reasons which are to be proved by the aggrieved party in order to get the justice.
(Court Jane ki jo vajah hai, use ham Cause of Action kahte hai, aur agar ek party ise na mane to hame proof
karna padega, tabhi hame court se nyay milega)

DECREE ORDER JUDGEMENT

As per section 2(2) of CPC, Section 2(14) - It is a formal Section 2(9) - It is ground or reason, on
1908, It is a formal expression expression of a court & in a the basis of which any decree is
of the court. It is passed single suit many orders can be passed. The court comes to a
once, in a single suit (except passed. Basically the decision conclusion on basis of Judgement. In
when preliminary decree is of the court which is not a other words, a "judgement" is the
not passed) & it is conclusive decree is an order. For decision of a Court of justice upon the
in Nature. It also includes example in a case a party respective rights and claims of the
rejection of plaint and asks for presentation of parties to an action in a suit submitted
determination of question evidence in the case but the to it for determination (State of
under section 144 (decision of court passes an order and Tamilnadu VS hangaval)
superior court on appeal) refuses the permission. Its an
order, it’s a formal
expression but it does not
finish the case.
An appeal as well as second No appeal can be preferred in
appeal may be preferred in case of order. The appeal can
superior court against a be made only against
decree. appealable order given in the
code.
Decree can be passed only Orders can be passed on
against plaints. petitions & applications.
Decree can be passed only by Even the quasi-judicial bodies Even the quasi-judicial bodies can
the courts and not by quasi can pass orders. pass judgment.
judicial bodies.
Court ka Antim Nirnay Court ka Aadesh Faisle ka karan

Lets Discuss in Detail

Decree
Following conditions are essential for a decree:
a) There must be an adjudication.
b) Adjudication must be given in suit.
c) Adjudication must have decided the right of the parties.
d) There has to be a formal expression of adjudication.
So basically adjudication is communicated in the form of decree.

Dushyant Jain^^ 105- -

DECREE DOES NOT INCLUDE FOLLOWING AS PER SECTION 2(2)
1) Any Decision (adjudication) from which appeal can be preferred in the superior court as appeal from an
order.
2) Any order through which court rejects any application for default.

KINDS OF DECREE

PRELIMINARY DECREE
CASE KHATAM NAI HUA, FIR BHI COURT KISI PARTY KI MADAT KAR SAKTA HAI,
PRELIMINARY DECREE KE ZARIYE

Where an adjudication decides the rights of the parties with regard to all or any of the matters in controversy
in the suit but does not completely dispose of the suit, it is a preliminary decree.

If the court is not in the position to pass the final decree on account of some reasons and if the court wants to
decide upon rights of some party before passing of the final decree, in this case the court can pass
preliminary decree, the preliminary decree gives the right to the party which are to be finally decided by the
Court in final decree.

Preliminary decree is not dependent on final decree and if preliminary decree is set aside on appeal even the
final decree will not stand. Rather final decree is dependent on preliminary decree and is subordinate to
preliminary decree.

In Shankar vs Chandrakant, The Supreme Court, stated that a preliminary decree is one which declares the
rights and liabilities of the parties leaving the actual result to be worked out in further proceedings.

CPC provides for passing a preliminary decrees in several suits such as - suit for possession and mesne profits
(money to be recovered from the person who occupies the property without permission of the owner),
administration suit, suits for pre-emption, dissolution of partnership, suits relating to mortgage.

In Narayanan vs Laxmi Narayan, it was held that the list given in CPC is not exhaustive and a court may pass
a preliminary decree in cases not expressly provided for in the code.

FINAL DECREE
When the court settles all the questions in controversy between the party and nothing remains to be
decided afterwards + suit has been completely disposed of by such degree, then such decree is referred as
final decree
For example: A had filed a suit against B, for recovery of Rs. 5000 the court has decided the amount, and
has also declared the manner in which such amount will be recovered, it amounts to final decree.
There can be two types of final decree:
a) When decree is passed and no appeal is preferred within the period of filing appeal or if the appeal is
filed, the decree has been decided by the highest court.
b) When the court passing the decree completely disposes of the suit.
Generally there will be only one final decree but when two cause of actions are joined together in one
case then there can be more than one final decree.

Partly Preliminary and Partly Final Decree

A decree may also be partly preliminary and partly final, when the Court has adjudicated on some matters
and the court keeps on hold some matter to be decided later on.
For example: A had filed a Suit against B for possession of immovable property and mesne

Dushyant Jain^^ 106- -

 profits (money to be recovered from the person who occupies the property without permission of the
owner) in this case the court passes a decree for possession of immoveable property, and orders for
enquiry in Mesne profits, this is partly preliminary and partly final decree. However if the Court decides
on possession and says that mesne profits will be decided in future then it is just preliminary decree.

Note: As per section 2 (2) of CPC 1908, an order for rejection of the plaint shall be considered as decree if
the rejection of plaint is authorised by CPC 1908.

TIME FOR PRONOUNCEMENT OF JUDGEMENT

JAISE SAMOSA LAGTA HAI BINA AALLU KE,
VAISE HI DECREE HOTI HAI BINA JUDGEMENT KE!

Decree becomes effective from the date on which judgment is

pronounced by court. It is the duty of the court to pass a
judgment on the date when hearing comes to an end.

If court could not pronounce a judgment on the date of

completion of hearing then it is the duty of the court to
pronounce judgment within a period of next 30 days

If it is not possible for the court to pronounce a judgment within

a period of 30 days, then in this case it is the duty of the court
to pronounce a judgment within a period of 60 days (x+30+30) from the date of conclusion of the hearing and
notice in this regard shall be given to both the parties.

Decree shall be made as early as possible and not later than 15 days from the date when judgement is
pronounced.

The judgement will cease to have effect when decree is drawn.

When judgement is pronounced its copy shall be immediately made available, so that the parties can file
appeal.

In the case of Kanaihyalal v/s Anupkumar, the supreme court set a side a judgement on the grounds that
such judgement was pronounced after a period of 2 years and 6 months from the date on which it should have
been pronounced

Section no 36 of CPC deals with execution, it means enforcement of the decree or order passed by the court.

In the case of Durga choudharain vs Jawahar Singh ,it was decided that ,the high court cannot entertain the
2nd appeal if an erroneous fact is produced before it.
Amendment of Decree
A decree once signed can not be amended however if there are clerical or arithmetical mistakes or on an
application for review of decree the decree can be amended.

ORDER
BHAIYA AISE ORDER JIN KE KHILAF APPEAL HO SAKTI HAI,
UNHE APPELABLE ORDER KAHTE HAI!

Order
The adjudication of the court which is not decree amounts to an order.

Dushyant Jain^^ 107- -

Similarities Between Decree and Order
a) Both relate to controversy.
b) Both are the decisions of the court.
c) Both are formal expressions of the court.
There can be no preliminary order but there can be a preliminary decree.

Appealable Orders

Appealable orders are contained in section 104 of CPC & against these orders only, an appeal can be made.
An Appeal may be preferred against the following orders :
1) If the court has rejected any monetary / pecuniary claim through an order on the ground that claim is
false or vexatious (Not original), then appeal may be made.

2) If the court has rejected permission through an order for filing a suit against a public nuisance, an appeal
can be made.

3) If an order has been made which imposes a fine on any person or the order is for arresting any person,
these orders can be challenged if the arrest or fines are not through a decree.

4) If an injunction on insufficient grounds is made, appeal can be made.

5) Against any order mentioned in any schedule under civil procedure code.

Decree Order
Can be passed only when plaint is filed. Can be passes on plaints, applications and
petitions.
Conclusive in nature May or may not be conclusive
May be preliminary or final or partly preliminary There can not be any preliminary order
or partly final
In one case only one decree except when In one case many orders can be passed.
preliminary and final decrees are passed.
Decree is appealable unless specifically Only appealable orders can be appealed.
restricted.
Second appeal can also be filed No second appeal can be filed even on appealable
orders.

Judgement
As per section 2(9) of CPC 1908, Judgement means the statement by the judge of the grounds of a decree or
order.
(beta bahut sare bacche judgement aur decree ke beech main confused hote hai, chaliye samjhiye – jaise
maine bataya ki cs main law hai, cs ke bad job acchi lagti hai, cs kam kharch main hota hai, cs karne se aap
apne sapne poore karte hai, cs se acchi wife ya husband mil jata hai, cs life hai, saste main ho jata hai aur cs
best hai – yeh sare reasons ke bad main ek line main kahta hun ki cs best hai! Ab is example main jo sare
reasons upar likhe hai wo sab judgement hai aur aakhiri main jo conclusion hai ke “cs best hai” decree hai)

Basically first judgement is passed, the judgement contains all the reasons and grounds of decree given by the
court, the decree is drawn on the points covered in judgement.
Essentials of judgement

Dushyant Jain^^ 108- -

 a) Every judgement should contain concise statements of the case - that means details of the case, like
parties, facts, points of dispute etc.
b) The point of determination - the issues (dispute) between the parties
c) The decision on such issues.
d) The reason for decision.
e) As per Rule 6A of CPC, 1908, last paragraph of judgement shall indicate in precise terms the relief
granted by such judgement.
If judgement misses any of the above points it will be invalid, so we can say on the basis of above points
covered in judgement, decree is given, but the details of decree can be found in judgement.

The judgement is not formal expression but the decree is formal expression of the court.

The material evidences on issue are also stated in judgement.

Judgement Decree
These are the grounds of decree or order In decree it is not necessary to give grounds
Not a formal expression of the Court The decree has to be a formal expression of the
Court.
It must precisely state the relief granted It deals with the rights of the parties.
It is passed prior to the passing of decree Decree is passed after judgement is pronounced or
passed.
Judgement may be passed in civil as well as criminal Decree is generally passed in civil cases.
cases

The person in whose favour the decree is passed is known as decree holder and against whom decree is passed
is known as judgement debtor.

STRUCTURE OF THE CIVIL COURTS

High Court

District Court

Dushyant Jain^^ 109- -

Small Causes Court/ City Civil court

District Court is subordinate to High Court, the court of small causes and civil court inferior to District Court,
are inferior than High Court and district court.

If there is no small Court then the case can be filed before civil judge junior division, if there is a dispute
between employer and employee it can be decided by labour court or industrial tribunals.

JURISDICTION OF THE COURT & VENUE OF THE SUITS

1) Jurisdiction over subject matters :
The jurisdiction to try certain matters by certain Court is limited by statute; e.g. a small cause court can try
suits for money due under a promissory note or a suit for price of work done.

Civil nature dispute includes right to property defamation, specific performance, injunction, recovery of rent,
custody of children, religious offices etc. A Civil court can entertain all types of civil cases unless it is
restricted by some law.

The subject matter of the Courts are fixed such as, case against tenant by landlord for ejection or recovery of
rent is filed in small causes Court as per the rent act.

2) Jurisdiction over persons :

Residents of all countries can be sued in the Indian Courts. Except Governments of Foreign Country.

3) Place of suing :
For every court, a territorial limit has been fixed by Government.
For example District Court has jurisdiction within its district.

4) Pecuniary Jurisdiction :

Section 6 deal with Pecuniary jurisdiction and lays down that save in so far as is otherwise expressly provided
Courts shall only have jurisdiction over suits the amount or value of which does not exceed the pecuniary
limits of any of its ordinary jurisdiction. There is no limit on pecuniary jurisdiction of High Courts and District
Courts.

KINDS OF JURISDICTION

1) Original Jurisdiction :
When the plaint is filed in the Court, the Court exercises original jurisdiction over the plaint.

2) Appellate jurisdiction :

Dushyant Jain^^ 110- -

 Appellate jurisdiction means a decision passed by the superior Court on appeal made by the party when he
is not satisfied with the original jurisdiction given by the Court. In other words appellate jurisdiction
means a jurisdiction exercised by the court on the appeal filed by party.

3) Original as well as Appellate Jurisdiction :

All courts except for small Civil Court (district or High Court or supreme court) are allowed to exercise
original as well as appellate jurisdiction.
There can be no appellate jurisdiction without any original jurisdiction. There can be an original
jurisdiction without appellate jurisdiction.
Plaint + Decree = Original jurisdiction.
Appeal + Decree = Appellate jurisdiction.
Supreme Court and high court have extra ordinary jurisdiction under Constitution. (to provide relief in
constitutional cases under writ jurisdiction)

In the case of Rex v. Boltan, it was decided that the

jusrisdiction of the Ciurt in respect of any matter does not
depend upon the truth or falsehood of facts but upon the
nature of case and the jurisdiction is decided in the
beginning and not at the conclusion of enquiry or
proceedings.

DOCTRINE OF RES SUB JUDICE : SECTION 10

AGAR EK COURT MAIN MAMLA SHURU HAI,
TO VAPAS USI MAMLE KE LIYE DOOSRE COURT MAIN MAT JAO

The word ‘Res’Means a ‘matter’ & the word ‘Sub-Judice’ means under consideration or pending in the Court
of law. ‘Res Sub judice’ means any matter which is pending before a court or has not been decided by the
Court. This concept is covered in section 10 of CPC.

1) According to the doctrine of Res Sub Judice, if any suit / case is pending in a competent Court of law,
the same suit between same parties under a same title for a same subject matter cannot be filed in
any other court of law.

2) If any other court of law is approached for the same matter which is “Sub-judice” in any other
competent Court in India, then the Second Court shall not proceed with the trial. The second court
will stay the suit.

3) This Doctrine or the Principle will save the precious time of court & will also avoid multiplicity of
suits, also the purpose is avoid conflict of decision.

4) The principal of res sub judice is not applicable if the suit is pending in the foreign court.

Dushyant Jain^^ 111- -

 5) However, if the suit is pending in foreign court which is established by the Indian Government than the
doctrine of res sub judice will be applicable.

6) If the landlord had made an agreement to sell his property to his tenant and fails to perform the
contract due to which the tenant filed a case of specific performance in the Court. In the meanwhile
the landlord filed a case against the tenant for eviction of the tenant from the leased property under
rent control act, the tenant objected the suit filed by landlord on the ground of res sub judice, the
Court decided that both the suits have different subject matters and subsequent suit can not operate
as res sub judice (N.P Tripathi Vs. Daymanti Devi)

In the case of Manohar Lal vs Seth Hiralal, it was decided that provision of section 10 are mandatory and the
courts have no discretion.

CASE LAW :
Wings Pharmaceuticals V/s. Swan Pharmaceuticals, AIR 1999.
There were two companies: Wings pharmaceuticals and Swan Pharmaceuticals. Swan pharmaceutical filed a
plaint against Wings pharmaceutical in Mumbai Court for infringement of trade mark of medicine.
Afterwards, Wings pharmaceuticals filed another plaint in the Court of Ahmedabad for infringement of
trademark against Swan pharmaceutical. It is the duty of Ahmedabad Court to dismiss the plaint as the
principal of res sub judice will apply in the case.

In case of Life Pharmaceuticals vs Bengal Medical Hall it was decided that stay of subsequent suit can be
made at any stage.

DOCTRINE OF RES – JUDICATA : SECTION 11

AGAR EK COURT NE MAMLA DECIDE KAR DIYA HAI,
TU USI JHAGDE KE LIYE DUSRE COURT MAT JAO
1) The word Res – means a “matter” & judicata means ‘already decided by the Court.’ According to this
Doctrine, if a matter is finally decided & disposed of by the competent Court of law in India, then for
same subject matter, same parties under a same title cannot approach to a different Court.

The doctrine underlines the general principle that no one

shall be twice vexed for the same cause (S.B. Temple v.
V.V.B. Charyulu, The doctrine of res judicata prevails over
the doctrine of lis pendens where there is a conflict
between the two.

2) If parties approach to a different court for a same

subject matter which has already been decided by the some
other Court, the second court shall dismiss the matters by
applying the Rules of Res – Judicata.

The issue or the suit itself is heard and finally decided, then it operates as res judicata and is not the
reasons leading to the decision (Mysore State E. Board v. Bangalore W.C. & S. Mills).

3) This rule will be applicable when the same matter has been already heard & decided by a competent
court.

4) A consent or compromise degree is not a decision by Court. It is an acceptance of something to which the
parties had agreed. The Court does not decide anything. The compromise decree merely has the seal of
the Court on the agreement of the parties. As such, the principle of res judicata does not generally apply
to a consent or compromise decree.

Dushyant Jain^^ 112- -

 But when the court on the facts proved comes to a conclusion that the parties intended that the consent
decree should have the effect of deciding the question finally, the principle of res judicata may apply to
it.

5) When the Court reviews its decision or when any appeal is filed in the superior court, the principal of res
judicata does not apply.

When a suit has been decided on merits, and the appeal is dismissed on a preliminary point, it amounts to the
appeal being heard and finally decided and the decision of appellant Court operates as res judicata (Mukunda
Jana v. Kanta Mandal)

In short, this principle applies where an issue which has been raised in a subsequent suit was directly and
substantially in issue in a former suit between the same parties and was heard and decided finally. Findings
incidentally recorded do not operate as res judicata (Madhvi Amma Bhawani Amma v. Kunjikutty P.M.
Pillai,)

Supreme Court in Gouri Naidu v. Thandrothu Bodemma, decided that, even if erroneous judgement is
passed, same parties for same subject matter can not file a subsequent suit in the same level of the Court. If
the decision of the Court stated that the gift between the coparceners of HUF is invalid under Hindu Law, the
Principal of Res Judicata will apply in the subsequent suit also, even if the suit was related to partition.

Application for amendment of decree

An application for amendment of a decree is not a ‘suit’ and may be entertained. But if such an application is
heard and finally decided, then it will debar a subsequent application on general principles of law analogous
to res judicata.

However, dismissal of a suit for default, where there has been no adjudication on the merits of the
application, will not operate as res judicata. Similarly an application for a review of judgment if refused does
not bar a subsequent suit for the same relief on the same grounds. In the case of conflicting decrees, the last
decree alone is the effective decree which can operate as res judicata.

The Cases in which Res Judicata Applies The Case in which Res judicata Does not apply
(The Court will not accept subsequent Suit) (The Court will accept subsequent Suit)
If the Court has heard and decided the amendment Application for amendment of Decree
decree than it will operate as Res judicata
Suit passed by the Court that does not have Application for review of the decree.
jurisdiction but competent to try the suit.
If there is some error in the judgement or decree The Consent decree passed by the Court which just
passed by the Court. has seal of the Court on settlement made by the
party.
If the Court expresses its opinion on the consent If the application for review has been refused by the
decree passed by the Court. Court then subsequent suit can be started on the
same grounds for the same relief.
When the suit is decided on merits and appeal has Dismissal of suit on default and no decision has been
been rejected on preliminary point. given on merits (decision on merits means the
decision after hearing the parties and considering the
facts of the case)

Conclusion: Res judicata applies when the matter has already been decided by the court, res sub judice,
applies when the matter is pending in the court and subsequent suit is started.

Dushyant Jain^^ 113- -

QUE:Explain the difference if any, in between ‘Res Judicata’ and ‘Res Sub-Judice’.

CONSTRUCTIVE RES – JUDICATA, EXPLANATION 6, SECTION 11

RES JUDICATA TO NAHI,
PAR US SE KAM BHI NAHI
The doctrine of constructive res judicata is based on the following grounds of public policy:
 There should be an end to litigation;
 The parties to a suit should not be harassed to agitate the same issues or matters already decided
between them;
 The time of Court should not be wasted over the matters that ought to have been and should have
been decided in the former suit between the parties;
 It is a rule of convenience and not a rule of absolute justice.
In case of representative suit or class actions, the decision passed by the Court binds all the parties to the
Suit, so if any party to representative suit brings a subsequent suit in respect of same matter, the principal,
of Res Judicata or Constructive Res Judicata will apply.
Decision given by Court which does not have Jurisdiction

Decisions of a “Court of limited jurisdiction competent to decide such issue” operates as res judicata in a
subsequent suit though the former Court had no jurisdiction to try the subsequent suit. The general principle
of res judicata is wider in scope than Section 11 which is applied when a case does not come within four
corners of Section 11. However, when the case falls under Section 11 but the conditions are not fulfilled, the
general principles of res judicata cannot be resorted to.

Exception :
In the second suit, if any party obtains a different title – subsequent suit will be allowed.
So it can be rightly concluded that if parties approach the Court with a different title & for the same subject
matter between the same parties, the Court will allow the subsequent suit.

PLACE OF SUING
As per section 15 the every suit must be started in the court of lowest grade.

1) For immovable Property :-

a) If the subject matter of dispute is an immovable property, the suit will be filed in the court within
whose jurisdiction the whole or some part of the property is situated.
b) The dispute relating to immoveable property may be on the following grounds:

a) For recovery, partition, for selling of mortgaged asset by the mortgagee.

b) For determination of any other right in immoveable property.

c) For receiving compensation for wrong done to immoveable property.

d) For foreclosure of sale or redemption in case of mortgage.

c) If there is any uncertainty or confusion in the mind of any party related to the place of filing suit, any
of the court can be approached and a written statement should be filed with the Court Regarding the
uncertainty – Section 18.

d) Property means property situated in India.

e) When the property is situated under the jurisdiction of different Courts,

Dushyant Jain^^ 114- -

 Section 17: Where immovable property is situated within the jurisdiction of different Courts: Where
the jurisdiction for a suit is to obtain relief respecting, or compensation for wrong to immovable
property situated within the local limits of jurisdiction of different Courts, the suit may be instituted
in any Court within the local limits of whose jurisdiction the property is situated provided the value of
the entire claim is summarized by such Court.

2) For any other subject matter :

a) The other suits relating to any moveable property or breach of a contract or any promissory note, bill
of exchange etc. can be filed :

1) Where cause of action arises.

2) Where the defendant resides.

3) Carries on any business, trade or profession, has a branch office, at the option of plaintiff.

4) In case there are one or more defendants, then the plaintiff may approach the court where cause
of action arises or where defendant or each of defendant resides.

5) If a suit is started at a place where a single defendant resides, the other defendants may take
objection, however in this case, the permission of the Court may be obtained for starting a suit
where one of the defendant resides.

In the case of Angile Insulations v. Davy Ashmore India Ltd, it was decided that, if in any case the two or
more courts have a jurisdication on the ground that a part of cause of action arose in the jurisdiction of two
different courts, so in this case if the parties to contract agree that the case or dispute will be filed in the
particular court only then such contract will be a valid contract.

However it shall be remembered that through a contract it can not be agreed that suit will be filed in the
court which has no jurisdiction at all, i.e. in whose jurisdiction neither cause of action arose not defendant
resides.

3) Cases where company is a defendant :

In case where a plaint is to be filed against the Company, such plaint can be filed in the court in whose
jurisdiction the registered office of the company is situated. However in case of Companies or
corporation, it shall be considered that it carries its business at its principal office or sole office, if cause
of action has not arisen at any other place.

So for example A real estate company has its head office at Delhi and branch offices at Ahmedabad, Patna
and Indore. A dispute cropped up between Sorabh and the company in respect of a transaction through
Ahmedabad office, in this case, suit can be started at Delhi as the head office is located at Delhi, but as
the cause of action has arisen at ahemdabad so the case can even be started at Ahemdabad.

In the case of a body corporate or company it shall be deemed to carry on business at its sole or principal
office in India, or in case of any cause of action arising at any other place, if it has a subordinate office,
at such place.

SET OFF, COUNTER CLAIM AND EQUITABLE SETOFF

Dushyant Jain^^ 115- -

Set off, counter claim and equitable setoff are basically rights of defendant. The defendant files his
defence by a written statement in the Court.

Set off
1) The concept of setoff has been defined under order 8 and rule 6 of civil procedure code.

2) When a suit related to monetary claim has been started in the court & plaintiff makes claim from
defendant for a certain sum of money. It is basically a cross claim by the defendant in respect of fixed
amount (ascertained sum) of money and for this amount even a separate case could have been filed.
The court can accept the claim of set off to avoid multiplicity of suits.

3) Set off is a defense for defendant if he has to claim ascertained sum of money from plaintiff.

4) One of the conditions for claiming set off is that both the claims must be relating to money (plaintiffs
and defendant) time barred debt can not be claimed in set off.

5) In the same suit, the defendant also has a right to file a written statement in the court for claiming a
set off in respect of the money which he has to recover from the plaintiff.

6) The amount of setoff claimed by the defendant should not exceed, the claim of plaintiff, and the
pecuniary limits of the Court.

7) Set off is the right of defendant. Basically liquidated damages are claimed by the defendant through
set off, from the plaintiff.

8) Right of set-off should be claimed from the party who is under an obligation to pay money to the
defendant.

9) Even if plaintiff has withdrawn his case, the claim of set off is not affected. In set off the claim may
arise from different transactions but the claims must relate to same right i.e. the right to claim
money.

10) For example: A student (plaintiff) claimed refund of fees though a suit but the teacher (defendant)
claimed that the student had borrowed Rs. 5000 from him.
11) The defense of set off, by the defendant, shall have the same effect as a plaint in a cross-suit so as to
enable the Court to pronounce a final judgement in respect both of the original claim and of the set-
off, and the judgement of the court in respect of the origional suit and set off shall not affect the
right of lien on the amount of decree, which is payable to the advocate towards his fees (matlab court
ka jo faisla aaega us se vakeel ka adhikar faisle ko implement hone se rokne ka agar use uski fees nai
mili hai, use fark nai padega)

Counter Claim :

1) It is a weapon at the hands of defendant (set off was defense). In case of counter claim even
unascertained sum of money can be claimed. The right of counter claim may even arise from different
transactions.

2) This right is in addition to the right of claiming set-off.

3) The defendant can file counter claim at the time of submitting his defense or it can even be filed
after filing of defense (order 8 Rule 9) or even if new claims arise after filing of defense then too it
can be filed.

Dushyant Jain^^ 116- -

 4) The counter claim is treated as sperate plaint of defendant in the same case. Counter claim is not
limited to money suits only it means in other cases also counter claim can be filed by defendant.

5) The Amount of counter claim should not exceed the pecuniary jurisdiction of the court.

6) Counter claim has been defined under order 8 and Rule 6 (A) of Civil Procedure Code.

Example: if Ramesh has filed a case against shyam for possession of property, so the Court issued a Summon
to Shyam, now when Shyam filed his written statement shyam stated that the property does not belong to
Ramesh Shyam is the Owner of said property.

Equitable Setoff :

1) If the claims between the parties arise out of the same transaction and the claim of defendant is for
an unascertained sum of money, in this case the defendant will be allowed to claim for an equitable
set off in the same suit.

2) This principle has been evolved to avoid the cross suits in between the parties for a pecuniary matter.

3) When parties make cross demands of money on account of a single transaction the court may grant
equitable set off.

4) The concept of equitable set of is not recognized in India. However, the Court allows, when parties
claim equitable set off.

5) Setoff granted to defendant for an uncertain amount of money on reasonable grounds is known as
equitable set off.

6) For example, A Servant was not paid salary for last 6 months and he filed a case against the owner but
the owner said that servant has broken his valuable articles.

7) Example: A student claimed refund for his fees as he was not satisfied by the classes the coaching
class claimed equitable set off for damages to the property done by the student.

8) In a suit by a washerman for his wages, the defendant employer should be able to set off the price of
the clothes lost by the plaintiff. In such a case, driving the plaintiff to file another suit would be
unfair. A set off in such situations is called an Equitable Set off.

Set off Counter Claim Equitable Set off

Right of Defendant Right of Defendant Right of Defendant
Ascertained sum of money Ascertained or unascertained Unasertained sum of money.
sum of money
Court is bound to accept Court is bound to accept Court is not bound to accept,
depends upon discretion of
court.
Claims can be on account of Claims can be on account of Claims has to be on account of
same or different transactions same or different transactions same transaction.
Both the claims must relate to Claims can relate to money or Case must relate to money.
same rights i.e. recovery of other claims also

Dushyant Jain^^ 117- -

 money.
Time barred debt can not be Time barred debt can not be Time barred debt can be
claimed as set off. claimed even in counter claim claimed in equitable set off.
Court fees is required Court fees is required Court fees is not required for
claiming equitable set off.
Treated as separate plaint Treated as separate claim May be treated as separate
claim if court accepts it.
Must be filed at the first hearing Has to be filed at the time of Must be filed at the first hearing
of suit and not afterwards, filing defense or even of suit and not afterwards,
however court can accept even afterwards. however court can accept even
after first heating of suit. after first heating of suit
It’s a defense Its an attack by defendant Can be considered as defense.

INJUNCTION
When a party does something which he is under obligation not to do, the court grants an injunction i.e. stay
order.

TEMPORARY INJUNCTION
Basically temporary injunction is a relief which can be granted by the Court at any stage of the suit on an
application of the party and it continues up to specified time or till further orders of the Court, through
this injunction the Court provides a temporary relief to the party applying for injunction.
1. When a party makes an application to the court:
a. That the subject matter of the dispute is in the possession of the other party and such other party
may:
i. Destroy or damage such property or the property is at the risk of being wasted or damaged
or transferrerd, OR
ii. Transfer that property so that the creditors or any other person may not use the property.
OR
iii. Any party threatens the other party to dispossess the party having possession of the
property or the other party threatens to dispossess the plaintiff or in any other manner cause
injury to the plaintiff in relation to any property in dispute in the suit.
It would be necessary for the party applying for temporary injunction, to satisfy the Court that:
(i) substantial harm or injury would be suffered by him if such temporary injunction (till the disposal of the
suit) is not granted
(ii) the balance of convenience (facts of the case) lies in his/ her favour and
(iii) that such loss or damage or harm cannot be compensated by damages
In all the above cases the court after making reasonable enquiries, pass a temporary injunction to stop the
parties from doing the above acts. The party applying for the temporary injunction will have to give an
affidavit to the Court for proving the above points.

INTERLOCUTORY ORDERS – Order 39, Rule 6 to 10

CASE CHALNE KE DAURAN,
KISI PARTY RELIEF MIL JATI HAI, Maal Kharab Ho Jaye,
US SE Accha Hai, Use Bech DO!

The court has power to order sale of immoveable property or any property which is subject to speedy and
natural decay and is the subject matter of dispute in a suit, for just and sufficient reasons to be at once.

The court can also order for detention, preservation or inspection of any property which is the subject matter
of suit, however before making such order the court will give notice to the opposite party unless the court is
satisfied that the notice may delay the proceedings and the object of the order will not be fulfilled.

Dushyant Jain^^ 118- -

In case the property which is subject to dispute has some revenue or rents due to the Government and the
party in possession neglects to pay the rent or revenue to the Government, in this case any party claining the
property may be put in the possession of the property immediately if such other party agrees to pay such
revenue or rent to the Government. The Court may order the defaulter to pay the revenue and interest to the
other party by a decree.

In case the subject matter of the suit is money or some other thing capable of delivery and a party to suit
admits that it holds money or thing as a trustee for another party or it is due for delivery to that party, in this
case the court may order such party to deliver to that party or deposit in the Court that particular money or
property.

DEPOSIT OF MONEY IN COURT RULE 10

1. When there is a contract between two parties and one of the party believes that other party will not
perform the contract;
2. In such case, the party may move to the court and file an application for directing the other party to
deposit money in the court;
3. If the court is satisfied with the application the court may ask the other party to deposit a sum money,
which shall be repayable only after performance of the contract.

ADMISSION
Means acceptance of fact by one party in whole or in part, admission may be made :
1. In pleading or
2. In interrogation or
3. Under an agreement or
4. By notice
Institution of the Court (Start of legal procedure in the Court) :

Dushyant Jain^^ 119- -

MISJOINDER OF THE PARTIES
BHAI AISI PARTY KA CASE MAIN AANA,
JIS KA KOI INTERSTE NAI HAI CASE MAIN!
When more than one person is involved in the case as plaintiff or defendant, and the case relates to same
questions of law and facts, then both the plaintiffs may together institute a suit or may also institute a
separate suit. So when 2 or more parties come together and file a single case in respect of same matter, it is
referred as joinder of the parties.

However when two parties join together in a case in which right to relief arise out of the different act or
transaction brought by the plaintiffs or against the defendants or there is no common question of law, in this
case it is treated, that, there is a misjoinder of parties.

When two parties join together to file a case against a person which suh case does not involve same question
of fact and same question of law or when the case is filed against the defendents against whom separate
cases must have been filed it will be referred as misjoinder of the parties.

Example: X who is a travel agent has taken Rs. 500 from Mr Y for a Goa trip and Rs. 200 from Mr. Z for Goa
trip, now X has made a defulat with both the parties, now in this case Y and Z may start different suits
against X or they may also join together and file a single suit as the case involves same questions of fact and
law, it refers to joinder of the Parties. But in this case if X had taken Rs 500 from Y for Goa Trip and Rs 200
from Z for selling A Book, and made default with both i.e Y and Z and in this case Y and Z plan to start a case
together against X, it will result in to misjoinder of the parites as the case has different questions of fact and
different questions of law.

"Cause of action" basically it means the facts which plaintiff states in his plaint to get a remedy by the Court
and if these facts are denied by the defendant then the plaintiff will have to prove these facts to get the
justice in the Court.

The cause of action must be a prior condition, to the, institution of the suit. It consists of two factors (a) a
right, and (b) an infringement for which relief is claimed.

Dushyant Jain^^ 120- -

Every breach of contract gives rise to a cause of action and a suit may be instituted to secure the proper
relief in the place—
(a) where the contract was made, or
(b) where the breach has occurred, or
(c) the place where money is payable.

The place of breach is the place where the contract had to be performed or completed.
Where the place of payment is not specified, it shall be determined from the intention of the parties.

Misjoinder of Causes of Action — If the plaintiffs are not jointly interested in all the causes of action there is
misjoinder of causes of action.
All objections regarding misjoinder of parties or of cause of action should be taken at the first hearing of the
suit and before the settlement of causes unless the ground for objections had subsequently arisen.

IMPORTANT STAGES IN PROCEEDINGS OF THE SUIT

1) Summons is a notice which is sent by the court to the defendant for producing himself into the court
of law. Summons can also be sent to produce any document or evidence in the court of law.

2) The defendant has to give reply of the summons within 30 days of service of summons.

3) Service of the summons means the date on which the summons was sent by the court.

4) If the defendant was present with plaintiff at the time of filing the suit / plaint, in this case no
summonses are required.

5) The defendant can present himself through an advocate, if summons does not require the defendant
to present himself personally.

6) Every summons issued by the court must be signed by the Judge of Special Court or authorized officer
of the Court, along with the seal of the Court.

7) If the requirement of personal appearance of the defendant or plaintiff is felt by the Court, then it
has to make an order for such appearance. The summons must contain a direction that personal
appearance is for the settlement of issues only or for the final disposal of the suit.

8) Every summon must be accompanied by a copy of the plaint. Where no date is fixed for the
appearance of the defendant, the Court has no power to dismiss the suit in default.

9) The summons must also state that the defendant is to produce all documents in his possession or
power (means he does not have but can produce) on which he relies in support of his case.

10) The ordinary mode of service of summons i.e. direct service is by delivery or tendering a copy of it
signed by the judge or competent officer of the Court to the person summoned either personally or to
his agent or any adult male or female member of his family, against signature obtained in
acknowledgement of the services
Que: Discuss in brief the important stages in the proceedings of a suit under The Code of Civil Procedure, 1908.

Dushyant Jain^^ 121- -

DELIVERY OF SUMMONS BY THE COURT
Rule 9 substituted by the Code of Civil Procedure (Amendment) Act, 2002 provides that
In case the defendent or his agent who is empowered to accept summon resides within
jurisdication of court in which the suit is started, if the court does not directs otherwise, the
summon shall be delivered to the proper officer who may be the officer of the court other than
the court in which suit is started so that he or his subordinate could deliver the summon or
summons could been given to courier which is approved by high court by such officer .

At the expenses of plantiff, the summon may be delivered by sending the copy of summon by
registered post with an acknowledgement due, addressed to the defendent or his agent or by
speed post or by courier service which is approved by high court or any other means of sending
documents including facts or emails.*

In case the defendent resides outside the jurisdiction of court and if the court directs that
summons may be served by the modes referred as above* except by registered post, the
provisions of rule 21 shall not apply (rule 21 deals with service of summon when the defendant
resides within jurisdiction of another court).

When the court receives the signed copy of acknowledgement or any other receipt by the
defendent or his agent or if the court receives back the parcel containing the summon with the
note that defendent or his agent or employee has refused to accept summons when tendered to
him, in this case the court shall declare that summons are duly delivered to the defendent.

In case the acknowledgement by the defendent does not reach to court within 30days of services
of summon the court shall make declare that summon is duly delivered.

If the court is satisfied that the defendent is willfully absent or keeping out of the way, so as to
avoid to summon of service or for any other reason the summons cannot be delivered in ordinary
course, in this case the court shall order that summons be served by affixing a copy of summon
in some conspicuous place in the court house and also on some conspicuous place of the house
where the defendent has last resided or carried on business or personally worked for gain asper
knowlegde of court or in other manner that the court thinks correct this is known as substituted
service of summon .

Same provisions apply when summons are to be served on witnesses.

DEFENSE BY THE DEFENDANT

1) The Defendant will have to produce his defense within 30 days of service of summons.
2) The court can grant additional period of 60 days on sufficient reasons shown by the defendant for not
producing a defense within 30 days (x + 30 + 60).
3) In the case of disputes covered under the Commercial Courts Act, 2015 if the defendant fails to file
the written statement within a period of 30 days, he shall be allowed to file the written statement on
such other day, as may be specified by the Court, for reasons to be recorded in writing and on
payment of such costs as the Court deems fit, but within 120 days from the date of

Dushyant Jain^^ 122- -

 service of summons and on expiry of the said period, the defendant shall forfeit the right to file the
written statement and the Court shall not allow the written statement to be taken on record.
4) Where the defendant bases his defence upon a document or relies upon any document in his
possession in support of his defence or claim for set-off or counter claim, he has to enter such
document in a list and produce it in Court while presenting his written statement and deliver the
document and a copy thereof to be filed within the written statement.
5) Any document which ought to be produced in the Court but is not so produced, such document shall
not be received in evidence at the time of hearing of the suit without the leave of the Court (O.8, R.1
and 1A). However this rule does not apply to documents produced for the cross-examination of the
plaintiff witnesses or handed over to a witness merely to refresh his memory.
6) Besides, particulars of set-off must be given in the written statement. A plea of set-off is set up when
the defendant pleads liability of the plaintiff to pay to him, in defence in a suit by the plaintiff for
recovery of money. Any right of counter claim must be stated. In the written statement new facts
must be specifically pleaded. The defendant must deal specifically with each allegation of fact of
which he does not admit the truth. An evasive denial is not permissible and all allegations of facts not
denied specifically or by necessary implication shall be taken to be admitted.
APPEARANCE OF PARTIES IN THE COURT OF LAW
Appearance of parties and consequence of non-appearance – If both the parties do not appear when the suit is
called on for hearing, the Court may make an order that the suit be dismissed (O.9, R. 3 and 4). If the
defendant is absent in spite of service of summons and the plaintiff appears, the Court may proceed ex-parte.

In case the defendant is not served with summons, the Court shall order a second summon to be issued. If the
summons is served on the defendant without sufficient time to appear, the Court may postpone the hearing to
a further date. If the summon was not served on the defendant in sufficient time due to the plaintiff’s
default, the Court shall order the plaintiff to pay costs of adjournment.

Where the hearing of the suit is adjourned exparte and the defendant appears at or before adjourned hearing
and assigns a good cause for his previous nonappearance, the defendant may be heard in answer to the suit
but he may be ordered to pay the cost of adjournment or any other condition may be imposed against him.

The defendant is not stopped from taking part in the proceedings even though he may not be allowed to file a
written statement, in case he was not present in the first hearing.

If the plaintiff is absent and the defendant is present at the hearing of the suit, the Court shall make an order
for the dismissal of the suit, unless the defendant admits the claim of the plaintiff or a part of the claim & in
this case the Court shall pass a decree in favour of the plaintiff as per the admission of the defendant and
shall dismiss the suit to the extent of the remaining claim (O.9, R.8).

In any case in which a decree is passed ex-parte against a defendant he may apply for setting aside the
decree on the ground that the summons was not duly served on him or that he was prevented by any
sufficient cause from appearing when the suit was called on for hearing and the Court shall set aside the
decree on such terms as to costs payment into Court or otherwise as it deems proper and shall appoint a day
for proceeding with the suit (O.9, R.13)

Que: Mr. X being a defendant in a suit, Could not reach the court when his case was called for hearing by
the Court, so the court passed an ex parte decree against Mr. X. As per the provisions of CPC what are
the remedies available to Mr. X.

A defendant has four remedies available if an ex-parte decree is passed against him :
(i) He may file an appeal against the ex-parte decree under Section 96 of the C.P.C.
(ii) He may file an application for review of the judgement.
(iii) He may apply for setting aside the ex-parte decree.

Dushyant Jain^^ 123- -

 (ii) A suit can also be filed to set aside an ex-parte decree obtained by fraud but no suit shall lie fornon-
service of summons.
It is open to a party at the trial of a suit to use in evidence any one or more of the answers or any part of the
answer of the opposite party to interrogatories without putting in the others or the whole of such answers.
But the court may direct that any connected answer should also be put in

KINDS OF APPEALS
Appeals are not specifically defined in CPC, 1908 however the application by a party in the superior court to
set aside the decree or revise the decree of subordinate court is referred as appeal. Right of appeal is not a
natural right but it is given by law. Parties by making a mutual agreement do not get the right to appeal but
this right is granted by law. It is a substantive right (right given by law) this right can also be taken away by
changes in law.

In the case of Gujarat Agro Industries Vs Municipal Corporation of Ahemdabad, it was decided that, though
the right of appeal is a statutory right and if the right of appeal is conditional then it can not be said that it
affects article 14 of Constitution of India.

↓ ↓ ↓
Appeal against an original decree Second Appeal : Appeal against orders :
: ↓ ↓
↓ ↓ Appeal can be made
When a court exercises on This appeal is filed against only against
original jurisdiction & appeal is the decree or judgement appealable orders.
preferred by a party against the passed by the appellate
decree of the court. court. Second appeal lies to
↓ the High Court and the High
When an appeal is made against Court accepts the second
the decree passed by the court appeal when the High Court
of lowest grade. is ssatisfied that the case
When an appeal is preferred involves substantial questions
against a decree granted by a of law. Whenever the Court
court on a plaint made by a subordinate to the High Court
party. passes any decree on appeal,
In all the above mentioned 3 as a result of this if further
cases appeal is made against an appeal is filed in the High
original decree. Court it is referred as second
appeal.

Questions of Law Include:

1. the issues relating to the
case not solved by the lower
court and also by the first
appellate court.
2. The issues that are
wrongly solved by the lower
court and the appellate
court.

In the case of Chunilal Mehta and Sons v Century spinning and weaving company ltd, it was held that
substantial question of law means the issue that is debatable and not clarified in the previous

Dushyant Jain^^ 124- -

case and also deals with public importance.

Appeal to Supreme Court

When the High Court exercise original Jurisdiction on any matter the appeal can be filed in supreme court if:
The High court certifies that case involved a In the opinion of High Court the case should
substantial question of law be decided by supreme court.

The other appeal that can filed in supreme court:

a. Appeal in constitutional cases:
The High court certifies that the case involves substantial question of law under article 132.
b. Appeal in civil cases:
The decree, judgement or order passed in original jurisdiction or appellate jurisdiction may be challenged
in supreme court if the high court issues a certificate that the case involves substantial questions relating
to law with the appeal to supreme court, the copy of judgement, order or decree has to be filed in the
court.
c. Appeal in criminal cases:
In criminal cases appeal can be filed in supreme court with or without the certificate from High Court.
d. Special leave petition:
KISI BHI COURT KE DECISION KO DIRCECTLY,
SUPREME COURT MAIN CHALLENGE KARO!
Article 136 of Constitution of India grants a power to supreme court to entertain appeals against the decisions
of any court or tribunal ( except military tribunal) when such decisions is challenged through a special leave
petition.

When the High court refuses to grant a certificate regarding the case to be fit to be tried by supreme court
then also we can file a special leave petition in supreme court.

To accept or not to accept, the special leave petition is purely a matter of discretion of supreme court and
the Supreme Court cannot be compelled to accept special leave petition.

4. Appeal against orders

Appeal can be made only against appealable orders given in CPC.

The word substantial question has not been defined anywhere however in the case of

REFERENCE, REVIEW &REVISION

1) Reference :
The concept of reference is covered under section 113 of [Link] a suit has been filed in any court of
law & such court wants to obtain an opinion from the High Court about the subject matter of the suit
before exercising any jurisdiction & the high court may pass the orders as it thinks appropriate in relation
to the subject matter of the suit.
Reference may be made during pendency of the suit.
In the following cases the subordinate Court can make a reference to the High Court:
1. In case of any doubt relating to validity of an act, rule, order.
2. When the Court believes that particular case is outside its jurisdiction.
3. When Court believes that it is important to take an opinion of the High Court on
the matter.
In the case of Diwali bai Vs Sadashivdas, it was decided that the reference must be made before passing of
judgement of the case.
Even the parties to the suit can make application to the Court for referring the case to the High Court..
2) Review :

Dushyant Jain^^ 125- -

 It is Covered under section 114 of CPC. Right to review is available with the party who is dissatisfied by an
order or decree passed by the court. An Application of Review can be made in the same court which has
passed a decree or order. Application of Review can be made on following grounds :
a) Discovery of any new evidence, document, record, information related to the case.
b) Any mistake in the decree or judgment passed by the court.
c) Or on any other sufficient ground.
Review can be made after the disposal of the cases.
In the case of Rakesh Baksh Vs Rajeshwari Kunwar it was decided that, even if the appeal is rejected by
the superior court, the party has the right of making review application.
As per Limitation Act, once the decree or order is passed the review application must be filed within 30
days of passing of such decree or the order. The decree or order passed on review shall be final and
binding on the parties.
3) Revision :
a) Sec. 115 deals with Revision.
b) The High Court can call for records related to any case, which has been decided by any subordinate
Court & against which no appeal has been made. It is the discretionary power of the High Courts
c) The High Court will call for Records when the High Court believes that:
1) Subordinate has exercised a jurisdiction which is not within its Authority.
2) The Subordinate court has failed to exercise jurisdiction.
3) The subordinate court has exercised jurisdiction illegally or with material irregularity.
The concept of revision is made to prevent illegal exercise of jurisdiction by the inferior courts. Revision is
made once the case has been decided or an order has been passed + no appeal lies on the case decided by the
inferior court.
The High court can itself revise the case or the party to case can also apply for revision. As per Limitation Act,
1963, the application for revision of decree or order is to be made within 90 days of passing of decree or
order.

Reference Review Revision

It can be made only to the High It is done by the Court which has It is done by the High Court.
Court passed the decree
The case is referred to the High The application for review is made The case comes to High Court by
Court by the subordinate court. by the aggrieved party. application of aggrieved party or
High Court on its own orders for
reopening of case.
Reference is made on questions of Here a party is not satisfied by the In revision the question relates to
law, as to if the inferior court has decree or order jurisdiction of the inferior court.
doubts with regard to any law,
provision of law, ordinance,
regulation etc, the court can refer
the case to the High Court.
It is made when the suit is It is made when decree or order It is done when a jurisdiction has
pending. has been passed been exercised. No appeal can be
preferred when any decision has
been given by the High Court by
revising any case.
Reference is done by the Court to It is done by the Party Revision can be done by the High
the High Court Court Suo Mottu or parties can also
apply for revision.

QUE: Distinguish between review and revision under the Civil Procedure Code 1908.

Dushyant Jain^^ 126- -

DISCOVERY

It is the process of finding out material each a document from an adversery ,in order to solve a case and
reduce the controversy .discovery may be of two types.

DISCOVERY BY INTEROGATIONS:

It means a party to the suit ,with the permissions of the court may deliver interrogations (list of questions ) in
writing for the purpose of examining the opposite party however interrogatories are not allowed for following
purpose:
a. For obtaining the facts that deals exclusively with evidences of opposite parties ,case or title
b. For the purpose of obtaining information that deals with the confidential communication that deals with
communication between opposite party and his cunsel.
c. For the purpose of obtaining information that is against public interest
d. Information that are of uncertain nature

1. DISCOVERY BY DOCUMENTS –

Under this discovery all the documents relating to the case that are in possession of the opposite party can be
inspected by the other party with the permission of the court .however a party may refuse to produce
document for inspection on the following grounds:
a. If such documents discloses parties evidence
b. It relates to communication between opposite parties and his counsel
c. When producing such documents is against public interest
d. When the party does not have the document

NOTE: As a general Rule no additional document can be introduced while filing an appeal. However this rule
does not apply when :
1. The subordinate court refused to admit the document.
2. Appellate court specifically demands it.
3. On any other ground.

When the applellate court accepts evidence it has to record the reasons in writing.

HEARING OF THE SUIT

The plaintiff has a right to begin, however if the defendant admits the the facts stated by the plaintiff and
also states that, on point of law or on some additional grounds the plaintiff is not entitled for a part of relief
claimed by him, in this case the defendant has a right to begin.

When there are several issues (bahut sare Vishay hai jis par bahas ho sakti hai) and the burden of proving
some issues lies on the defendant, in this case the plaintiff, when he begins may produce all his evidences or
he also has a choice of stating some evidences and reserving some evidences, to be produced as an answer to
the written statements (defence) which will be produced by the defendant.

When the evidences have been reserved by the plaintiff, he has to produce, only the evidences which have
not been reserved, if the plaintiff produces all his evidences, at the time when he begins the case, he will
loose his right of producing the evidence as an answer to the written statement filed by the defendant.

AFFIDAVIT

An affidavit is the written statement through which a party verifies the correctness of any statement, and it is

Dushyant Jain^^ 127- -

produced before any Court or Magistrate or any Oath Commissioner appointed by the Court or before the
Notary Public. An affidavit can be used in the following cases:

(i) the Court may at any time of its own motion or on application of any party order that any fact may be
proved by affidavits (Section 30).

(ii) The Court may at any time ask the the affidavit of the defendant do be read at the Court, however if the
other party requests the Court for his cross examination than the Court will not order for reading of the affi
davit.

(iii) upon application by a party, evidence of a witness may be given on affidavit, but the court may at the
instance of either party, order the deponent to attend the court for cross-examination unless he is exempted
from personal appearance.

Affidavits contain only such facts as the deponent is able of his own knowledge to prove however in case of
interlocutory applications the affidavit may contain the statements that are true in the knowledge of some
other person also. (O.19, R.2&3).

SUIT BY OR AGAINST A MINOR: Order 32

SUIT BY A MINOR
1) Minor is a person who has not completed age of 18 years or for whom or his/her property a guardian
has been appointed by a Court, or whose property is under a Suprintendence of the Court of Wards,
the age of attaining majority is 21 years.
a) Suit by a minor :
Suit by a minor can be started in his own name by a person who shall be next friend of minor.
b) Next friend of minor shall be a major person & of sound mind and his interest should not be against
the minor (matla use minor ke khilaf nai hona chahiiye) and the defendant can not become next friend
of minor.
c) If a suit is started without next friend by a minor, the defendant may apply the court to dismiss the
suit and the costs of suit will be paid by the person who filed such suit.
d) If minor attains majority during the continuance of the suit :

Minor can withdraw or discontinue a suit Minor can continue suit

↓ ↓
The next friend of the minor will also be Minor will give an application to the court for
discharged. Minor (who has become major) will discharging, the next friend and for continuance of
apply to the Court for dismissal of the suit) the suit in his own name and title of the case will be
↓ corrected.
The major (who wa minor before) a will have to ↓
refund all expenses & loss sustained in connection And suit will be continued in the Name of Minor.
with the suit to the Defendant.
SUIT AGAINST A MINOR
1) If a suit is to be started against a minor, a permission from the court will have to be taken.
2) After analysing the case, the court can permit for a suit against a minor.
3) The court on its own or on an application made by a plaintiff, appoint a guardian for a minor.
4) The guardian appointed by a court cannot be removed by any party except in case of death,
insolvency or permanent incapacity and such guardian will also represent the minor in case appeals,
revisions, review and execution decrees.
However a court can remove him.

In the case of Ram Chandra VS Ram Singhit was held that a decree passed against a minor or a lunatic
without appointment of a guardian is a nullity and is void and not merely voidable

Dushyant Jain^^ 128- -

SUMMARY PROCEDURE / SUMMARY SUIT
EK DAM JALDI SUNWAI KARNA,
TAKI NYAY JALDI MILE PARTIES KO
1) Summary procedure is contained in order XXXVII of civil procedure code.
2) Summary procedure means speedy disposal of the suit.
3) Summary procedure can be followed in the cases related to promissory note, bill of exchange,
payment of money, recovery of debt or liquidated demand of money payable by defendant on written
contract or on guarantee.
4) The following courts are authorized to pass a decree through summary procedure :
a) High Court,
b) City Civil Court or small civil court.
c) Any other court which is authorized by high court.
5) To commence the summary proceedings, the plaintiff has to proof the following points to the court.
a) The suit is filed under order of 37 of civil procedure code.
b) The suits relates to matter covered under order XXXVII of Civil Procedure Code (i.e. Promissory
Note, Bill of Exchange, Cheques etc.)
c) The Relief claimed by the plaintiff is covered under XXXVII of Civil Procedure Code.
6) An application for commencement of summary Proceedings will be made to court in prescribed form.
7) The Court will send a summons to the defendant & the defendant will have to reply within 10 days
from the date of service of summons.
8) In summary proceedings, the defendant is not allowed to defend himself without permission of court
(leave to defend).
9) But Normally the Court grants permission to the defendant unconditionally for producing his defense.
But in the following two cases permission is not granted by the court.
a) Where the claim of plaintiff is accepted by the defendant & deposited into the court.
b) Where the court believes that the defense produced by the defendant is not much important.

On the hearing summary suit, the plaintiff shall be entitled to judgement if the defendant has not applied for
leave (permission) to defend or if such application was made and is refused or if the defendant is permitted
to defend but he fails to give the required security within the prescribed time or to carry out such other
precautions as may have been directed by the Court.

After decree in summary suit, the Court may, under special circumstances set-aside the decree, and if
necessary, stay or set aside execution, and may give leave (permission) to the defendant to appear and to
defend the suit. (Order 37 Rule 4)

10) If the defendant does not reply the summon within 10 days or does not present himself within 10 days
from the date of service of summon, the court may pass an ex-parte decree.

QUE:‘Explain provisions of summary procedure’ including leave to defend under Civil Procedure Code.

Difference between summary suit and regular suit

Summary Suit Regular Suit
The defendant is not allowed to defend the suit, he In the regular suit the defendant has a right to
has to obtain the permission of the court and if does defend the suit and no permission from the court is
not apply for such permission in the presecribed required.
period or if the court has refused such permission the
plaintfiff gets a decree in his favor.
Summary suit can be filed only for 2 categories of the These suits can be filed for any purpose and not
suit i.e. promissory note, bill of exchange, payment restricted to particular category of the suit.
of money, recovery of debt or liquidated demand of

Dushyant Jain^^ 129- -

money payable by defendant on written contract or
on guarantee.

The court may set aside the decree in summary suit In regular suits the decree can not be set aside by the
or set aside its execution and may allow the court except on the gorund of review.
defendant to appear and defend the suit in case it
seems reasonable to the court.

Summary Judgment

The provision with regaed to the summary judgement are covered under order 13A of civil procedure code
1908. The commercial dispute can be on 22 matters such as agreement to sale of goods, exports or imports,
franchising agreements etc.

As per the order 13A of civil procedure code ,1908, the dispute which are recognized as commercial dispute
under the provisions of commercial court Act 2015 can be disposed of by the commercial courts under the
commercial court Act 2015, without a fullfledged trial and on the lines of summary suits as provided in civil
procedure code 1908.

However, there is a difference that, the summary suit under order 37 relates only to the dispute as given in
order 37 relating to recovery of fixed amount of money but summary judgement under order 13A can be in
respect of any commmercial dispute as given under Commercial Court Act, 2015.

One of the major problems relating to commercial disputes was that even the cases which could been decided
on merits and had a clear outcome were also subject to very long trial so this problem is resolved by order
13A and commercial courts Act ,2015.

An application for summary judgement can be made by either party after services of summons and before
farming of issues and the court after being satisfied may order for summary judgement that:

a. the plantiff or defendent has no chance of succeeding in the claim or defence as the case may be

b. there are nosufficient reasons for not disposing of the claim before the recording of oral evidence.

Que: Summary judgement provides relief to the parties in cases of commercial [Link]?

ISSUES
When a fact is alleged by one party and denied by the other party, it will result in to issue.
Issues arise on account of:
1) Questions of fact
2) Questions of Law
The Court gathers issues from the following:
1) Written statements filed by the parties.
2) Allegations made by the parties.
3) Facts given by the party during interrogation.
4) Documents submitted by parties.
5) By examining the witness.

Important Notes:
1. In case of SB Temple vs V.B Tharyulu it was decided that the Doctrine of Res judicata underlines the
principle that no one shall be vaxed for the same cause
2. In the case of Municipal corporation vsMadanmohanit was decided that in the matter relating to
municipal taxes doctrine of res judicata will not apply as each year’s municipal tax constitute
different subject matter

Dushyant Jain^^ 130- -

 3. If the defendant is public officer or servant of railway or local authority ,the summons will be sent to
the head of the office to which he is employed
4. If summons are to be sent to the partner of the firm then it may be sent to the partner or at the
principle place where the P.S firm carries on its business
5. When the defendant takes his defense through set off , counter claim or equitable set off then he
has to also produce the supporting documents.
The limitation period for filling summary suit is 1 year from the date on which debt becomes due and payable

Saving of Inherent Powers of Court – Section 151 of CPC

Section 151 of the Civil Procedure Code says ‘Nothing in this Code shall be deemed to limit or otherwise
affect the inherent power of the Court to make such orders as may be necessary for the ends of justice or to
prevent abuse of the process of the Court.’

The section does not grant any specific powers to the Courts but it is one of the most used section in CPC,
1908, as any situation that is not covered in CPC can be brought under this section. The scope of this section
is explained by Supreme Court in the case of K.K. Velusamy v. N. Palanisamy, as:

1. Section 151 CPC is not a substantive provision which create any power or jurisdiction on courts. It just
recognises the discretionary power inherent in every court as a necessary remedy for providing justice
as per law, to do what is “right” and prohibit what is “wrong”, so as to secure the purpose of justice.

2. As the provisions of the Code are not Complete, Section 151 recognises and assures that if the Code
does not expressly or impliedly cover any particular procedural aspect, the inherent power can be
used to deal with such situation or aspect, if the ends of justice requires it. The power will be
exercised as per need and circumstances of each case.

3. A court has no power to do that which is prohibited by law or the Code, by exercise of its inherent
powers. If the Code contains provisions which expressly restricts the court either expressly orr
impliedly to deal in particular subject or topic then the inherent powers can not be used or invoked in
such a case. So if there are specific remedies provided in the Code the court can not use the inherent
powers as given in section 151.

4. The inherent powers of the court are complementary to the powers specifically given to the court, a
court is free to exercise them for the purposes mentioned in Section 151 of the Code when the matter
is not covered by any specific provision in the Code and the exercise of those powers would not in any
way be in conflict with what has been expressly given in the Code or be against the intention of the
legislature.

5. While exercising the inherent power, the court will be very cautious, as there is no legislative
guidance to deal with the procedural situation and the exercise of power depends upon the discretion
and wisdom of the court, and in the facts and circumstances of the case. The absence of an express
provision in the Code and the recognition and saving of the inherent power of a court, should not
however be treated as a carte blanche (complete freedom) to grant any relief.

6. The power under Section 151 will have to be used with care, only where it is absolutely
7. necessary, when there is no provision in the Code relating to the matter, when the genuineness of the
applicant cannot be doubted, when such exercise is to meet the ends of justice and to prevent abuse
of process of court.

Dushyant Jain^^ 131- -

COMMERCIAL COURTS ACT, 2015

Introduction

The Government of India introduced the ‘The Commercial Courts, Commercial Division and Commercial
Appellate Division of High Courts Act, 2015’ (Commercial Courts Act, 2015 for short) to reduce the burden on
judiciary with respect to commercial disputes. This not only unburdened the judiciary but also enable
prospective foreign investors to gain more trust over their investments in Indian market.

Its main emphasis is on Commercial disputes which are special in nature since they affect the economy of a
nation, directly or indirectly.

To expedite the process of disposal of cases of large economic value or commercial cases, the Commercial
Courts Act, 2015 (the Act) was introduced. It is an Act to provide for the constitution of Commercial Courts,
Commercial Division and Commercial Appellate Division in the High Courts for adjudicating commercial
disputes of specified value and matters connected therewith or incidental thereto.

The Commercial Courts Act, 2015 came into force on 23rd October, 2015. It enables speedy redressal of cases
holding large economic value.

Commercial Courts

According to Section 3 of the Act, the State Government may with the consultation of respective High Court
constitute the constitute Commercial Courts at District level, as it may deem necessary for the purpose of
exercising the jurisdiction and powers conferred on those Courts under this Act.

State Government, after consultation with the High Court may-

1. specify pecuniary value which shall not be less than three lakh rupees or such higher value. [Section
3(1A)]

2. extend, alter, and reduce the jurisdiction of such court within local limits. [Section 3(2)]

3. appoint one or more persons having experience in dealing with commercial disputes to be the Judge or
Judges, of such Courts.

Jurisdiction

According to Section 6 of the Act, the Commercial Court shall have jurisdiction to try all suits and applications
relating to a commercial dispute of a Specified Value arising out of the entire territory of the State over
which it has been vested territorial jurisdiction by State Government with the assistance of concerned High
Court.

According to Section 7 of the Act, all suits and applications relating to commercial disputes of a Specified
Value filed in a High Court having ordinary original civil jurisdiction shall be heard and disposed of by the
Commercial Division of that High Court.

According to Section 10 of the Act, in case of matters of international commercial arbitration pertaining to
Arbitration and Conciliation Act, 1996 the matters shall be heard and disposed of by the Commercial Division
where such Commercial Division has been constituted in such High Court. In matters of arbitration other than
international commercial arbitration under Arbitration and Conciliation Act, 1996 that have been filed on the
original side of the High Court, matters shall be heard and disposed of by the Commercial Division where such
Commercial Division has been constituted in such High Court.

Dushyant Jain^^ 132- -

Determination of Specified value

The Specified Value of the subject-matter of the commercial dispute in a suit, appeal or application shall be
determined by –

o In case of recovery of money – the value should include interest accrued so far, upto the date
of filing of application or suit.
o In case of Movable Property or right in it – the value shall be computed taking into account
market value of the movable property as on the date of filing of the suit or application.
o In case of immovable Property or right in it - the value shall be computed taking into account
market value of the immovable property as on the date of filing of the suit or application.
o In case of other intangible right - the value shall be computed taking into account estimated
market value of such right by plaintiff as on the date of filing of the suit or application.

Pre-Institution Mediation and Settlement

The very purpose of this Act was to resolve the commercial disputes without bringing them to the court of law
through mediation. Prior to approaching a commercial court for dispute commercial in nature, the Act
requires that parties attempt to settle their issues through mediation. The Central Government may,
authorise the Authorities constituted under the Legal Services Authorities Act, 1987 for the purposes of pre-
institution mediation.

Time Period

The process of pre-litigation mediation shall be completed within a period of three months from the date of
application made. It can be extended for a further period of two months with the consent of the parties.

award/settlement

The award or settlement of pre-litigation mediation shall be in writing and signed by the parties to the
dispute and the mediator. The award shall have the same status and effect as of an arbitral award under
section 30(4) of the Arbitration and Conciliation Act, 1996.

Appeals

Any person aggrieved by the judgment or order of a Commercial Court shall within sixty days of such
judgment may file an appeal -

1. If he is aggrieved by the judgment of Commercial court below District Judge, he may appeal to the
Commercial Appellate Court.
2. If he is aggrieved by the judgment of Commercial court at District Judge or Commercial Division of a
High Court, he may appeal to the Commercial Appellate Division of that High Court

All the appeals filed shall be disposed of within a period of six month from the date of filing.

Amendments to the Provisions of the Code of Civil Procedure, 1908

Section 16 of the Act provides that the provisions of Code of Civil Procedure 1908 shall in their application to
any suit in respect of a commercial dispute of specified value stands amended in manner provided under the
schedule. The following provisions have been amended by the Schedule in their application-

• Section 26 – Institution of Suits

• Section 35-A- Compensatory Costs
• Section 35- Costs
• Order 5 – Issuance and Service of Summons

Dushyant Jain^^ 133- -

 • Order 6, 7 and 8 – Pleadings
• Order 11- Discovery and Inspection of Documents
• Order 18 – Examination of Witness
• Order 20 – Judgment and Decree, etc.

Certain provisions were also inserted to enable the fast track process of Commercial Courts.

Daimler financial services india Pvt. limited vs. vikash Kumar and other, The petitioner is a non-banking
finance company. The opposite parties obtained loan which they failed to repay and the matter was then
referred to sole arbitrator. On being dissatisfied with the
arbitral award they approached to Commercial Court,
Dhanbad. The Commercial Court dismissed the petition on
grounds of having no pecuniary jurisdiction.

CHAPTER: 7
LAW RELATING TO CRIME & ITS PROCEDURE

INTRODUCTION

The Indian Penal Code (IPC) is a colonial legislation which was retained as the main penal law of the country
even after India became independent in 1947. The Indian Penal Code was passed in the year 1860 but it came
into force on 1st January 1862, and it applies to the whole of India. However amendments have been made in
the law from time to time.

CRIME

When a person breaks any rule or law he commits a crime

CRIME

Against society Against individual

Such crimes will be treated under Criminal laws Will be treated under civil laws.

CRIME KAR KE AGAR KISI KO PAHUCHAI HAI CHOT

TO JAIL JAOGE AS PER INDIAN PENAL CODE

In India the base of crime and punishment laws is contained in Indian Penal Code 1860 which came into force
on Jan. 1, 1862.

Indian Penal Code applies to whole of India.

Dushyant Jain^^ 134- -

IPC contains 23 chapters and has – 511 sections.

Under IPC the Criminal courts exercise a jurisdiction.

If any person breaks any rule or law, he commits a crime. There are two types of crimes, i.e. against
individual – such crimes will be treated under civil laws and against society – such crimes will be treated
under criminal laws.

The jurisdiction of criminal courts in India can be classified in 2 categories :-

JURISDICTION BOLE TO APNE COURTS KI POWER IPC KE ANDAR

Intra Territorial Jurisdiction Extra territorial jurisdiction

When any person whether Indian or Foreigner When laws are made that applies to the terrorists
commits a crime in territory of India including outside India or when crime is done outside India by
waters of India or in any ship or aircraft which is Indian national, such crime or such person may be
registered in India. punished in India by the Indian courts.

The court will exercise intra territorial jurisdiction. Such crime will be punished in the same manner as if
the crime has been committed in India.
In the case of Mubarak Ali Ahmed V/s. State of OR
Bombay, it was decided that it will be no excuse, If any person commits an offence outside India, on a
the foreigner was not aware with the laws of India ship, aircraft or vessel which is registered in India.
and hence, he did not know that a particular act is a
crime in India. In case of a ship, the ship is considered to be of the
nation whose flag the ship flies, when it is in High
Seas.

The jurisdiction of Indian court on the offences

committed on ships is also known as admirality
jurisdiction

When an offence is committed from outside India but

the target is the computer resource in India.
Que: Briefly discuss the intra-territorial and extra-territorial application of Indian Penal Code, 1860 with
exceptions.

Exceptions to rule of intra territorial jurisdiction of IPC:-

President of India, Governor of Foreign Sovereigns, foreign Millitary attaches, Secretaries

State till the time then hold diplomats, ambassadors and Political Attaches, who are
the office. [diplomatic protection] on a mission on India.

Que: Discuss in brief the power of the court to try offences under Indian Penal Code and any other law as laid
down in Criminal Procedure Code, 1973.

The Fundamental Elements of Crime

Crime Involves 3 basic elements:

Human Being Mens Rea Act

Dushyant Jain^^ 135- -

Bina Insan ke gunah kaise hoga! Sirf Gunah Kafi Nai hai, Gunah Galat Neeyat to thi par Gunah
Galat Neeyat se Hona Chahiye Karne se Dar Gaye to Crime Nai
Hoga!

The basic function of criminal law is to punish the offender and to deter the incidence of crime in the society.

A criminal act must contain the following elements:

a) Human Being :
First requirement of any crime is a human being and he should have not acted in accordance with
law and should be physically and mentally fit for committing a crime.

b) Means Rea :

The basic principal of Crime is “actus non facitreum nxisi mens sit rea.” Which means an act alone is
not guilty unless it is accompanied by a guilty mind.

It is an attitude that directs the act. The act is not judged from the mind of wrong doer but the mind
of wrongdoer is judged from the act.

In the case of Girijanath V/s. State the Court decided that the principle of mensrea covers various
kinds of mental attitude.

TYPES OF MENS REA

BHAI JAB TAK NEEYAT NAI HAI KHARAB,

COURT TUM SE NAI KAR SAKTA SAWAL JAWAB

Intention (Kharab Neeyat) Negligence (Laparwahi) Recklessness (Gairzimmedari)

It means a decision. It means not taking care. The actor does not desire any
e.g. A peson has poisoned consequence but expects a
water which was to be served It means a state of mind when possibility and consciously
to Mr. X, but Mr. Y drank and there is no desire to cause any takes the risk. It is the form of
died, in this case Ram will be particular consequence. mensrea.
liable [generic intention]
It means a person does not e.g. Drink and drive.
take standard case as
established by law.

Negligent conduct amounts to

mensrea.

e.g. A person throws stone

from his house and such stone
hits another person. It will
amount to negligence.

In the Indian Penal Code, the evil intent of wrong doer is indicated by words such as intentionally, voluntarily,
fraudulent maliciously, knowingly, etc.

EXCEPTIONS TO THE PRINCIPAL OF MENS REA

NEEYAT ACCHI HO YA KHARAB, TUM TO FASOGE JANAB

Dushyant Jain^^ 136- -

In the following cases there will be liability even without mensrea :

In the matters relating If a person violates the When it is difficult to Public nuisance or in
to public, health, law without the prove mensrea and the interest of public
safety, food, drugs, knowledge of law. penalties are petty safety.
motor vehicle act, fines.
arms act, etc.

Que: ‘There are exceptional circumstances under which mens rea is not required in criminal law’. Discuss.

CORPORATE BODIES AND MENS REA

Section – 11 of IPC defines a person which includes individual, a company, AOP, BOI, whether registered or
unregistered.

In the case of State of Maharashtra V/s. Syndicate transport, it was decided that the liability of corporate
body through an individual’s action will depend upon the nature of offence as disclosed in the charge sheet.

Que: Companies can no longer claim immunity from criminal liability on the ground that they are incapable of
possessing the necessary mens rea for commission of offences. Critically examine.

Hint: the definition of person includes company also!

c) Act :-

BHAI HUMAN BHI THA, MENSREA BHI THA,

PAR CRIME KARNE KI HIMMAT HI NAI HUI, NO CRIME

Only human beings and intention are not sufficient, there should be an act or omission also. The act or
omission must be such, which law prohibits it is a result of voluntary conduct.

A person is also liable to be punished when he has not taken any part in the offence.

e.g. The party who insights the other party to commit an offence will also be liable.

STAGES OF CRIME

There are 4 stages in crime.

Statge 1, Criminal Intention

Stage 2, Preparation

Stage 3, Attempt

Stage 4, Commission of Crime

Sabse Pahle Neeyat Kharab, fir taiyari, fir kosis, aur fir kamyabi, In char stages se hokar har crime guzarta
hai!

1) Criminal Intention :

It is Conscious exercise of Law does not punish only an Intention must also result in

Dushyant Jain^^ 137- -

 faculties of mind of a person to intention as it is difficult to voluntary act for some specific
do an act for a specific prove the intention for the purpose.
purpose. prosecution.
For example, if a man throws a boy from high rise building or cuts his throat, it is obvious that he
desires victims’ death.

Intention must not be confused with motive, motive iss a reason that encourages an action while the intention
is the decision. Motive is not the basis of criminal liability for example, if a man steals food in order to feed
his starving child, the act will amount to fraud although the motive behind the act is to save life.

2) Preparation :

It means to arrange necessary resources for doing any criminal act. Generally preparation is not punishable,
as it is difficult to prove that preparation results into an offence.

However in the below mentioned cases mere preparation is punishable :-

Preparation of war Preparing to commit Preparation for Possessing false

against government. criminal decoity. counter feiting coins weights and measures
and stamps or forged documents.

3) Attempt :

It is considered as preliminary crime. The IPC does not define attempt but provides punishment for
attempting to commit a crime Attempt is a step after preparation.

A person first forms an intention, then makes a preparation and then makes an attempt, if he succeeds in
attempts, then he will be punished for crime and if he does not succeed in attempt, then he will be punished
for attempt.

The act constituting attempt must have direct connection with the intended result.

Attempt can be divided in four categories:

[Link] in which the commission of an offence and attempt to commit offence are dealt in same section
and punishment is same for both, these sections are:

Section 196: using false evidence, section 197: using false certificate, section 391: dacoity etc.

[Link] case of 3 grave offences separate specific punishments are prescribed in separate sections:

Section 307: Punishment for attempt to Commit Murder, Section 308: Punishment for attempt to culpable
homicide, Section 309: Punishment for attempt to Commit Sucide (Punishable up to 1 year of simple
imprisonment.), Section 393: Punishment for attempt commit robbery.

[Link] 511, is the residuary section for dealing with attempts.

[Link] 120-D: Punishment for Attempt

Whoever is guilty of an attempt to commit an offence is punishable with imprisonment for life or for
imprisonment of specific term, shall, where no specific provision is made for the punishment of such attempt,
shall be punished with imprisonment of any description for the offence for the term which may extend to one
half of the imprisonment for life or as the case may be one half of longest term of imprisonment provided for
the offence or with fine provided for such offence or with both.

Dushyant Jain^^ 138- -

Example: Amar makes an attempt to steal some jewels by breaking a box, and finds that there is no jewel in
the box, he has done an act towards commission of theft and will be guilty for attempt.

4) Commission of Crime or Accomplishment :

If the accused is successful in his crime, then he will be punished for crime. If the attempt in unsuccessful
then he will be guilty for attempt only.

KINDS OF PUNISHMENTS UNDER IPC

IPC contains following 5 kinds of punishments :-

Death (Capital Punishment) Life Fine Imprisonment Forefeiture

This is harshest punishment imprisonm of property.
ent It means Forfeiture
It is a judicial killing of money by way of Rigouro Simple As a result
It means a penalty us Imprisonme of any
As per the direction of rigorous nt – it default the
supreme court, death imprisonme If the court has Impriso means an property of
sentence, should be given in nt till the imposed a fine on nment imprisonme convict may
rarest of rare cases. last breath any person and if with nt which is be
of the such person does hard not the forefeitted
In the following cases death convict. not pay fine then labour rigrous by the court.
sentence may be awarded : the court may ask imprisonme
1) Murder such person to nt.
2) Abetment of suicide suffer an
by minor or lunatic imprisonment as a
person result of default in
3) Decoity and murder payment of fine.
4) Attempted murder
by life convict.
5) Fabricating false
evidence upon which
innocent person
suffers death
6) Abetting mutiny
actually committed.

Whenever the court awards

death sentence, it has to
gives reasons.

Difference between Fine and Penalty

Fine

According to merriam-webster dictionary fine “a sum imposed as punishment for an offense”.

Penalty

Dushyant Jain^^ 139- -

According to merriam-webster dictionary, “the suffering or the sum to be forfeited to which a person agrees
to be subjected in case of non fulfillment of stipulations.”

Analysis

An inference may be drawn from the definitions above that punishments are against offences and penalties
are against non-compliances.

According to section 2(38) of the General Clauses Act, 1897, offence shall mean any act or omission made
punishable by any law for the time being in Force.

According to Merriam-webster dictionary, the meaning of Non-compliances is failure or refusal to comply with
something (such as a rule or regulation) : a state of not being in compliance.

Accordingly, we can analyse that the mention of fine and penalty in a particular provision may depend upon
the nature of provision i.e. Criminal or Civil.

Further, it may be noted that in the Companies Act, 2013, where monetary penalty is provided for any
default, generally no punishment by way of imprisonment is provided. But, Fine and imprisonment are mostly
provided together. Two such examples may be referred as under:

Section 8(11) of Companies Act, 2013

“If a company makes any default in complying with any of the requirements laid down in this section, the
company shall, without prejudice to any other action under the provisions of this section, be punishable with
fine which shall not be less than ten lakh rupees but which may extend to one crore rupees and the directors
and every officer of the company who is in default shall be punishable with imprisonment for a term which
may extend to three years or with fine which shall not be less than twentyfive thousand rupees but which may
extend to twenty-five lakh rupees, or with both”

Section 26(9) of the Companies Act, 2013

“If a prospectus is issued in contravention of the provisions of this section, the company shall be punishable
with fine which shall not be less than fifty thousand rupees but which may extend to three lakh rupees and
every person who is knowingly a party to the issue of such prospectus shall be punishable with imprisonment
for a term which may extend to three years or with fine which shall not be less than fifty thousand rupees but
which may extend to three lakh rupees, or with both.”

The same may also be analysed from SEBI Act, 1992, where imprisonment and fine and kept together for
imposition but liability of penalties are provided for non-compliances.

PROVISONS RELATING TO CRPC, 1973

The Code of Criminal Procedure (Cr.P.C.) is basically an

Adjective law (Law regulating the procedures) It aims at providing
machinery for fixing guilt and imposing punishment.

When the criminal acts are done, the aggrieved party may follow the proceduregiven in CRPC to get

justice.

A Company Secretary should have knowledge of Cr.P.C. to avoid the criminal liability imposed by different
corporate and industrial laws.

Dushyant Jain^^ 140- -

DEFINITIONS
❑ MENS REA
AGAR OFFENCE KARTE VAQT THI GUILT INTENTION,
TO TUM FAS JAOGE MERE BHAI
Mens Rea means guilty intention. According to the principle
of Mens Rea, no one shall be punished according to the law,
until he has a guilt intention. Intention involves knowledge of
probable outcome.

The fundamental principle of penal liability is embodied in

the maxim actus
non facit ream nisi mens sit rea. The act itself does not
constitute guilt unless done with a guilty intent. Thus, unless
an act is done with a guilty intention, it will not be criminally punishable.
The motive is not an intention. Intention involves foresight or knowledge of the probable or likely
consequences of an injury. In short, mens rea is the state of mind which accompanies and directs the
conduct resulting in the actus reus.

Offence
Section 2(n) of the Cr.P.C. defines the word "offence" to mean any act or omission made punishable by
any law for the time being in force and includes any act in respect of which a complaint may be made
under
Section 20 of the Cattle-trespass Act, 1871.

However, the term is more elaborately defined in Section 40 of the I.P.C. which states that "offence"
denotes a thing made punishable by the Code.
An offence is what the legislature classes as punishable. Mens Rea a bad intention or guilt is an essential
ingredient in every offence.

❑ BAILABLE & NON-BAILABLE OFFENCE

The offence for which Bail can be granted is known
as Bailable offence. These offences are included in
First Schedule of Code of Criminal Procedure, 1973.

The offences in which Bail is not granted are known

as non-bailable offences.

The working of the bail system in India was

highlighted in the case of HussainaraKhaton vs
Home Secretary, 1980.

It came to the courts attention for the first time

that thousands of people were rotting in jails for 3
to 10 years for petty crimes which do not have
punishment more than 6 months to a year.

This was because they were unable to pay bond money for bail and the courts were too backlogged to
hear their cases.

In this respect, J Bhagwati observed that the courts must abandon the antiquated concept under which
pre trial release is ordered only against bail with sureties. Thus, in general, the intention of the justice
system is to give bail and not jail before the accused is convicted. It is said that since the accused is
presumed innocence, he must be released so that he can fight for his defense. Thus,

Dushyant Jain^^ 141- -

 releasing a person on bail is a rule, while denying bail is an exception.

Provisions for Bail can be categorized by the type of offence committed i.e. bailable offence or non-
bailable offence.

❑ COGNIZABLE & NON-COGNIZABLE OFFENCES

Cognizable offence means offence in which
a police officer can make an arrest without
warrant. They are generally non-bailable.

Non-Cognizable offences are those in which

police officer cannot make an arrest without
warrant.

Difference between Cognizable and Non

Cognizable Offece

Cognizable Non-Cognizable

It is the offence in which a police officer can It is the offence in which a police officer cannot
arrest the convict without the warrant. arrest a person without the warrant.

The police can start a preliminary investigation The police officer cannot start the investigation
without the permission of the court or without without the permission of the court.
registering the FIR.

These are heinous crimes like murder, rape, These crimes are not so serious like forgery,
dowry death etc. cheating, defamation etc.

The victim can file an FIR or make a complaint The victim can only make a complaint to the
to the magistrate. magistrate.

It is defined in the Section 2(c) of the Criminal It is defined in Section 2(I) of Criminal Procedure
Procedure Code, 1973. Code 1973.

The police officer is bound to register the FIR The police officer is not bound to register the FIR
even without the permission of Magistrate. or cannot register the FIR without prior
permission of the magistrate.

It is a non-bailable offence. It is a bailable offence.

QUE:Distinguish between cognizable and non-cognizable offence under the Criminal Procedure Code, 1973.

❑ BAIL
1) Bail means release of an accused from the custody of police and handing him to the custody of private
person who gives a guarantee to produce the accused whenever the accused is called by the court.
2) The private person also gives certain money, property documents for the performance of guarantee.

Types of bail

Regular Bail Interim Anticipatory Bail

Bail

Dushyant Jain^^ 142- -

 A bail granted after the A bail given during pendency of A bail given when a person has
offence is committed. application. apprehension that he may be
arrested on an accusation of having
committed a non-bailable offence.

❑ ANTICIPATORY BAIL
ARREST HONE SE DAR LAG RAHA HAI,
ANTICIPATORY BAIL LE LO BAS
1) When a person anticipates that he will be arrested for committing a non-bailable offence & till now he
has not been arrested. He can make an application to the court for grant of an anticipatory bail.
2) An opportunity of being heard must be given to the aggrieved party before granting an anticipatory
bail.
3) Anticipatory bail can be granted by high courts or court of session.

INVESTIGATION, INQUIRY & TRIAL – Not in Syllabus (just read for knowledge)

INVESTIGATION

It is the process of collecting

evidences. Investigation is done by a
police officer on his own or under
the orders of the magistrate. After
completion of investigation, the police
officer forwards a report to the
magistrate. Investigation is not done by
a magistrate.

When Magistrates receives the report, he will have 2 opinions:

▪ Offence has been committed.

▪ Offence has not been committed.

If offence is not committed, the case will be rejected by Magistrate.

If offence has been committed magistrate will order for an enquiry or trial. In this case the magistrate may deal
with the case himself or in case of serious offences the magistrate may forward the case to the sessions court
which has wider power to punish the convict.
CBI or police may conduct investigations.
INQUIRY

▪ After completion of investigation the second stage begins i.e. inquiry. It is the proceeding in which
authencity of the case is reccognised. Normally till the time the magistrate does not frame the charges
under section 211 of CRPC, the entire proceeding is inquiry and after fixing of charges trial begins.

Dushyant Jain^^ 143- -

▪ In inquiry, Court or magistrate make the enquiry, the purpose of making inquiry is to collect strong evidences
related to the case. object of an inquiry is to determine the truth or falsity of certain facts with a view to
taking further action. Inquiry is different from trial and its wider then trial and it stops when trial begins.

▪ For example in 2G scam the court had ordered for an enquiry.

▪ TRIAL
▪ After completion of enquiry, Trial begins. In the trial conviction or acquittal of accused takes place.
▪ So inquiry is wider then trial as till the time of framing of charges the proceedings of the case is based on
inquiry and in trial just orders are passed by the Court.

Difference Between Investigation, Enquiry and Trial

Investigation, inquiry and trial are three different stages of a criminal case. The case is first investigated
by the police to ascertain whether an offence has actually been committed and if so, by whom and
the natureof evidence available for the prosecution.

Inquiry is the second stage which is conducted by a Magistrate for the purpose of committing the
accused to sessions or discharging him whenno case has been made out. In case of complaints made
to a Magistrate, it refers to a preliminary inquiry made by him under Section 202 to ascertain the
truth or falsehood of the complaint or whether there is any matter which calls for investigation by a
criminal court.

The final stage of the case comes when the accused is put on trial before the Sessions Judge or
the Magistrate when he is empowered bylaw to try the cases himself.
JUDICIAL PROCEEDINGS
1) A process in which all the evidences are examined is known as judicial proceedings.
2) In judicial proceeding, evidence are examined on the basis of oath.
3) Judicial proceedings include trial & enquiry, but not investigation.

PLEADER
Pleader means any person who is authorized by law to practice in a court and also includes a person who is
allowed to appear in a court with the permission of the court e.g. : Advocate.

It is an inclusive definition and a non-legal person appointed with the permission of the Court will also be
included.

PUBLIC PROSECUTOR – Section 24

Public Prosecutor is a person who fights the case on behalf of the
government & his duty is to bring to the Notice of the Court, true
and fair facts related to the case. In case a person has been in
practice as advocate for at least 7 years then only he can be
appointed as public prosecutor. The public prosecutor conducts
prosecution, files appeals or conducts other proceedings on behalf
of Central or State Government.

SUMMONS CASE
1) This is the case in which police officer cannot make any
arrest without a warrant.
2) Any offence which is punishable for a term less than or equal to 2 years is a summon case.

Dushyant Jain^^ 144- -

WARRANT CASE
"Summons case" means a case relating to an offence and not being a warrant case. A "Warrant case" means a
case relating to an offence punishable with death, imprisonment for life or imprisonment for a term
exceeding 2 years.

POWERS OF COURT TO PASS SENTENCES: SECTION 29

Section 29 of Criminal Procedure Code, deals with the power of the Courts(magistrates), one of such powers is
to pass sentences in respect of the offences.

The offences are categorised in 2 categories i.e. under the provisions of IPC, 1860 and under other laws (for
example companies act, 2013 alos has provisions relating to offences)

Section 26 of CRPC, 1973 states that the offences under IPC, 1860 may be tried by the High Court, Sessions
Court, or any other Court which is authorised under schedule I to try such offences.

If the offences under any other law is committed, such offence can be tried by the Court specified in that law
or in case no court is specified in that law, then by the Hign Court or the Court which is authorised under
schedule I to try such offences.

1. High Court : Section 28

High court can pass any sentence authorized by law including life imprisonment and death sentence.

2. Session Judge / Additional Session Judge : Section 28

This Judge can pass imprisonment for any term including life imprisonment but the death sentence passed
by these Judges will require confirmation from the High Court.

3. Assistant Session Judge : Section 28

The assistant judge of session Court may pass an imprisonment up to 10 years & not authorized to pass
death sentence.

4. Chief Judicial / Metropolitan Magistrate : Section 29

This magistrate can pass a sentence of imprisonment up to 7 years. (metropolitian majistrates are
appointed for metropolitian areas the city in the state whose population exceeds 1 millon shall be
metropolitian area for the purpose of this code) (chief judicial magistrates are appointed for districts)

5. Magistrate of First Class : Section 29

This magistrate can pass sentence of imprisonment up to 3 years & maximum fine of Rs. 10,000 or both.

6. Magistrate of Second Class : Section 29

This magistrate can pass sentence of imprisonment of 1 year & fine up to Rs. 1,000 or both.
Note: A Chief Metropolitan Magistrate shall have the powers of the Court of a Chief Judicial Magistrate and
that of a Metropolitan Magistrate, and the powers of the Court of a Magistrate of the First class.

Executive Magistrate : In every district and in every metroplitian area the state government can appoint as
many persons as it thinks fit to be executive magistrate and shall appoint one of them to be district
magistrate.

Que: Angad is charged for the Murder of Binod. The charge sheet is filed in the Court of Chief Judicial
Magisstrate, who passed an order of sentence of imprisonment for life. Angad engages you as an
advocate. Advice the course of action to Angad, giving reasons.

Dushyant Jain^^ 145- -

Que: A magistrate of the first class passed a sentence of imprisonment for a term of three years with a fine of
Rs.4,000 and in lieu of non-payment thereof an additional imprisonment for another one year. Has the
aggrieved person any right to appeal against this sentence ?

Que: Discuss the sentences which can be passed by various courts under Sections 28 and 29 of the Criminal
Procedure Code, 1973.

SENTENCE OF IMPRISONMENT IN DEFAULT OF FINE

As per section 30 of Code of Civil Procedure, if a person was ordered for payment of the fine by the magistrate
and such person makes a default in payment of fine, in this case the magistrate may impose additional
imprisonment to the person in making a default in payment of the fine.
However the following conditions should be satisfied before ordering additional imprisonment :

The imprisonment should not exceed the powers of magistrate undersection 29.

For example if the Magistrate of second class wants to give additional imprisonment in default of fine then
such imprisonment can be for maximum 1 year.

In case the, if punishment of imprisonment is given, then the additional imprisonment in default of payment of fine
th
shall not exceed, 1/4 of the original imprisonment which the magistrate was capable to give.

th
In case the magistrate grants extra imprisonment in default of fine then total imprisonment including the 1/4
extra imprisonment may exceed the powers of magistrate.

For example if Magistrate of Second Class gives additional imprisonment then it can be for maximum 3 months
th
(1/4 of 1 year) and in this case the total imprisonment can be for 16 months given by Magistrate of Second
Class including additional imprisonment in default of fine.

Dushyant Jain^^ 146- -

Beta 2 bate yad rakho agar aap ko saja hui thi to magistrate ki jitney power hai usi ke andar saja
sunaega + Jo saja originally suna sakta hai uske ¼ hi additional saja de sakta hai aur agar additional saja
deta hai to total saja uski power se bahar ja sakti hai!

Sentences in cases of conviction of several offences at one trial

Section 31 relates to the quantum of punishment which the Court is authorised to impose where the accused
is convicted of two or more offences at one trial.
Que: A Magistrate of the First Class passed a sentence of imprisonment for a term of three years with a
fine of 6,000 and in lieu of non-payment thereof, an additional imprisonment for another one year. The
aggrieved party, Anshul, wants to prefer an appeal against the order of the Magistrate. Will he succeed ?
Advise with reasons.

ARREST OF PERSONS: SECTION 41

BHAI IN SARE CASES MAIN AAP,
BINA WARRANT KE ARREST HO SAKTE HO
In the following cases a police officer may make an arrest without warrant or orders from Magistrate:
1) If a person has committed a cognizable offence and the police officer have reliable information about his
linkage in the cognizable offence.
2) Any person in whose possession an instrument of House Breaking is found without any lawful excuse.
3) Any person who has been proclaimed as an offender by state government.
4) Any person in whose possession any stolen property has been found without lawful excuse.
5) Any person who obstructs a police officer while discharging his duty or who attempts to escape from the
police custody.
6) Any person who is deserted from armed forces. Deserted is a person who leaves arm forces without a
Notice.
7) Any person against whom a complaint has been received in India that he has committed an offence
outside India & the offence is punishable in India.
8) Any person who is a convict and was released from jail on some terms and conditions and he makes a
breach of such terms and conditions.
9) Any person for whose arrest request has been received from another police station & the request clearly
specifies the name of the person and the offence committed by the person. Such police officer who has
received a complaint may make an arrest without warrant.
At the time of making arrest under section 41, the police officer has to follow certain measures which are
given in section 41A:

• Issue a notice to and ask such accused against whom any complaint or
information has been received regarding congnizable offence to appear
before the police officer or at such other reasonable place as specified
in the notice.
• If the accused complies with the terms and conditions mentioned in the
notice he should not be arrested in respect of the offences as specified in
the notice till the time he complies with the conditions given in the
notice.

•If the accused does not comply with the notice or is not giving his
identity then the police officer subject to the orders passed by
competent magistrate mayarrest such accused.
As per Section 41B of CRPC the police officer at the time of making thearrest shall:

Dushyant Jain^^ 147- -

 a. Should have a clear, visible and accurate identification of his name,
which will provide his identification.
b. Shall prepare a memorandum of arrest (report of arrest) which shall
be attested by at least one witness who is a family member of
arrested person or is a respectable member of locality where arrest
is made.

c. Provide information to the arrested person that he has a right to

inform his relative or friend that he has been arrested however if
memorandum of arrest is attested by family member only then there is
no need to provide this information.
As per section 41D when after arrest if a person is interrogated, he has a right to meet an advocate of his choice
during interrogation but not throughout interrogation.

Section 41C deals with establishing of police control room in every district and at state level and in
every police control room at every district the names and addresses of the persons arrested and the
name and designation of the police officer has to be displayed on the notice board kept outside the
police control room.

In the case of Arnesh Kumar Vs State of Bihar, it was decided by the Supreme Court that arrest must be
made only when all the above conditions are satisfied and if the police officer is given free power to arrest, it
will increase corruption and may also result in harassment of people by police.

Que: What are the duties of a police officer while making an arrest under Section 41B and the right of an
arrested person under Section 41D of Criminal Procedure Code, 1973 ?

ARREST ON REFUSAL TO GIVE NAME AND RESIDENCE: SECTION 42

If a person who is accused of committing a non-cognizable offence refuses to give his name and address or
gives a name and address which the police officer believes to be false or misleading, the police officer can
make an arrest without warrant. Such a person cannot be kept in police custody beyond 24 hours.
In the following cases such a person can be kept for more than 24 hours:
(a) If his correct address has been found & it is proved that he gave wrong address.
or
(b) He is not ready to sign a bond or produce adequate sureties or guarantor.
In this case such person must be produced before the magistrate.
This section basically applies when a person commits non cognizable offence in presence of the police officer
or the accused is before the police officer after committing such offence, arrest will be done only when he
refuses to give his name and address.

ARREST BY A PRIVATE PERSON: SECTION 43

1) If any cognizable offence takes place in presence of any person, such a person can make an arrest.
2) If any person finds a proclaimed offender such person can make an arrest.

This right of arrest arises under the Common Law which applies to India Re. Ramaswamy Aiyar Case

ARREST BY MAGISTRATE: SECTION 44

If a cognizable offence takes place in presence of a magistrate, even the magistrate is authorized to make an
arrest or issue a warrant of arrest to any police officer, he can also order any civilian to make an arrest

However, Section 45 protects members of Armed Forces from arrest where they do

Dushyant Jain^^ 148- -

something in discharge of their official duties. They could be arrested only after obtaining the consent of the
Central Government.

PROCEDURE TO MAKE AN ARREST: SECTION 46

TUMHE WO CHOO SAKTA HAI,
TUMHE 24 Ghante Ke ANDAR MEGISTRATE KE SAMNE PESH KAREGA
1) Arrest means putting a Restriction on Freedom of movement of any person. It also means depriving a
person from its liberty.
2) The Police officer is authorized to touch a person while making an arrest. If the accused shows any
forcible Resistance, the police officer can take all the necessary steps to make an arrest successful.
However, police officer is not authorized to cause death of a person who is not charged with an offence,
punishable with death punishment or life imprisonment while making an arrest.
3) The police officer can go anywhere in India to make an arrest. However if he goes outside India to make
an arrest, he will have to take permission from Home Ministry of the Country.
4) The magistrate should be informed within 24 hours of making an arrest.
5) The person who is arrested cannot be kept in police custody for a period of more than 24 hours without
producing him in front of magistrate. (Excluding travel time & public holidays).
6) When an accused is presented before a magistrate, the magistrate can even send him on a remand of 15
days (14+1). The period of remand cannot exceed 60 days.
7) Officers in-charge of the concerned police stations shall report to the Magistrate the cases of all persons
arrested without warrant, within the limits of their respective police stations whether such persons have
been admitted to bail or otherwise. (Section 58)
8) A person arrested by a police officer shall be discharged only on his own bond or on bail or under the
special order of a Magistrate, (Section 59).
9) If a person in lawful custody escapes or is rescued, the person, from whose custody he escaped or was
rescued, is empowered to pursue and arrest him in any place in India and although the person making such
arrest is not acting under a warrant and is not a police officer having authority to arrest, nevertheless, the
provisions of Section 47 are applicable which stipulates provisions relating to search of a place entered by
the person sought to be arrested.
10) Unless there is an exceptional circumstance, no women shall be arrested after sunset and before sunrise,
however in case of exceptional circumstance the women police officer by making a written report with
prior permission of magistrate may make an arrest at anytime.
11) As per section 49, the person arrested shall not be subject to more restraints except the ones which are
necessary to prevent his escape.
12) As per section 50, the person who has been arrested shall be informed of grounds of arrest and right of
bail and the arrested person may arrange for sureties on his behlf so that he can be released on bail.
13) As per section 50A, the police officer or the person who makes tha arrest shall give information relating to
arrest to any of friends or relatives or such other nominated person as informed by the arrested person for
giving of the information.
14) As per section 53, at the request of police officer not below the rank of sub inspector the medical
examination of accused is done to know the facts which will afford the evidence as to commission of an
offence.

SUMMONS (Section 61) & WARRANTS (Section 70)

CHALO BULAWA AAYA HAI,
SUMMON DEKAR COURT NE BULAYA HAI!
1) A Summon is issued by the court for appearance of the parties or production of any document or any
evidence in the court.
2) Summon shall be in writing and signed by Presiding officers of the court or by any other officer authorized
by the High Court.
3) Summon shall bear a seal of the court.
4) Summon should clearly specify the day, date and time and place for making an appearance in

Dushyant Jain^^ 149- -

 the court.
5) Summon is issued in the cases where the offence is punishable with an imprisonment of less than 2 years.

SERVICE OF SUMMON
1) As per section 61, the summons issued by the Court shal be in witing in duplicate, signed by the presiding
officer of the Court. Summons may be sent to the accused and witnesses.
2) As per section 62 Summon shall be delivered by a police officer or by any officer authorized by the court.
3) If the defendant refuses to accept summon, the court after making reasonable enquiry may declare that
the summon has already been delivered.
4) If the defendant willfully remains absent from the place where summons are to be delivered, the police
officer or the authorized person of the court may affix copy of summon at a conspicuous place of the
house where accused ordinarily resides and will declare that summon has been delivered it is substituted
service of summon under section 65.

When personal service of summons cannot be affected under Section 62, section 64 allows the extended
service which can be provided by leaving one of the duplicates with some adult male member of his family
residing with him who may also be asked to sign the receipt for that. A servant is not a member of the family
within the meaning of Section 64.

Service of Summons on Corporate Bodies : section 63

Summon will be delivered at the registered office of the Company or by seriving it on the secretary, local
manager or other principal officer of the corporation.

Summons on Government Departments :

Summons shall be delivered / addressed to the Head of Departments.

In the case of a Government Servant, the duplicate copy of the summons shall be sent to the head of the
office by the Court and such head shall thereupon cause the summons to be served in the manner provided by
Section 62 and shall return it to the Court under his signature with the endorsement required by Section 62.
Such signature shall be evidence of due service under section 66.

As per section 67, if summons are to be served outside the jurisdiction of the Court, it shall be sent in
duplicate to the magistrate within whose jurisdiction the person summoned resides ad then it is served by
that Court and duplicate is sent with signature and endorsement.

According to Section 69 a Court issuing a summons to a witness may, in addition to and simultaneously with
the issue of such summons, direct a copy of the summons to be served by registered post addressed to the
witness at the place where he ordinarily resides or carries on business or personally works for gain and when
an acknowledgement is signed by the witness or an endorsement is made by a postal employee that the
witness refused to take delivery of the summons has been received, the Court issuing the summons may
declare that the summons has been duly served.

In the case of Central Bank of India Vs DDA, it was decided that the branch manager is the local manager and
if summon has been served on him it shall be considered that summon has been delivered to the Company.

Que: Explain the substituted mode of service of summon and its effect.
WARRANT: SECTION 70
1. Warrant means a permission given by the magistrate to the police officer or any other officer authorized
by the court to make an arrest.
2. A valid warrant must fulfill the following conditions :
a) It must be written.
b) It must contain the name of the officer who is to execute the warrant.

Dushyant Jain^^ 150- -

 c) It must also state the name of the person to be arrested and description of his offence.
d) It must be signed by the presiding officer of the court.
e) It must have seal of the court.
f) A warrant will remain valid until an arrest is made or is cancelled by the court.
Normally there are two types of warrants i.e. bailable warrant and non bailable warrant in case of bailable
warrant the warrant specifies that the person arrested may be released against a bond with sureties for his
appearance before the Court on a specified date and time and the warrant which is not a bailable warrant is a
non bailable warrant.
Que: Explain the requisites of a ‘warrant of arrest’. What is the time limit within which the police officer
should bring the person arrested before the court

Difference between summons and Warrants

Summons Warrants
Summon is a notice to appear before a magistrate Warrant is a more drastic step it is issued in serious
cases after a summon is disobeyed or if the accused
has knowingly avoided the service of summons.
The person who absconds to avoid service of summon The person who absconds to avoid service of summon
is not punishable is punishable under IPC
There is a provision of substituted service of summons There is no provision for substituted service of
warrants.
Summons are issued in 2 copies Warrant is issued only one copy.
Issue of summon is not drastic Issue of warrant is more drastic step

PROCLAMATION AND ATTACHMENT

If the warrant issued by the court remains unexecuted the court may take following steps:
a) Issuing proclamation : Section 82.
b) Attachment of property: Section 83.

1) Proclamation :
Proclamation means a formal declaration / Announcement, when a warrant issued by the court remains
unexecuted and the court believes that the accused is absconding to avoid the warrant issued against him.
The court can publish a written proclamation to compel his appearance in the court. The proclamation
must specify the date and time for appearance. The accused must present himself in the court or any
other place specified by the court in a period of 30 days or more (not less than 30 days) from the date of
issuing proclamation.

The proclamation should be published as follows:

(a) it shall be publicly read in some conspicuous place of the town or village in which such person ordinarily
resides;

(b) it shall be affixed to some conspicuous part of the house or homestead in which such person ordinarily
resides or to some conspicuous place of such town or village;

(c) a copy of proclamation shall be affixed to some conspicuous part of the Courthouse;

(d) the Court may also, if it thinks fit, direct a copy of the proclamation to be published in a daily newspaper
circulating in the place in which such person ordinarily resides.

2) Attachment: If the accused does not appear within the time specified by the Court, after issuing
proclamation, the court can pass an order for attachment of the properties of the accused.

Dushyant Jain^^ 151- -

 Attachment is the step followed after proclamation.
The purpose of attaching the properties is not to punish the accused but to compel his presence in the
court.
Que: What actions can the Court take if the accused does not appear in the Court under the provisions of
CRPC.

Proclamation Attachment
It is issued when the court is satisfied that the The object of attachment is to compel the
warrant has been issued but the accused is appearance of the person agaist whom proclamation
absconding. is already issued, it is a penalty and may also result in
sale of the property.
The mere fact that the accused could not be found is The object of attachment is not to punish but to
not enough for issue of proclamation. compel his appearance.

Que: What are the remedies under Criminal Procedure Code, where a warrant remains unexecuted ?
SUMMONS TO PRODUCE
Sometimes it is necessary that a person should produce a document or other thing which may be in his
possession or power for the purposes of any investigation or inquiry under this Code. This can be compelled to
be produced by issuing summons (Sections 91 and 92) or a warrant (Sections 93 to 98).
This kind of summon may be issued by the Court or or a police officer incharge of the police station for
production of document or thing which is considered necessary or desirable for purpose of investigation,
inquiry or trial or other proceedings.

SEARCH WARRANT: Section 93

A search warrant means a permission to make a search for any purpose as specified by the court. Search
warrant can be issued by the court in the following cases:
i) Where the court believes that the person summoned has documents related to the case but will not
produce it.
ii) Where the court believes that any document or information which is not known to the court may be in
possession of any person.
iii) When a general inspection is necessary.
(Note: However, no search warrant can be issued to take search of the documents which are in possession of
postal authorities and documents relating to official communication & documents under banker book evidence
act).

As per section 94, warrant may be issued and police officer may be authorised to search a place where any
stolen property is kept or deposited or is sold or where any objectionable object is kept and for the
production of same.

As per section 95, if any newspaper or any document contain any punishable matter under IPC in the opinion
of State Governement then the State Government by issuing notification declare that every copy of document
or the newspaper be forfeited to Government and then the police officer may seize all such documents and
newspapers.

In terms of Section 97 any District Magistrate, Sub-Divisional Magistrate or Magistrate of the first class who has
reasons to believe that any person is confined under such circumstances that the confinement amounts to an
offence, he may issue a search warrant for the search of the person so confined. The person if found shall be
immediately produced before the Magistrate for making such orders as in the circumstances of the case he
thinks proper.

Dushyant Jain^^ 152- -

Search by Police Officer

Section 165 authorises general search if the police officer has reason to believe that anything necessary for
the purpose of an investigations may be found.
The officer acting under this section must record in writing his reasons for making of a search. But, the
illegality of search will not affect the validity of the articles.

Whenever any person is arrested or detained in custody and it appears that the investigation cannot be
completed within the period of twenty four hours and if there are grounds for believing that the accusation or
information is well founded, the officer in charge of the police station or other competent investigation
officer shall promptly transmit to the nearest judicial Magistrate a copy of the entries in the diary relating to
the case, and shall forward the accused to such Magistrate at the same time.

The Magistrate may then authorise the detention of the accused in custody for a term not exceeding of fifteen
days.

Every investigation must be completed without undue delay. On completion of investigation, the competent
police officer under the Code shall forward a police report with the prescribed details to a Magistrate
empowered to take cognizance of the offence and send along with the report all documents or relevant
extracts on which the prosecution intends to rely.

In the case of State of Punjab Vs Balbir Singh it was decided that if the provisions relating to search section
100 and 165 are not followed than it will amout to an irregularity.

Whenever any person is arrested or detained in custody and it appears that the investigation cannot be
completed within the period of twenty four hours as laid down in Section 57 and that there are grounds for
believing that the accusation or information is well founded, the officer in charge of the police station or
other competent investigation officer shall promptly transmit to the nearest judicial Magistrate a copy of the
entries in the diary relating to the case, and shall forward the accused to such Magistrate at the same time
(required to be mentioned day by day under Section 172).

The Magistrate may then authorise the detention of the accused in custody for a term not exceeding of fifteen
days. (Section 167)

Every investigation must be completed without undue delay. On completion of investigation, the competent
police officer under the Code shall forward a police report with the prescribed details to a Magistrate
empowered to take cognizance of the offence and send along with the report all documents or relevant
extracts on which the prosecution intends to rely. (Section 173)
LIMITATION PERIOD IN RESPECT OF CRIMINAL OFFENCES
Limitation period means the time within which Court should be approached for getting relief:
✓ If the offence is committed which is punishable with fine only limitation period is 6 months.
✓ If the offence is committed in which the imprisonment can be given upto 1 year, limitation period is 1
year.
✓ In case of 1 to 3 years imprisonment in this case limitation period is 3 year.
✓ No limitation period in case of more than 3 years imprisonment.
COMMENCEMENT OF PERIOD OF LIMITATION
The limitation period for filing a complaint commences on the following date
1. On the day when offence is committed
2. If the offence comes into knowledge at later date then the period of limitation begins from the day when
it comes to the knowledge of aggrieved party or police officer.
3. If the identity of offender is unknown then the period of limitation commences on the day on which the
identity of offender comes into the notice of aggrieved or police officer, whichever is earlier

Dushyant Jain^^ 153- -

The following period can be excluded from the period of limitation
1. The period during which wrong prosecution was prosecuted(in good faith)
2. If the notice of prosecution was given then the period of notice.
3. The period in which the offender absconds or conceals himself.
Continuing offence — In the case of a continuing offence, a fresh period of limitation begins to run at every
moment during which the offence continues. (Section 472)

Extension of period of limitation — The Court may take cognizance of an offence after the expiry of the
period of limitation if it is satisfied that (i) the delay is properly explained or (ii) it is necessary to do so in the
interests of justice. (Section 473)

SUMMARY TRIALS: Section 260 - 265

1) Summary Trial means speedy disposal of the cases.
2) The offences which are punishable for a term not exceeding 2 years can be tried summarily.
3) The following magistrates are authorized for Resolving a case by summary trial :
a) Chief Judicial Magistrate (C.J.M.)
b) Any magistrate of first class who is authorized by High Court.

The offences which can be tried summarily

1) Offences which are punishable for an imprisonment up to 2 years.
2) In the cases related to theft and the value of stolen property does not exceed Rs. 2000.
3) If any stolen property is found in possession of a person and the value of stolen property does not exceed
Rs. 2000
4) If any person conceals or disposes of any stolen property and the value of stolen property does not exceed
Rs. 2000.
5) If any person attempts to breach the peace.
When magistrate accepts any case for a summary trial and during the trial the magistrate believes that it is
undesirable to try the case summarily, the magistrate may recall the witness and re-hear them in a manner
provided in a code.
Under summary trial maximum 3 months’ imprisonment can be granted.

Record in Summary Trial:

If magistrate accepts any case for summary trial he must maintain the following records:
i) Serial Number of case.
ii) The date of commission of offence,
iii) The date of report or complaint etc.
iv) Name of complainant
v) The name, parentage and address of the accused
vi) The finding
vii) The date on which proceedings terminated
viii) The sentence or the final order

Judgment in Summary Trial :

Every judgment given under summary trial must be signed by magistrate along with reasons.
To try a case as summarily is purely a matter of discretion of the court, the magistrate or the court cannot be
compelled to try a matter summarily.

Inherent Powers of High Court – Section 482

As per section 482 of CRPC, no provision in the CRPC shall affect or limit the inherent powers of High Courts
to make such orders as may be necessary to give effect to any order which is made under the CRPC by any
court or any order that is required to provide justice to any party. So section 482 gives administrative as well
as judicial powers to High Courts such as the power to cancel any FIR, to cancel any investigation or criminal

Dushyant Jain^^ 154- -

proceedings pending before the High Court. The High Court can take cognizance of any miscarrage of justice
by any court and can take action under the powers given to it by section 482. These powers can not be
curtailed by any other provision of CRPC.

In the case of Madhu Limye Vs State of Maharashtra, the Supreme Court has made the following principles
that would govern the inherent powers of the High Courts:

1. The power under section 482 can not be used, if there is a specific provision in the CRPC to resolve
the grievence of the aggrieved party.
2. It should be exercised very rarely and only to prevent the abuse of justice or to secure the ends of
justice.
3. The power can not be exercised against any express bar or restriction given under any other provision
in the code.

It is a well settled principal that the powers under section 482 will be exercised only when no other
remedy is available to the litigant (party to any case) under any other provision of CRPC.

(example ke liye police aap ko jabarjasti pareshan kar rahi hai aur aap se paise mang rahi hai, aur jhoothi
FIR aap ke against register kari hai to aap us case main High Court ko apply kar sakte hai section 482 ke
andar kafi important section hai yeh)

SECTION 190 OF CRPC DEALS WITH COGNIZANCE OF OFFENCE BY THE MAGISTRATE

In the case of Mohhamadsafi it was decided that the court was allowed to accept any case only when the
conditions relating to start of the proceedings are fulfilled, otherwise the court does not have any jurisdiction
to such case.
The magistrate of first class and of second class can accept a case if:
1. He receives a complaint
2. A police report is received
3. Information received from any other person
4. A case of his own knowledge

When a Magistrate takes cognizance of an offence upon information received from any person other than a
police officer or upon his own knowledge then the accused is informed that he is entitled to to have the case
inquired into or tried by another Magistrate and if the accused objects to further proceedings before the
Magistrate taking cognizance, the case is transferred to other Magistrate as is specified by the Chief Judicial
Magistrate. (Section 191)
The Chief Judicial Magistrate may after taking cognizance of an offence transfer the case for inquiry or trial
to any competent Magistrate subordinate to him. Similarly a first class Magistrate may transfer a case to such
other competent Magistrate to try as the Chief Judicial Magistrate specifies. (Section 192)

Cognizance of an offence by Courts of Session (Sections 193 and 194)

The Court of Session does not take cognizance of any offence, as a Court of original jurisdiction unless the
case has been given to it by a competent Magistrate.

The Additional Sessions Judge and Asstt. Sessions Judge try such cases as the High Court may direct or the
Sessions Judges may make over to them.

Complaints to Magistrate

A Magistrate taking cognizance of an offence on complaint examines the complainant and the witnesses if any
upon oath and then the substance of such examination is reduced to writing and signed by the complainant
and witnesses and also by the Magistrate.

Dushyant Jain^^ 155- -

However, when the complaint is made in writing, the Magistrate need not examine the complainant and the
witnesses.

If the Magistrate makes over the case to another Magistrate, after examining the complainant and the
witnesses, they need not to be re-examined by the latter Magistrate.

If a complaint is made to a Magistrate who is not competent to take cognizance of the offence, he shall return
it for presentation to the proper Court if the complaint is in writing, and if the complaint is oral, he should
direct the complainant to the proper Court.

The Magistrate enquiring into a case may take evidence of witnesses on oath but where the offence is triable
by the Court of Session; he shall call upon the complainant to produce all his witnesses and examines them on
oath. He may dismiss the complaint if he believes there is no sufficient ground for proceeding and may record
his reasons for doing so.

On the other hand if the Magistrate is of opinion that there is sufficient ground for taking cognizance of an
offence he may either issue summons for attendance of the accused.

Every charge under this Code shall state the offence with which the accused is charged specifying the law and
the name of the offence, particulars of time and place of the alleged offence, if more than one offence is
committed by same person then he may be charged at one trial for every such offence.

As per section 258 if a person is convicted or accused for an offence then he shall not be liable to tried again
for the same offence, however this can be done with the consent of same court or any superior court or with
the consent of same magistrate.

As per section 353 judgment in every trial in any Criminal Code of original jurisdiction shall be pronounced in
open Court by the Presiding officer immediately after the termination of the trial or at some subsequent time
of which notice shall be given to the parties or their pleaders:
(a) by delivering the whole of the judgment; or
(b) by reading out the whole of the judgment; or
(c) by reading out the operative part of the judgment and explaining the substance of the judgment in a
language which is understood by the accused or his pleader.
As per section 362 once the court has signed its judgment, it shall not be reviewed or altered except in a
manner provided in the court however critical or arithmetic error may be corrected by the court.

No appeal shall be made for any judgment or order except in manner provided in the code, if the criminal
court acquits any person then the state government may order the public prosecutor to file an appeal to any
superior court to pass the judgment or order.

No appeal shall be dismissed summarily unless the appellant or his pleader has had a reasonable opportunity
of being heard in support of the same. An Appellate Court may if it thinks additional evidence to be necessary
shall record its reasons and may either take such evidence itself or direct it to be taken by a Magistrate.

If an appeal lies, but an applications for revision has been made to the High Court by any person and the High
Court is satisfied that such application was made under the erroneous belief that no appeal lies thereto, the
High Court may treat the application for revision as a petition of appeal and deal with the same accordingly.

Under Section 438, provisions have been made for a person who has reason to believe that he may be arrested
on an accusation of having committed a non-bailable offence, he may apply to the High Court or the Court of

Dushyant Jain^^ 156- -

Session for a direction and that Court may if it thinks fit direct that in the event of such arrest, the person
shall be released on bail on such conditions which the Court may include in such directions.

Bail may be taken when any person other than a person accused of a non-bailable offence, is arrested or
detained without warrant by an officer-in-charge of a police station or is brought before a Court, and is
prepared at anytime while in custody or at any stage of the proceedings before such Court to give bail, such
person shall be released on bail. Such police officer or the Court if it thinks fit may instead of taking bail from
such person discharge him on executing a bond without sureties for his appearance as may be required
(Section 436).

Compounding of Offence
Section 320 of the [Link] enumerates the provisions related to compounding of offences. Compounding means
settlement of offence committed by a person. The settlement must be with the consent of the court of law.
There may be the times when parties to a suit do not want to continue further proceedings in the court and
they want to settle it out of the court amicably, then the compounding comes into picture. In such case,
future proceedings do not take place in the court.

section of iPC Name of the offence Who can compound the offence

Section 325, 337, 338 IPC) Voluntarily causing grievous hurt. To whom hurt has been caused

Section 357 IPC Assault or criminal force in The person assaulted or to whom
attempting wrongfully to confine a the force was used
person.
Section 381 IPC Theft, by clerk or servant of The owner of the property stolen.
property in possession of master.

Section 406, 408 IPC Criminal breach of trust. The owner of the property on which
a breach of trust has occurred.

Section 418 IPC Cheating with knowledge that The person who has been cheated.
wrongful loss may ensue to a person
whose interest offender is bound to
protect.
Section 420 IPC Cheating and dishonestly inducing The person who has been cheated.
delivery of property.

Bail in cases of bailable offences (Section 436)

According to section 436, if a person accused of an offence other than non-bailable offence (i.e. Bailable
Offence) is arrested or detained without warrant by an officer in charge of a police station, or appears or is
brought before a Court, and he is prepared to give bail, such person shall be released on bail.

Further, if such officer or Court, if he or it thinks fit, may, and shall, if such person is indigent and is unable
to furnish surety, instead of taking bail from such person, discharge him on his executing a bond without
sureties for his appearance.

Where a person is unable to give bail within a week of the date of his arrest, it shall be a sufficient ground for
the officer or the Court to presume that he is an indigent person for the purposes of above.

However, where a person has failed to comply with the conditions of the bail-bond as regards the time and
place of attendance, the Court may refuse to release him on bail, when on a subsequent occasion in the same
case he appears before the Court or is brought in custody and any such refusal shall be without prejudice to

Dushyant Jain^^ 157- -

the powers of the Court to call upon any person bound by such bond to pay the penalty thereof under section
446 of Cr. P. C.

Bail in cases of Non-bailable Offences (Section 437)

When any person accused of, or suspected of, the commission of any non-bailable offence is arrested or
detained without warrant by an officer in charge of a police station or appears or is brought before a Court
(other than the High Court or Court of session), he may be released on bail but subject to:

(i) such person shall not be so released if there appear reasonable grounds for believing that he has been
guilty of an offence punishable with death or imprisonment for life;
(ii) such person shall not be so released if such offence is a cognizable offence and
(a) he had been previously convicted of an offence punishable with death, imprisonment for life or
imprisonment for seven years or more, or
(b) he had been previously convicted on two or more occasions of a cognizable offence punishable with
imprisonment for three years or more but not less than seven years.

However, the Court may direct that a person referred to in clause (a) or clause (b) above be released on bail
if such person is under the age of sixteen years or is a woman or is sick or infirm.
Further, the Court may also direct that a person referred to in clause (b) above be released on bail if it is
satisfied that it is just and proper so to do for any other special reason.
The bail may also be cancelled.

If, in a case triable by a Magistrate, the trial of a person accused of any non-bailable offence is not concluded
within a period of sixty days from the first date fixed for taking evidence in the case, such person shall, if he
is in custody during the whole of the said period, be released on bail to the satisfaction of the Magistrate,
unless for reasons to be recorded in writing, the Magistrate otherwise directs.

If, at any time, after the conclusion of the trial of a person accused of a non-bailable offence and before
judgment is delivered, the Court is of opinion that there are reasonable grounds for believing that the
accused is not guilty of any such offence, it shall release the accused, if he is in custody, on the execution by
him of a bond without sureties for his appearance to hear judgment delivered.

Bail to require accused to appear before next appellate Court

Before conclusion of the trial and before disposal of the appeal, the Court trying the offence or the Appellate
Court, shall require the accused to execute bail bonds with sureties, to appear before the higher Court as and
when such Court issues notice in respect of any appeal or petition filed against the judgment of the respective
Court and such bail bonds shall be in force for six months.

If such accused fails to appear, the bond stand forfeited and the procedure under section 446 shall apply
which is related to the procedure for forfeiting the bail bond.(Section 437A)

Anticipatory bail (Section 438)

When a person has reason to believe that he may be arrested on an accusation of non-bailable offence, he
may apply to the High Court or the Court of Session for a necessary direction and that Court may, direct that
in the event of such arrest, he shall be released on bail.

When the High Court or the Court of Session grants bail under section 438(1), it may include such conditions,
as it may think fit, including:
(i) a condition that the person shall make himself available for interrogation by a police officer as and
when required;

Dushyant Jain^^ 158- -

(ii) a condition that the person shall not, directly or indirectly, make any inducement, threat or promise
to any person acquainted with the facts of the case so as to dissuade him from disclosing such facts to the
Court or to any police officer.
(iii) a condition that the person shall not leave India without the previous permission of the Court;
(iv) such other condition as may be imposed under section 437(3), as if the bail were granted under that
section.

CONTINUING OFFENCES
Continuing offence means an offence which is committed for a very long period. It is neither clearly defined
in the Indian Penal Code or [Link]. Whether the offence is continuing one or not, it clearly depends on its
nature.
The offence which is happening and continuing again and again comes in the category of continuing offence.

Section 472 of Cr. PC mentioned the term Continuing offence and states that in the case of a continuing
offence, a fresh period of limitation shall begin to run at every moment of the time during which the offence
continues.

In udai shankar awasthi v. state of u.P. (2013), the Supreme Court observed that the expression, ‘continuing
offence’ has not been defined in the Cr.P.C. because it is one of those expressions which does not have a
fixed connotation, and therefore, the formula of universal application cannot be formulated in this respect.

In Gokak Patel volkart ltd. v. Dundayya Gurushiddaiah hiremath (1991) the Supreme Court held that the
question whether a particular offence is a ‘continuing offence’ or not must, therefore, necessarily depend
upon the language of the statute which creates that offence, the nature of the offence and the purpose
intended to be achieved by constituting the particular act as an offence.

in Balakrishna savalram Pujari Waghmare & ors. v. shree Dnyaneshwar Maharaj sansthan & ors., air 1959 sC
798, the Court observed that a continuing offence is an act which creates a continuing source of injury, and
renders the doer of the act responsible and liable for the continuation of the said injury. In case a wrongful
act causes an injury which is complete, there is no continuing wrong even though the damage resulting from
the said act may continue. If the wrongful act is of such character that the injury caused by it itself
continues, then the said act constitutes a continuing wrong. The distinction between the two wrongs
therefore depends, upon the effect of the injury.

OFFENCES AgAINST PROPERTY

Chapter XVII (Section 378 to 402) of the Indian Penal Code, 1860, provides the provisions and law related to
the offences against property.

The Property is of two kinds i.e. movable and immovable. The offence which is committed in regard to any
kind of property whether it is movable or immovable is punishable under the provisions of the Chapter XVII of
the Indian Penal Code.

Theft (Section 378)

Whoever, intending to take dishonestly any movable property out of the possession of any person without that
person’s consent, moves that property in order to such taking, is said to commit theft.

The essentials elements of theft are:

1. There should an intention to dishonestly take the property.

2. The property should be movable property.

3. The property should be taken out of the possession without that person’s consent.

Dushyant Jain^^ 159- -

4. The property should be moved in order to take that property.

Explanation 1. A thing so long as it is attached to the earth, not being movable property, is not the subject of
theft; but it becomes capable of being the subject of theft as soon as it is severed from the earth.

Example: Wood of the tree.

Explanation 2. A person is said to cause a thing to move by removing an obstacle which prevented it from
moving or by separating it from any other thing, as well as by actually moving it.

Example: Opening the tap for the purpose of taking the expensive liquid kept thereunder.

situations which constitute theft

Illustration 1- A cuts down a tree on Z’s ground, with the intention of dishonestly taking the tree out of Z’s
possession without Z’s consent. Here, as soon as A has severed the tree in order to such taking, he has
committed theft.

Illustration 2- A puts a bait for dogs in his pocket, and thus induces Z’s dog to follow it. Here, if A’s intention
be dishonestly to take the dog out of Z’s possession without Z’s consent, A has committed theft as soon as Z’s
dog has begun to follow A.

situations which do not constitute theft

Illustration 3- Z, going on a journey, entrusts his plate to A, the keeper of a warehouse, till Z shall return. A
carries the plate to a goldsmith and sells it. Here the plate was not in Z’s possession. It could not therefore be
taken out of Z’s possession, and A has not committed theft, though he may have committed criminal breach
of trust.

Illustration 4- A finds a ring lying on the highroad, not in the possession of any person. A, by taking it,
commits no theft, though he may commit criminal misappropriation of property.

Punishment for theft

Section 379 of IPC provides the punishment for theft and states that whoever commits theft shall be punished
with imprisonment of either description for a term which may extend to three years, or with fine, or with
both.

However, there are different punishment for theft depending upon situation, which may understood with the
help of below:

1. Theft in dwelling house, etc punishable with Imprisonment of either description for a term which may
extend to seven years, and shall also be liable to fine.

[Link] by clerk or servant of property in possession of master - punishable with, Imprisonment of either
description for a term which may extend to seven years, and shall also be liable to fine.

[Link] after preparation made for causing death, hurt or restraint in order to the committing of the theft,
punishable with Rigorous imprisonment for a term which may extend to ten years, and shall also be liable to
fine

Extortion (Section 383)

Whoever intentionally puts any person in fear of any injury to that person, or to any other, and thereby
dishonestly induces the person so put in fear to deliver to any person any property, or valuable security or

Dushyant Jain^^ 160- -

anything signed or sealed which may be converted into a valuable security, commits “extortion”.

The essentials elements of theft are:

1. There should be an intention to put any person in fear of any injury.

2. By that fear of injury, dishonestly induces the person so put in fear to deliver any property, or
valuable security or anything signed or sealed which may be converted into a valuable security.

situations which constitute extortion

Illustration 1: A threatens to publish a defamatory libel concerning Z unless Z gives him money. He thus
induces Z to give him money. A has committed extortion.

Illustration 2: A threatens Z that he will keep Z’s child in wrongful confinement, unless Z will sign and deliver
to A a promissory note binding Z to pay certain monies to A. Z sings and delivers the note. A has committed
extortion.

Punishment of Extortion

Section 384 provides the punishment for extortion and states that whoever commits extortion shall be
punished with imprisonment of either description for a term which may extend to three years, or with fine, or
with both.

However, there are different punishment for extortion depending upon situation, which may understood with
the help of below:

Putting person in fear of injury in order to commit extortion - punishable with, Imprisonment of either
description for a term which may extend to two years, or with fine, or with both.

Extortion by putting a person in fear of death or grievous hurt - punishable with, Imprisonment of either
description for a term which may extend to ten years, and shall also be liable to fine.

Putting person in fear of death or of grievous hurt, in order to commit extortion - punishable with,
Imprisonment of either description for a term which may extend to seven years, and shall also be liable to
fine.

Extortion by threat of accusation of an offence punishable with death or imprisonment for life, etc. -
punishable with Imprisonment of either description for a term which may extend to ten years, and shall also
be liable to fine; and, if the offence be one punishable under section 377 of this Code, may be punished with
imprisonment for life.

Putting person in fear or accusation of offence, in order to commit extortion - punishable with, Imprisonment
of either description for a term which may extend to ten years, and shall also be liable to fine; and, if the
offence be punishable under section 377 of this Code, may be punished with imprisonment for life.

CASE LAW

In Jadunandan singh v. Emperor, the accused, along with others, assaulted two persons and forcibly took their
thumb impressions on three blank papers. The court observed that cases frequently occur which turn on the
difference between the giving and taking of thumb impression. The forcible taking of the victim’s thumb
impression does not necessarily involve inducing the victim to deliver papers with thumb impressions.
Therefore, the offence of extortion is not established. It is not a case of theft because papers were not taken

Dushyant Jain^^ 161- -

from the victim’s possession. It is a case of criminal force or assault (Sec. 325).

Distinction between Extortion and Theft

Both are different from in following respects:

i. Extortion is done by wrongfully getting the consent of the owner while there is no present of consent
in case of theft.

ii. Both movable and immovable property may be the subject of an extortion whereas theft is limited to
movable property only because of its nature.

Robbery (Section 390)

As per Section 390 of IPC, in all robbery there is either theft or extortion.

When theft is robbery. — Theft is “robbery” if, in order to the committing of the theft, or in committing the
theft, or in carrying away or attempting to carry away property obtained by the theft, the offender, for that
end voluntarily causes or attempts to cause to any person death or hurt or wrongful restraint, or fear of
instant death or of instant hurt, or of instant wrongful restraint.

When extortion is robbery. —Extortion is “robbery” if the offender, at the time of committing the extortion, is
in the presence of the person put in fear, and commits the extortion by putting that person in fear of instant
death, of instant hurt, or of instant wrongful restraint to that person or to some other person, and, by so
putting in fear, induces the person so put in fear then and there to deliver up the thing extorted.

The offender is said to be present if he is sufficiently near to put the other person in fear of instant death, of
instant hurt, or of instant wrongful restraint.

situations which constitute robbery

Illustration 1: A holds Z down, and fraudulently takes Z’s money and jewels from Z’s clothes, without Z’s
consent. Here A has committed theft, and, in order to the committing of that theft, has voluntarily caused
wrongful restraint to Z. A has therefore committed robbery.

situation which does not constitute robbery

Illustration 4: A obtains property from Z by saying “Your child is in the hands of my gang, and will be put to
death unless you send us ten thousand rupees”. This is extortion, and punishable as such: but it is not
robbery, unless Z is put in fear of the instant death of his child.

Punishment for Robbery

Section 392 of IPC provides the punishment for robbery and states that whoever commits robbery shall be
punished with rigorous imprisonment for a term which may extend to ten years, and shall also be liable to
fine; and, if the robbery be committed on the highway between sunset and sunrise, the imprisonment may be
extended to fourteen years.

Punishment for attempt of robbery

As per section 393 of IPC, whoever attempts to commit robbery shall be punished with rigorous imprisonment
for a term which may extend to seven years, and shall also be liable to fine.

Dushyant Jain^^ 162- -

Dacoity (Section 391)

When five or more persons conjointly commit or attempt to commit a robbery, or where the whole number of
persons conjointly committing or attempting to commit a robbery, and persons present and aiding such
commission or attempt, amount to five or more, every person so committing, attempting or aiding, is said to
commit “dacoity”.

The essentials elements of Dacoity are:

1. There should be at least five persons by active participation or aiding.

2. They will commit robbery or its attempt.

3. Every person whether committing or aiding is said to commit dacoity.

CASE LAW

In the case of Emperor v. lashkar, a gang of five dacoits, one of whom had a gun, raided the house of X. After
looting, while they were running away with their booty, they shot down one villager. It was held that the
murder committed by the dacoits while carrying away the stolen property was murder committed in the
commission of dacoity, and every offender was therefore liable for the murder.

Punishment for dacoity

Whoever commits dacoity shall be punished with imprisonment for life, or with rigorous imprisonment for a
term which may extend to ten years, and shall also be liable to fine.

However, there are different punishment for robbery and/or dacoity depending upon situation.

Dishonestly receiving stolen property

Whoever dishonestly receives or retains any stolen property, knowing or having reason to believe the same to
be stolen property, shall be punished with imprisonment of either description for a term which may extend to
three years, or with fine, or with both.

• Criminal Misappropriation of Property :

Dishonest misappropriation of the property – Section 403 Section 404 – Dishonest

Misappropriation of property
possessed by deceased
person at the time of his
death.
When a person dishonestly misappropriates or converts for his own use, If a person misappropriates or
the properly belonging to other person. converts the property for his
own use knowing that the
The essential elements of section 403 are: property was in possession of
Accused must act dishonestly + He Must misappropriate the Property. deceased person @ the time
of his death and the property

Dushyant Jain^^ 163- -

When a person intends to make a wrongful gain for himself and cause is not returned to the person
wrongful loss to other person, he acts dishonestly. who is legally entitled to such
property.
Punishment
2 years imprisonment or fine or both Example: Mr. V died and the
gold jewelry that was in his
e.g. if a person takes watch of other person believing that such other possession during his death
person has no problem. was kept by his servant and
If X goes in the library of Y in absence of Y and takes a book from library was not returned to the son of
believing implied consent of Y for the purpose of reading the book, it is deceased person or the other
not theft but if X later on sells the book without the knowledge and person legally entitled for
consent of Y, for his own benefit, then it’s a crime under section 403. such hold jewelry – servant is
If one of the joint owners of property sells the property without the guilty under section 404.
consent of the other joint owner and keeps the entire amount of sale with
himself, it results in crime under this section. Punishment

3 years imprisonment + fine

When a person discloses that certain property does not belong to him but and if the person was clerk or
still keeps the property - Guilty. servant of deceased then the
punishment is upto 7 years
A person finds a bank note, from the note it appears that the note belongs imprisonment + fine.
to some other party but such person still keeps the note – guilty

When a person finds a purse and he keeps the purse with the intention of
returning the purse to the owner but, starts using the purse – guilty.
Even for a single time if dishonest misappropriation is done it amounts to
misappropriation under this section.
A person finds promissory not belonging to Mr k, such person pledges the
bank note and obtains a loan for his own benefit and he intends to restore
the promissory note to Mr K in future, it’s a crime under this section.
A person who finds stolen property and keeps it with himself for protecting
it or for restoring it to the owner and does not misappropriate the
property dishonestly, it is not a crime under this section, but if such
person, has the means of discovering the owner but still does not discover
the owner neither gives a notice to the owner and also starts using the
property + he waits for owner to claim the property in this case he will be
guilty under this section.
In the case of Muhammad Ali Vs State, electric wires were seized from
the house of the accused, the electric department of the state did not
claim the wires as stolen property. The accused had purchased the wires
from the scrap dealer and did not have the receipt, the court decided
that, the accused did not act dishonestly.
In the case of U Dhar Vs State of Jharkhand, it was decided by Supreme
Court, that if the contractor receives the payment but does not make
payment to the sub contractor, then it will not be a misappropriation as
the money that comes to contractor is his own money and not the money
of sub contractor, and this case should be treated as a civil case and not a
criminal case.
Que: There is a contract between A and contractor B. There is another contract between B and sub-contractor
C to execute same work. On completion of work C demanded money from B. On non-payment C filed a
criminal complaint against B alleging that B having received the money from A had misappropriated the
money. Discuss with reasons the matter of the case and offence committed by B, if any.

Dushyant Jain^^ 164- -

Que: Sameer finds ` 10,000 on the high road, not knowing to whom the rupees belong, he picks up the rupee. Has
Sameer committed the offence of dishonest misappropriation of property under Section 403 of The Indian Penal
Code, 1860 ? Explain.

CRIMINAL BREACH OF TRUST : SECTION 405

A person who was entrusted with a property dishonestly mis appropriates the property or converts the
property for his own use or disposes of the property in violation of any law and breaches the trust.
Punishment.

A person who deducts the provident fund contribution as per the provisions of provident fund and
miscellaneous provisions Act, but does not deposit the same with the government - Liable under section 405
→ 7 years jail.

A person who deducts insurance contribution from the wages of the employees under ESIC Act, but does not
deposit it with ESIC → liable u/s. → 405.

ESSENTIAL ELEMENTS OF CRIMINAL BREACH OF TRUST

a) Accused must be entrusted with a property and he must have control over it.
b) He uses the property
c) He violates the law.
d) He breaches the trust:
1) By not following the manner given in law regirding the manner in which trust should be
fulfilled or discharged, or
2) By not following the contract under which the manner of discharging trust is given.

Criminal Breach → This provision, section 405, applies to both moveable and immoveable property.

In the case of VR Dalal Vs Yugendra Naraji Thakkar, it was decided that, in the case of criminal breach of
trust, entrusting or giving the property is important, if it is missing the case will not be considered as criminal
breach of trust. Breach of trust is a civil wrong but if it involves mens rea, then it becomes a criminal case.

In the case of Pratibha Rani Vs, Sooraj Kumar, the in-laws, of the aggrieved refused to return the “Stree
Dhan”, when the aggrieved was separated from her husband, the Court decided that the refusal to return the
Stree Dhan is a criminal breach of trust.

In the case of Onkar Nath Mishra Vs State of Delhi, it was decided that, in criminal breach of

Dushyant Jain^^ 165- -

trust, 2 parts are involved, the first is having an obligation related to control of the property which is
acquired by the accused and second is dealing dishonestly with the property against the obligations on the
property.

In the case of SK Alagh Vs State of UP and others, it was decided that if the demand drafts were issued in
the name of the Company and company neither supplied the goods nor returned the money then the managing
director of the company can not be held vicariously liable under this section, if nothing is mentioned in the
law regarding creation of liability on the managing director.

Que: A’ is a warehouse-keeper. ‘Z’ going on a journey, entrusts his furniture to A, under a contract that it
shall be returned on payment of a stipulated sum for warehouse room. A dishonestly sells the goods. Discuss,
when offence, if any, committed by A ?

If any case has to be punished as per section 405, then following elements are to be present:

1. The person who gives property must have confidence or trust in the person
taking the property and a fiduciary relation has to be created.
2. The Accused must be in the position to control the property.
3. Property includes movable and immovable property.
4. It must be proved that accused dishonestly used the property or made
unauthorized use. Dishonest intention is essential fact which has to be
proved to bring an offence under this section.

As per section 406, the criminal breach of trust is punishable with 3 years of imprisonment or fine or both.

As per section 407, If a person is a carrier warehouse keeper, godown owner or incharge of warehouse and
dishonestly misappropriates the property.

OR

As per section 408, if the clerk or servant, dishonestly misappropriates the property - Punishment →upto 7
years jail + fine.

As per section 409, if criminal breach of trust is done by public servants, attornies, banker, agent, merchants,
banks, advocates, brokers.

The punishment is life imprisonment or 10 years imprisonment + fine.

The punishment is more harsh for the persons who enjoy a special status. The law wants to punish the
persons more strictly who are into fiduciary relationship, than the strangers. The persons who stand in a
fiduciary relationship have more responsibility for the honesty. (Vishwas todna kafi galat mana gaya hai)

In the case of Bagga Singh Vs State of Punjab, the accused was the taxation clerk with the municipal
corporation. He collected tax and deposited the tax after a period of 5 months and in the court he stated that
the money was given to the cashier and the cashier did not deposit the money with the municipal authority,
the cashier was the co-accused in the case and he proved that no money was given to him by the accused, the
Court decided that the accused was guilty under section 409.

In the Case of Bacchu Singh Vs State of Haryana, The Gram Sachiv collected Rs 648 from the villagers in
account of house tax and also issued receipts for the same but did not deposit the amount in the Government
treasury, it was decided by the Supreme Court on an appeal that its an offence under section 409 of IPC.

In the case of Girish Saini Vs State of Rajasthan, a public servant made personal use of stationary as no record
of such stationary was found in the register which was maintained, he was the incharge of Government store,
he stated that he had maintained a register for the stationary, and all the record of stationary was in the
register but he could not prove the same, so it was decided that he committed criminal breach of trust.

Dushyant Jain^^ 166- -

SECTION 415 – 420 → CHEATING

Section 415 : If a person deceives any person or convinces any person to deliver any property or omit to do
any act and such other person would have not delivered the property or would have not omitted to do any act
if such deceit had not been done.

Main ingredients of Cheating

1. Deception by a person.
2. Fraudulently or dishonestly convincing a person to, deliver a property or for retaining of the property
by some other person or intentionally convincing a person to do or not to do an act which that person
would have not done if he had not been so convinced and due to such act or omission that person
suffers a damage or harm in body, mind, property or reputation.

e.g. 1) A person takes away gold of any other person by stating that he will clean the gold and return but he
does not return.

e.g 2) Ram asks Shyam not to lock the door of house at the night as God will come at the night, Shyam
believes Ram and does not lock the door, Ram takes away all the jewelary of Shyam on the same night.

2) Goods delivered do no match with sample.

3) By pledging false diamond if I obtain a credit from you when I know that diamonds are fake.

In the case of M.N Ojha Vs Alok Kumar Shrivastava, if the intention of the accused was to keep the excise
duty, which the state is liable to recover, the accused was held as guilty of cheating by the Court.

In the case of T.R Arya Vs State of Punjab, it was decided that the negligence without dishonest intention is
not cheating.

SECTION 416 – CHEATING BY PERSONATION :

(behroopiya banker chapat laga dena)

MAIN APNI IDENTITY KUCH AUR HI BATAU,

AUR KISI KO CHUNA LAGAU, YAHI HAI PERSONATION

If a person represents that he is some other person and conceals his own identity and convinces other person
to enter into a contract or for any particular act.

Such other person who is represented may be real or fictitious.

Example: A person sells Taj Mahal by stating that he is the owner of Taj Mahal.

Anant cheats Bimal by stating that he is the Income Tax Officer.

GENERAL PUNISHMENT →FOR CHEATING UNDER SECTION - 417 – 1 YEAR IMPRISONMENT OR FINE OR BOTH.

Section 418 – A person who knows that he is causing a wrongful loss to a person in a contract or in accordance
with law whose interest such person was under an obligation to protect.

e.g. :A certified guardian appointed by the Court for minor or lunatic person sells the property of minor or
lunatic person for his own benefit.

Dushyant Jain^^ 167- -

→punishment under section 419 (for personation), 3 years jail or fine or both.

SECTION 420 – CHEATING, DISHONESTLY INDUCING A PERSON TO DELIVER HIS PROPERTY:

Whoever dishonestly induces a person to deliver any property or money to other person or to make alteration
or destruction of any valuable security or anything which is signed, shall be punished for imprisonment upto a
period of 7 years and also fine.

Simple cheating is covered u/s. 417 – Section 420 applies when there is delivery or destruction of any property
or security resulting from deceiving.

In the case of KuriaChan Chacko V/s. State of Kerala, it was decided that money circulation scheme which
was launched without an intention of repaying the funds, will be covered u/s. 420 of IPC.

In the case of Mohammad Ibrahim Vs State of Bihar, it was decided, if false sale deed is made to the
transfer the property belonging to some other person, it will be covered under section 420.

In the case of Shruti Singh Vs State of Bihar, it was decided that only breach of contract does not create a
criminal offence, however if breach of contract is made with fraudulent or dishonest intention and it should
have been present at the beginning of the transaction. However if it is proved that the dishonest intention
was in the beginning but later on intention was not dishonest so in this case the criminal liability will not
arise.

Que: ‘A’ under a bonafide belief that certain property belongs to him and purchaser also under the same
belief purchased the property from A. Subsequently real owner ‘C’ filed a complaint of cheating against ‘A’
for having executed a false sale deed. Whether A is liable for punishment under Indian Penal Code, 1860 ?
Discuss.

FRADULENT DEEDS AND DISPOSITIONS OF PROPERTY :- SECTION 421 – 424

SECTION 421 – DISHONEST OR FRADULENT REMOVAL OR CONCEALMENT OF PROPERTY TO PREVENT FROM

CREDITORS :

If a person dishonestly or fraudulently removes or conceals or transfers any property without consideration so
that his creditors does not get any right in the property.

This act is punishable with imprisonment which may extend to 2 years or with fine or both.

In the case of Ramautar Chakhney Vs Hari Ram Jodi, a person transferred his property for inadequate
consideration, so that his creditors do not get any right in the property, such person was punished under
section 421.

In this case the Court decided that offence under section 421 has following ingredients:

a. The accused removed or concealed or transferred the property.

b. The transfer was without adequate consideration.
c. The accused had the intention of preventing the creditors from using the property or preventing the
creditors of some other person from using the property.
d. The accused acted dishonestly and fraudulently.

SECTION 422 : DISHONESTLY OR FRAUDULENTLY PREVENTING A DEBT AVAILABLE FOR CREDITORS.

If a person dishonestly prevents the payment of any debt or demand which is due to himself, is punishable
with imprisonment which may extend to 2 years or fine or both.

The word debt has not been defined in IPC, so in the case of Commissioner of Wealth Tax Vs

Dushyant Jain^^ 168- -

G.D Naidu, it was decided that there are three essential elements of wealth, a) Ascertained amount or
capable of being ascertained b) An absolute Liability, present or future c) Obligation already accrued or
existing.

Example: When a person wilfully remains absent from the place where he resides in order to prevent his
creditors from demanding the debt.

SECTION 423 :- DISHONEST OR FRAUDULENT EXECUTION OF DEED OF TRANSFER CONTAINING FALSE

STATEMENT OF CONSIDERATION.

Whenever any person creates any charge on the property through a charge deed which contains false
statements.

Punishable with imprisonment which may extend to 2 years or with fine or both.

SECTION 424 – DISHONEST OR FRAUDULENT REMOVAL OR CONCEALMENT OF PROPERTY :

A person who dishonestly removes or conceals any property of himself or dishonestly releases claim of any
person.

e.g. A person uses some other person’s property and transfers it to his creditor to satisfy the claim of the
creditor.

Punishable with imprisonment which may extend to 2 years or with fine or both.

The essential ingredient to bring an offence under this section are:

There is a Property + The Accused Removed or concealed the property or helped in removing or concealing
the property + Removal or Concealing was done with dishonest intention

Or

There was a demand due on accused + Accused released or discharged the demand + he dish charged the
demand dishonestly.

Que: 'A' under a bonafide belief that certain property belongs to him and purchaser also under the same belief
purchased the property from A. Subsequently real owner "C" filed a complaint of cheating against 'A' for
having executed a false sale deed, Whether A is liable for punishment under Indian Penal Code, 1860 ?
Discuss.

Section 405 to 424 – Presentation by Charts – Easy to read and understand

Section 405 Section 406 Section 407 Section 408 Section 409
As per section 406, As per section 407, As per section 408, As per section 409,
A person who was the criminal breach If a person is a if the clerk or if criminal breach
entrusted with a of trust is carrier warehouse servant, of trust is done by
property punishable with 3 keeper, godown dishonestly public servants,
dishonestly mis years of owner or incharge misappropriates attornies, banker,
appropriates the imprisonment or of warehouse and the property - agent, merchants,
property or fine or both. dishonestly Punishment →upto banks, advocates,
converts the misappropriates 7 years jail + fine. brokers.
property for his the property. The punishment is
own use or disposes life imprisonment
of the property in or 10 years
violation of any law imprisonment +

Dushyant Jain^^ 169- -

and breaches the fine.
trust.
Punishment.

Section 415 Section 416 Section 417 Section 418 Section 419
Section 415 : If a If a person GENERAL A person who punishment under
person deceives represents that he PUNISHMENT →FOR knows that he is section 419 (for
any person or is some other CHEATING UNDER causing a wrongful personation), 3
convinces any person and SECTION - 417 – 1 loss to a person in years jail or fine or
person to deliver conceals his own YEAR a contract or in both
any property or identity and IMPRISONMENT OR accordance with
omit to do any act convinces other FINE OR BOTH. law whose interest
and such other person to enter such person was
person would have into a contract or under an obligation
not delivered the for any particular to protect.
property or would act.
have not omitted
to do any act if
such deceit had not
been done.

Section 420 Section 421 Section 422 Section 423 Section 424
Whoever If a person If a person Whenever any Whenever any
dishonestly induces dishonestly or dishonestly person creates any person creates any
a person to deliver fraudulently prevents the charge on the charge on the
any property or removes or payment of any property through a property through a
money to other conceals or debt or demand charge deed which charge deed which
person or to make transfers any which is due to contains false contains false
alteration or property without himself, is statements. statements.
destruction of any consideration so punishable with Punishable with Punishable with
valuable security or that his creditors imprisonment imprisonment imprisonment
anything which is does not get any which may extend which may extend which may extend
signed, shall be right in the to 2 years or fine or to 2 years or with to 2 years or with
punished for property. both fine or both. fine or both.
imprisonment upto This act is
a period of 7 years punishable with
and also fine. imprisonment
which may extend
to 2 years or with
fine or both

FORGERY AND ITS PUNISHMENT – SECTION 465

It includes

False Documents [OR] False Electronic record

With an intention of :

Dushyant Jain^^ 170- -

Causing damage To commit fraud. Injury to public Injury to Person To convince any
OR OR OR OR person to transfer
his property.

All the above acts amount to forgery.

Punishment :- With imprisonment which may extended to 2 years or with fine or both.

The Supreme Court in the case of Ramchandran v. State, decided that to make an offence of forgery,
document must be made with dishonest or fraudulent intention.
A person is said to do a thing fraudulently if he does that thing with intent to defraud and not in any other
manner.
The Supreme Court in Parminder Kaur v. State of UP, has decided that only alteration of document does not
make it a forged document. Alteration must be made for some gain or for some objective.
Similarly, in Balbir Kaur v. State of Punjab, the allegation against the accused was that she furnished a
certificate to get employment as ETT teacher which was found to be bogus and forged as school did not have
recognition for period given in certificate. However the certificate did not anywhere say that school was
recognized. It was decided that by only indicating teaching experience of the accused, it cannot be said that
it indicates wrong facts. So the direction which was issued for prosecution is liable to be quashed.

DEFAMATION

Whoever by words spoken or intended to be read or by signs or by visual representation makes or publishes
any thing with the intention to harm the reputation or to defame any person.

It may also be against the deceased person if it affects his family and relatives.

It may also be against company or any AOP.

It should lower the moral character of a person.

e.g. If A states that B cannot steal the pen as he is very honest – B can sue A for defamation.

The following cases are not covered under the scope of defamation :-

1) Importation of truth which is in public interest – speaking truth about any person is not
defamation.
2) Public conduct of public servants – if in good faith public servant discharges his duties, its not
defamation for example NCB arrests Aryan Khan, in discharge of its duties its not defamation.
3) Conduct of any person touching any public question – Giving opinion on a public question regarding
the conduct of any person is not defamation, so if I express my opinion on Aryan Khan regarding
his drugs case in good faith its not defamation.
4) Publication of report of proceedings in the court – the publishing of judgements of the Court is not
defamation, so if any law journal publishes a case in which Mr X was lost, its not defamation.
5) Merits of the case decided in the court – having a discussion on the grounds on basis of which the
Court passed a decision is not defamation.
6) Censure passed good faith – Censure means criticizing someone for wrong acts, so if we criticize
some person for his wrong acts in good faith, it is not demfamtion.
7) Merits of Public Performance – if opinion is given on public performance in

Dushyant Jain^^ 171- -

 good faith its not defamation.
Example: A says that Z’s book is foolish, Z must be a weak men, Z’s book is indecent, Z must be
man of impure mind, if A says all these things in good faith in respect of Z’s character in relation
to the book, this will not amount to defamation but if A says I am not surprised that Z’s book is
foolish and indecent as he is a weak men with impure mind, now this is defamation as this opinion
is about Z and not the character of Z mentioned in the book.

8) Accusation preferred in good faith to authorized person – to make accuse or allege someone for
wrong deed is not defamation, for example I lost my laptop and I doubt that Ramesh has stolen my
laptop so I publicly say in good faith that Ramesh has stolen my laptop in my opinion, so its not
defamation.
9) Imputation made in good faith by person for protection of his interest or other’s interest –
Imputation means to accuse someone for wrong acts. So in good faith I say that don’t give
admission to Ram, unless he clears his remaining fees, is not defamation.

PUNISHMENT FOR DEFAMATION

2 years imprisonment or fine or both.

There are two types of defamation :

Libel Slander

This kind of defamation is in permanent or It is a defamation through spoken or audible

visible form. It may be through written words, words, which is in transitory form.
or printed words, or pictures, video. [temporary]. It also includes gestures.

• PRINTING OR ENGRAVING A MATTER KNOWN TO BE DEFAMATORY :

Whoever prints or engraves any matter, knowing that such printing or engraving may be defamatory or cause
defamation to some person. Such person shall be punished with 2 years imprisonment or fine or with both.

In the case of Shankaran V/s. RamkrishnaPillai, it was decided that if defamatory matter was published in
Malyalam which the accused did not know, there is no mensrea and hence there will be no case of
defamation.

• Sale of printed or engraved substance containing defamatory matters :

If any person :
a) Publishes defamatory matter.
b) Which is printed or engraved.
c) Knew that the matter is defamatory.
d) The accused sold or offered for sale such defamatory matter.

The offence may be punished with simple imprisonment of 2 years or fine or both.

Dushyant Jain^^ 172- -

 CHAPTER: 8

INDIAN EVIDENCE ACT, 1872

This law applies to whole of India. This law does not apply
to court martial.

DEFINITIONS
JUDICIAL PROCEEDING
It is a proceeding in which evidences can be taken on oath
and can be verified. The proceeding under Income Tax Act,
is not judicial proceeding.

Nowadays in place of oath affidavit is given in the court to verify correctness of statement. In affidavit a
declaration is sworn or affirmed before a Competent Person [judge of the court or any other officer of
court or oath commissioner].

If the other party gives consent to the affidavit then the affidavit can be considered as evidence.

EVIDENCE – SECTION 3

It means and includes :

Statements that the court permits or are required to be made as per the
orders of the court by the witness. Such statements are called as oral
evidence.

As per section 60, oral evidences refers to a “fact” which could be seen
and given by the person who saw it or a fact which could be heard and
given by the person who heard it or a fact which could be perceived and
given by the person who perceived it, oral evidences are described as
best evidences.

Statement of experts are also referred as oral evidences.

The documents produced for the inspection of the court, are called as documentary evidences.

The documentary evidences are classified in:

Dushyant Jain^^ 173- -

 a. Primary Evidence: if the original copy of any document is presented in the court for the inspection
of the court, it becomes primary evidence.

b. Secondary Evidence: if the original copy of any document is lost or destroyed and is not available
for inspection of the court than, certified copy or the facsimile copy or photograph or written
statements read before the court, such evidences become secondary evidences.
Rules relating to Electronic Record:

If an electronic record is printed on a paper it will be considered as computer output and it will be
considered by the court as original or primary evidence.

FACT

BHAI JO HUME DIKHTA HAI, JO HUM MAHSOOS KARTE HAI,

WAHI FACT HAI, BAKI SAB MOH MAYA HAI
Anything, state of things, relation of things which
can be perceived byour senses. [Physical fact]

A person holds an opinion when he is conscious is a

fact (psychologicalfact)

Example: Fan is revolving, students are writing, Mr.

A holds anopinion, Mr K has a reputation, all these are
facts.

Law of evidence applies both to civil as well as

criminal cases but thereis a difference :-

Civil Cases Criminal Cases

Burden of proof is the basis of Much bigger degree of

decision. assurance is registered by

Decision can be given on Unless concrete proof is available, the court

probability. does not pass the decision.

If evidence is to be described in simple way it can be said that the facts which are accepted by the
Court, become evidence.

As per Section 5, Evidences may be given of facts in issue and ofrelevant facts :

Dushyant Jain^^ 174- -

 SECTION 3 : FACT IN ISSUE

AISE FACTS JO ISSUE KA HISSA HAI,WO

HAI FACTS IN ISSUE,

EK PARTY KAHTI HAI, PAR DUSRI MANTI NAHI,

LO HO GAYA ISSUE CREATE!!
Facts in issue means:
➢ A fact, which itself or,
➢ In connection with the other facts,
➢ relates to existence or non existence of, or nature of any right orliability,
➢ of any right, liability or disability, asserted or denied in any suit or proceedings.
Example: Ram is accused of committing murder of Shyam, the following facts are available:

a. Ram had the intention to kill Shyam.

b. Shyam has not committed sucide but it is a homicide.
c. Ram Killed Shyam.
d. Weapon used for Killing Shyam was purchased by Ram, 2 days ago. All the above facts in connection
with each other have created the issue i.e death of Shyam.

e. However if Ram proves that he is a person of unsound mind, it will create an issue of non
liability.

In simple term fact in issue means a fact which is stated by one party and denied by the other
party. Facts in issue can be also called as disputed facts.

(jin facts ke upar vivad ya jhagda hai unhe facts in issue kahte hai, aur har party apni apni baat prove
karne ke liye evidences ya facts court ke samne rakhti hai)

RELEVANT FACT & CIRCUMSTANTIAL EVIDENCE [SECTION3]

EK FACT JISKO SABIT KAR DIYA TO WHO,

EVIDENCE KAHLA SAKTA HAI
When one fact is connected with the other fact in a manner given in Indian Evidence Act, such fact is
referred as relevant fact.

Dushyant Jain^^ 175- -

 Section 3 does not define the term relevant, it simply indicates, when one fact becomes
relevant to other.
Normally facts relevant to issue are those facts which are necessary to prove or disprove the fact in
issue.
For example A has committed murder of B, it’s a fact is issue (disputed fact), now if A had the motive
to kill B as B was dating A’s wife, A and B went together on the murder day to watch a movie, this both
facts are connected with issue (murder) so can be considered as relevant fact.

A fact may be treated as relevant fact when it is connected with issue (disputed fact) in such a manner
that the Court assumes, that the fact is relevant to issue or the controversy.

Example: If Ram has committed murder of Shyam (the issue is, whether Ram Committed murder of
Shyam) & Mohan saw it, the statement givenby Mohan will be considered as or will prove the Issue.

Example: If Mohan Saw Ram running with the blooded knife from the place where dead body of Shyam
was lying. The statement of Mohan in the Court will result in relevant fact.

Through relevant facts we prove or disprove facts in issue.

With the help of relevant facts we prove the fact in Issue.

The relevant fact can also be proved with the help of circumstantial evidences. When direct evidences
are not available then the Court may consider circumstantial evidences. Relevant facts are proved on
the basis of circumstantial evidences and circumstantial evidences are based on presumptions.

Relevant facts are also known as facts probanda and facts in issue are known as facts probandum.

In the case of State of U.P VS Raj Narain, it was decided by the Court that all relevant facts are not
admissible by the Court.

Note: Relevancy of fact is test of admissibility.

SECTION 5: EVIDENCES MAY BE GIVEN OF FACTS ANDFACTS IN

ISSUE
Evidence may be given of every fact in issue and of such other facts that can be referred as relevant
facts. However no evidence of a fact can be given by a person who is disentitled to prove a fact.

The person who was aware of the fact but did not state the fact in his statements made to the court,
such person will not be given a chance to prove such fact later.

LOGICAL RELEVANCY, LEGAL RELEVANCY ANDADMISSIBILITY

Logical Relevancy: If a fact is logically relevant but legally irrelevant [because it could not be proved]
then it will not be considered as a fact related to case.

For example, confession made to polic officer may be logically relevant but not legally relevant, as
section 25 of evidence act declares that it such confession before police officer can not be considered
as confession.

Legal Relevancy: A fact is legally relevant but logically irrelevant, then such fact will be

Dushyant Jain^^ 176- -

 considered as a fact related to the same.

In some cases a judge may consider a fact as legally relevant if it islogically relevant.

In some cases a fact may be legally as well as logically relevant but still it will not be considered as
evidence on the ground of public policy.

ISSUES OF FACT

In civil cases, the court has to frame “issue” out of the disputed facts so in civil cases We first consider
all the disputed facts and on the basis of disputed facts the Court decides the “issue”. Fact in issue in
criminal case becomes issue of fact in Civil Case.

CLASSIFICATION OF RELEVANT FACTS :

Relevant fact may be classified in the following categories:

1) Facts connected with facts to be proved.

2) Statement of the person who cannot be called witnesses.
3) Statement about the fact to be proved.
4) Statements under special circumstances.
5) How much statement is to be proved.
6) Judgment of the courts, when relevant.
7) Opinion of 3 party.
rd

8) Character of parties in civil cases.

• Two rules on basis of which law of evidence is based :

A fact that has reasonable probative value Reasonable probative value will be admitted
should beconsidered. unless they areotherwise proved.

Presumption is an inference and can be considered as evidence.

When one fact is connected with other fact and it is declared by the court then both the facts can be
considered as relevant and can not be challenged.

1. RELEVANCY OF FACT CONNECTED WITH FACT TO BEPROVED :

In the following circumstances a fact connected with other fact, if proved may be considered as
relevant :-

a) Res Geste Facts : Section 6,

AISE FACTS JO, EK HI TRANSACTION KA HISSA HAI, WAHI RES GESTE FACTS
KAHALATE HAI

Dushyant Jain^^ 177- -

These are the circumstantial facts which are the part of the transaction. These facts are the part of same
transaction. These facts are associated to the main act in such a manner that they become the part of issue
(referred as transaction or acts).

e.g. A person saw 2 ladies entering in the room and after some time a lady called “help” “help”, after 2
days the body of a lady was recovered from the same room. The statement of the person who saw the
lady entering can be considered as res-geste fact.

e.g. A person is accused of beating the other person with club (baseball bat), the statement given by the
bystanders (people who saw), or the surroundings of the place where the transaction took place, can be
considered as res geste fact.

A sues B for libel, the letters which are exchanged and forming part of the correspondence relating to
subject, out of which libel arose, can be considered as relevant fact.

2. FACTS CONSTITUTING OCCASION OR OPPORTUNITY OR STATE OF THINGS FOR

OCCURRENCE OF FACT TO BE PROVED [ISSUE] : SECTION 7,

AGAR MAUKA DEK KAR MAR DIYA CHAUKA,

TO BHI KAM SE JAOGE, SAJA PAOGE

If any person had the best opportunity to commit a crime, such opportunity for occurance of the fact can be
considered as a relevant fact against such person.

e.g. 1) Only the milkman accused of murder of a women knew the fact that lady remains alone in the
house during afternoon, can be considered as a relevant fact in the case relating to urder of that
women.

e.g. 2) The marks on ground, where the issue took place can also be considered as fact.

3. MOTIVE, PREPARATION, PREVIOUS CONDUCT OR SUBSEQUENT CONDUCT : Section

8,

There is a difference between motive and intention, motive is a reason and intention is decision.
Motive can be considered as a fact and it can be proved and if it is proved it will become a relevant
fact.

e.g. When a was committing murder of B [Saw it and after few days C’s dead body was recovered. A
had a motive to kill C is a relevant fact, if it is proved.

Preparation by a person for a crime or a controversy can be consideredas a fact, if proved.

e.g. X purchased a poison from chemist shop and it was found in the dead body of X’s wife. Purchase of
chemical may be considered as a fact.
e.g. Issue is, whether the given document is Will of Ram?

Facts available: Ram made an enquiry in the matters stated in the will, Ram consulted Vakils, Ram also
asked Vakil’s to prepare the draft of will, these all facts relate to preparation of will and can be
considered as relevant fact.

4. PREVIOUS CONDUCT AND SUBSEQUENT CONDUCT :Section 8

Dushyant Jain^^ 178- -

 The conduct of the party whether previous or subsequent of the accused or his agent, which influences
the issue or is influenced by the issue canbe considered as relevant fact.

Previous Conduct Subsequent Conduct

Acts before issue Acts after issue

X threatened Y, if you stare mywife, I shall kill Concealing the evidences.

you.
Issue: Whether A killed B?
Within 3 days Y’s dead bodywas found. Facts: After the murder of B, A absconded, A
renovated the place where murder was
X’s threatening can beconsidered as committed, A did not co-
previous conduct operate in the police
investigations, all these facts constitute
subsequent conduct and can be considered as
relevant fact.

Issue: Whether Ram committed Murder of

Shyam?
Facts Available: There was a fight between Ram
and Shyam in relation to traffic dispute, Ram
had sent a message to Shyam, asking Shyam to
be in limits, Ram had enquired from the
Security gaurds of Shyam’s building relating to
the time when Shyam is home alone. All these
facts are relevant fact and can be considered
as
relevant.

In case of Emperor Vs Manchan Khan, the deceased had written a letter to the police commissioner 2
months before his murder and the letter stated that he had a danger of life from the accused, the letter
can be considered as relevant fact against the accused.

Examples:

A files a case against B for recovery of money on the ground that B had made a written promise to pay money,
In the Court B refuses to pay ans says he had never made such promise, in this case the facts that, when the
Bond is said to be made, B wanted money for particular purpose may be considered as relevant.
A is accused of a crime. The facts that, A provided facts which establish evidence in his favour, the facts that
A destroyed or concealed evidence, the fact that a stopped witnesses from appearing in the Court, all these
facts may be considered as relevant.
The issue is, whether A has to pay rupees 10,000 to B. The facts that A asked C to lend him money, and that D
said to C in A’s presence and hearing—“I advise you not to trust A, as he has to pay B 10,000 rupees”, and that
A went away without making any answer, are relevant facts.
The question is, whether A committed a crime. The fact that A absconded after receiving a letter giving
warning to him that inquiry was being made for the criminal of the offence, and the contents of

Dushyant Jain^^ 179- -

the letter, are relevant.
A is accused of a crime. The facts that, after the commitment of the alleged crime, he absconded, or was in
possession of property or the proceeds of property acquired by the crime, or attempted to conceal things
which were or might have been used in committing it, are relevant.
The question is, whether A was raped
The facts that, shortly after the alleged rape, she made a complaint relating to the crime, the circumstances
under which, and the terms in which, the complaint was made, are relevant.
The fact that, without making a complaint she said that she had been ravished is not relevant as conduct
under this Section, though it may be relevant as a dying declaration or as corroborative evidence.
the question is, whether A was robbed. The fact that, after the alleged robbery, he made a complaint relating
to the offence, the circumstances under which, and the terms in which, the complaint was made are
relevant.
The fact that he said he had been robbed without making any complaint, is not relevant, as conduct under
this section, though it may be relevant as a dying declaration or as corroborative evidence.
What is relevant under Section 8 is the particular act upon the statement and the statement and the act must
be so mixed together as to form a part of a thing observed by the witnesses and sought to be proved.

ACTS NECESSARY TO EXPLAIN OR INTRODUCERELEVANT FACTS : Section 9,

1 2 3 4

Facts that Facts that Facts that show Facts that

supports the relevant establish identify of relationof the parties. explain
factsor issue person in /
connection withissue introduce relevant
facts

Dushyant Jain^^ 180- -

 Recovery of A person was not found In case of If the violent
murder weapon from a afterthe issue. defamations, bad crowd was
person supports the relations shouting with the
In the case of Surinder
issue between theparty name of a particular
Pal Singh Vs Delhi
can be person, so the voice
Administration, in this
considered as of the
case the dog who was
relevant fact. crowd introduces
the part of Dog Squad
theidentity of the
of police
person who’s
pointed out the
name was

Dushyant Jain^^ 181- -

 accused at the murder taken by the
place, the Court did not crowd.
consider the Dog’s act as Ram Convinces shyam
relevant fact as it did to breach the contract
not that shyam entered
establish the identity of with Mohan, so Shyam
the person. breaches the contract
with Moahn and
Shyam says Mohan that
I am breaching this
contract as Ram has
convinced me and has
given me better offer.
The statement of
Shyam explains his
conduct and can be
considered as
relevant.

A is accused of a crime.
The fact that, soon after the commitment of the crime, A absconded from his house, is relevant under Section
8, as conduct subsequent to issue. The fact that, at the time when A left house, he had sudden and urgent
business at the place where he went, can also be considered relevant, as it explains the fact that the left
home suddenly. The details of the business for which he left are not relevant, however such details will be
relevant only to explain that business was sudden and urgent.

Amar is accused of theft and he was seen giving the stolen property to Bika, and Bika further gave the
property to his wife and Bika says to his wife that Amar wants, to keep this property with you (Bikas wife),
and you have to hide this property so Bikas statement explains the entire transaction and can be considered
relevant.

2. STATEMENTS RELATING FACT TO BE PROVED [ISSUE] : (Yaha par hum statements jo issue se connected
hai use dekenege ki relevant mana ja sakta hai ya nai)

There is a general rule that hearsay evidence is no evidence. Which means court never consider
statement of the parties if they are based on “hear say”.

However res geste facts even if based on hearsay are considered as relevant.

However, there are some exceptions to the above rule (hearsay evidence is no evidence):-

Que: Oral evidence must be direct in all cases. Explain this statement.

a) Admission and Confession:

Admission Confession

1) Covered under Section 1) Covered under Section

17 – 31 of Indian 24 – 30 of Indian
Evidence Act. Evidence Act.

Dushyant Jain^^ 182- -

 2) Admission is oral, documentary 2) Confession means oral, documentary, or
electronic, statement that suggests electronic statement relating to any
any fact in issue or any relevant fact fact in issue or relevant fact made by
made by an accused. an accused before a person in
authority.

3) It can be made byaccused himself or his 3) Confession has to be made by the

agent or his predecessor accused himself.
in interest.

4) Admission is always selfharming 4) Confession is against the

maker and the co-
accused.

5) In the case of Basant Singh V/s. Jacky 5) Confession has to be

Singh the court decided that voluntary.
admission made by

Dushyant Jain^^ 183- -

 Government is not relevant unless Case :Palaka Narayan SamiV/s. Emperor.
actedupon it.
It was held that a statement that frees a
person from a guilt is not a confession.

6) Admission can also be

made under compulsion.
6) There are two types of confession :
a) Judicial Confessions : The
confessions made before Judge or a
Magistrate.
b) Extra Judicial
Confession :
The confession that are made
before the police officer or before
any person authorized by court.

7) Court never acts on the

basis of admission.

Dushyant Jain^^ 184- -

 8) Court never treats a person as guilty on
the basis of admission.
9) As per section 58, the facts
that contradict withthe admission may
also be considered as relevant. For
example if a person states that he did
not meetthe deceased
before his death, but CCTV footage
suggests that he met with deceased,
Footage may be
considered as relevant.

The extra judicial confession will be valid if :-

Confession was made in presence of Police When confession was made before the police
Officer, Magistrate was also present [confession office and through such confession the police
was made outside the court]. officer received aconcrete evidence relating to

Dushyant Jain^^ 185- -

 the case.

Example :-Shyam committed murder & was

arrested by Police officer before the police
officer he admitted that he committed murder
and threw the dead body into a well and the
gun from which murder was done with Raju.

The police officer recoveredthe gun from Raju.

In this case the admission made by Shyam may
amount to Extra Judicial Confession.

The court treats a person as guilty on the basis of confession.

Features of Admission and Confession:

1) The admission may be verbal or may be contained in books, maps,reports or bills.

2) Admission may be made by the party in plaint which is signed and verified by him and it may be
used against him in the other suits also. However the court may accept some previous
statements and reject the remaining.

3) Admission also includes conceding (confirming) something against the person making the
admission.
4) Admission of gravely incriminating (agar aap kisi ke khilaf sangeen aarop lagao) act is not
confession.
5) If it appears to the Court that confession was not voluntary or if it was under threat or pressure
or if the accused was assured that he will gain any advantage by making a confession, the Court
will not consider such statement as confession.
6) In the case of Ram Khillari V/s. State of Rajasthan the court decided that, if confession is made
by a witness who was close relative of the accused and the testimony of such witness was
reliable and truthful, such confession can be a valid confession.

7) In the case of Vinayak Shivaji Rao Pol Vs State of Maharashtra, it was decided that, the law does
not require extra judicial confession shall be corroborated (confirmed) in all the

Dushyant Jain^^ 186- -

 cases. When the accused confessed to his friend that he was involved in the offence and such
confession was without any mistake and very clear, the Court will consider the confession made
by the friend of accused.

b. Statement of the persons who cannot be called as witness [they are dead or cannot be found]:

Statements made by the person who are dead or cannot be found. Can be considered as relevant fact if
the following conditions are satisfied :
Statement must relate to fact in issue
Statement made in any will may be considered as relevant.
Statement must be made in the ordinary course of business.
When a person expresses his emotions or feelings through some other person then statement of
such other person can also beconsidered as relevant fact.
Statement must relate to cause of death.
Statement before controversy, relating to any relationship.
Dying declaration has to be against the maker.
Statement that relates to a public right or custom of any place mayalso be considered as relevant.
Example: Issue: Whether the road is a public road or not?
Fact: The deceased “Gram Pradhan” of the village had before his death declared that the said road is a
public road, the statement of Gram Pradhan can be considered as relevant fact.

Evidences given in the judicial proceedings or before any person authorised by law may be considered as
relevant if the proceeding was between the interested parties and the opposite party was given an
opportunity to cross examine.

c. Statement made under special circumstances :

The below mentioned statements can be considers as relevant fact :

Entries made in books of account whether maintained in physical form / electronic form. However
only such entries are not sufficient to prove any fact.
Statements made in government notifications.
E.g Issue: Whether Ram is authorised to confiscate Shyam’s Vehicle?
Fact: Ram Produces a notification issued by the Income Tax Dept. which authorises him to
confiscate the property, will be consideredas relevant.
Entries in maps, charts, which are sold by state on central government on agencies of central or
state government.
E.g. Issue: Whether an area comes under the jurisdiction of Collector of Mumbai?
Fact: The map issued by the Government of Maharashtra that prescribes the jurisdiction of each
collector, can be considered relevant.
Entries in public record by government servant.
In the case of Anita Vs Atal Bihari, it was decided by the Court that the entries made in the
register of birth by the public servant will be considered as relevant.
In all the above cases only the relevant part of the book or entries or statement will be considered
as evidence and not the entire bookor entries.
Statements made in the foreign law or book published by the foreign Government may be
considered as relevant.

Example: Issue: Whether George is illegal immigrant in India?

Dushyant Jain^^ 187- -

 Facts: US Government issued a notification allowing George to provide relief in Kerla Floods may be
considered as relevant.

Note: In all the above cases only the relevant part of the book or entries or statements will be
considered as relevant and not the entirebooks or entries.

2. OPINION OF THE THIRD PARTY TO BE RELEVANT

As a general rule the opinion of witness on any particular fact or law is always irrelevant. However there are
some exceptions to this rule. In the following cases the opinion of witness can be considered relevant:

Opinion of experts Facts that support or are

inconsistent with the opinion of
Forensi c Signatur e DNA Opinio n as Handwritin g expert are also relevant.
Expert Expert Expert tocustom of Expert
any
place

Facts that Facts that

support are inconsisten t
experts with
opinion expert’s
opinion
Are

Are
Relevant
Relevant

The opinion of expert is supported by report. If the report of expert suggests something else but reality
is something else. In this case such consistency may also be considered as relevant fact.

Apart from the above The Indian Evidence Act, 1872 provides that, in addition to the opinions of
experts, opinion of any other person is also relevant in the following cases:
(a) Opinion as to the handwriting of a person if the person giving the opinion is acquainted with the
handwriting of the person in question. (Section 47)
(b) Opinion as to the digital signature of any person, the opinion of the Certifying Authority which has
issued the Electronic Signature Certificate. (Section 47A)
(c) Opinion as to the existence of any general right or custom if the person giving the opinion is likely to
be aware of the existence of such right or custom. (Section 48)
(d) Opinion as to usages etc. words and terms used in particular districts, if the person has special
means of knowledge on the subject. (Section 49)
(e) Opinion expressed on the existence of any relationship by persons having special means of
knowledge on the subject. (Section 50)
QUE: Opinion of experts under section 45 of the Indian Evidence Act,1872.

Dushyant Jain^^ 188- -

 FACTS OF WHICH EVIDENCE CAN NOT BE GIVEN

Privileged Communication

Evidenc e Source of Communic ation Profession al Affairs of Official

given informat ion during marriage, communica tion state Communication,
by a to a police between an
Section Section Section 124,
Judge or officer 122,
advocate his
123,
Magistr ate: relating to client, CS Communica tion
Section 121 fact Protected even & his Internal matters between officers
or relevant after client. or of
fact. divorce unpublishe d government.
Section
communica tion
Section125 126 and of
129. government.

E.g The
notification s
that are
yet to be

Dushyant Jain^^ 189- -

 published or
cabinet
papers or
notes taken by
the Govtofficials.

QUE:The ‘Privileged Communications’ are based on Public Policy and a witness cannot be compelled to
answer the same during the evidence in the Court or before any other authority. Explain in brief.

Que: “Under the Indian Evidence Act, 1872, there are some facts of which evidence cannot be given though
they are relevant.” Explain.

PRESUMPTIONS

Presumptions give a prima facie idea about the case. Through presumptions the Court gets a prima facie
idea of the case. Presumptions change from circumstances to circumstances.

In the Indian Evidence Act, 1872, presumptions are no where defined, however section 4 of the Act,
refers to:

a) Conclusive Proof: Referred as irrevocable presumptions – facts ke aadhar par law ka andaza lagana
jise court presume kar chukka hai auryeh jhuthlaya nai ja sakta.

b) Shall Presume: It refers to revocable presumptions of law – kisi fact ke aadhar par law ka andaza
lagana.

Dushyant Jain^^ 190- -

 c) May Presume: It refers to presumptions of fact – ek fact ke addhar par dusre fact ka andaza
lagana – revoke ho sakta hai!

Kinds of Presumptions:

a) Presumptions of Law: the Court makes an inference ofcircum

b) Presumptions of fact: Court makes inference of fact.

c) Mixed Presumption: Court makes inference of facts as well ascircumstances.

Example: Murder was committed in the room and 2 men walked out of the room, it can be presumed
that such 2 persons committed murder.

ORAL DOCUMENTARY AND CIRCUMSTANTIAL EVIDENCES

Every fact covered in this chapter has to be proved, except privileged communication. Facts are
proved through evidences

There are two types of proofs [evidence]

WITH DOCUMENTS WITHOUT DOCUMENTS

Written Evidence Oral Evidence

Dushyant Jain^^ 191- -

 Primary Secondary evidence
evidence All the facts except content of a document can
be proved by oralevidence.
If the original copy is not
If the available orhas been destroyed
original copy is or lost then : Oral evidences are direct evidences and these
produced before evidences refer to :
the 1) Certified copy of
court it documents
becomes primary 2) Facsimile copy
evidence
3) Photographs
4) Oral
statements, read
before thestatement.

If the fact could If the If the fact

be fact could be could be
seen, the heard, the perceived by
person who saw person who senses the
itmay give heard it person who
an oral perceive
evidence.

will give oral such fact will

Opinion of evidence give
persons may oral evidence.
alsobe
considered as
oral
evidence

• Rules Relating to Electronic Records :

Dushyant Jain^^ 192- -

 If electronic record is printed on a paper it will be considered as Computer output and will be
considered or accepted in the courtas “Original” / Primary.

• Circumstantial Evidences :

A Fact is proved through

Direct evidence Circumstantial evidence

Are the facts in issue If direct evidences are not available then
circumstances are
considered.
Decision is given on the basis of
Oral Fact is issue Documentary presumption and relevant facts are
also known as factum proved.
probandum.

Relevant fact are also known as factum

probandum.

ESTOPPEL

It means a fact which is stated once cannot be denied later on.

It is based on the principle “Allegans contratia non-estaudiendus”. Which means “Contrary fact stated
by a person shall not be admitted”.
In the case of Mohiri Biwi V/s. Dharam Das Ghosh. It was decided
that rule of estoppels will not apply when a person knows the real facts.

In the case of Biju Patnaik Tech University Vs Siaram Collage, thestudents appeared for the final
examinations, after declaration of the

Dushyant Jain^^ 193- -

 result, the university asked the students to give additional papers to get the degree, the Court estopped
the university from taking the additional examinations.

Kinds of Estoppel

Estoppel by attestation – when a person signs a statement.

Estoppel by Contract – When a person agrees something in contract.

Constructive Estoppel – Constructive Notice (a notice which is deemed) creates estoppel.

Equitable Estoppel – Stating Something and denying later on.

Estoppel by Silence – By not taking objections also we can createestoppel.

Estoppel by Election – When you elect something you make a estoppel.

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 CHAPTER – 9
SPECIFIC RELIEF ACT,
1963

INTRODUCTION

Specific Relief Act has been passed to provide a relief or remedy to the aggrieved parties. The act is
applicable only in civil cases.
(basically jab ek party apna part contract ke andar perform nai karti, to aap ko compensation offer karti hai
par aggrieved party ko compensation nai chaiye, use to performance chaiye jo us se promise ki gai thi is case
main specific relief ke liye aap is law ke andar court jayenge)
Under the Specific Relief Act, 1963, remedies have been divided as specific relief (Sections 5-35) and
preventive relief (Sections 36-42). These are:
(i) Recovering possession of property (Sections 5-8);
(ii) Specific performance of contracts (Sections 9-25);
(iii) Rectification of Instruments (Section 26);
(iv) Rescission of contracts (Sections 27-30);
(v) Cancellation of Instruments (Section 31-
33);
(vi) Declaratory decrees (Sections 34-35);
and
(vii) Injunctions (Sections 36-42).

▪ Recovery of possession of property

(a) Immovable property: Section 5 and 6 –
Possession of immovable property can be
recovered on the strength of :
a) Title /
Ownership.
b) Possession.
✓ Recovery on the strength of title
If a person is dispossessed from the
immovable property of which he is an owner, such person may file a suit for recovery of possession of
immovable property within 12 years from the date of dispossession.

✓ Recovery on strength of possession

If a person was in the possession of an immovable property and he is dispossessed of the property in an
Unlawful manner such a person may approach the court for recovery of possession within 6 months from
the date of dispossession.
Some of the points to be kept in mind for recovery of possession of immovable property on the strength of
possession:
a) The Plaintiff / aggrieved party must have acquired the possession of the property with the consent of
owner.
b) The Plaintiff or aggrieved party must have been dispossessed without a lawful procedure.
c) When the suit was filed by the aggrieved party or plaintiff, his right of possession was existing.
d) No suit can be brought against the Government.

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 e) If an order is made by the court against the suit filed by plaintiff, no appeal, review or any application
can be made against the order.
f) The Court’s order will be the final order.
If a property is given on lease and the lessee is unlawfully dispossessed by the lessor the lessee can
exercise the rights given above.

Recovery of specific movable property

Section 7 and 8 provide for recovery of specific movable properties.

As per Section 7, a person entitled to the possession of specific movable property may recover it in the
manner provided by the Code of Civil Procedure, 1908.

Explanation 1.-A trustee may sue under this section for the possession of movable property to the beneficial
interest in which the person for whom he is trustee is entitled.

Explanation 2.-A special or temporary right to the present possession of movable property is sufficient to
support a suit under this section.

Section 8 provides that any person having the possession or control of a particular article of movable
property, of which he is not the owner, may be compelled specifically to deliver it to the person entitled to
its immediate possession, in any of the following cases:-

a) when the thing claimed is held by the defendant as the agent or trustee of the plaintiff;
b) when compensation in money would not afford the plaintiff adequate relief for the loss of the
thing claimed;
c) when it would be extremely difficult to ascertain the actual damage caused by its loss;
d) when the possession of the thing claimed has been wrongfully transferred from the plaintiff.

Explanation. - Unless and until the contrary is proved, the court shall, in respect of any article of movable
property claimed under clause (b) or clause (c) above , presume- that compensation in money would not
afford the plaintiff adequate relief for the loss of the thing claimed, or, as the case may be; that it would be
extremely difficult to ascertain the actual damage caused by its loss.

SPECIFIC PERFORMANCE OF CONTRACTS AND DEFENSE

Relief by specific performance of contract is an equitable relief in cases of breach of contract.

Defences respecting suits for relief based on contract

According to section 9, where any relief is claimed in respect of a contract, the person against whom the
relief is claimed may plead by way of defence any ground which is available to him under any law relating to
contracts.

The contract in question should be valid and enforceable.

Specific performance in respect of contracts

As per section 10 of the Act, the specific performance of a contract shall be enforced by the court subject to
the provisions contained in section 11(2), section 14 and section 16 of the Specific Relief Act, 1963.

Cases in which specific performance of contracts connected with trusts enforceable

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Section 11 provides that except as otherwise provided in this Act, specific performance of a contract shall be
enforced when the act agreed to be done is in the performance wholly or partly of a trust.

A contract made by a trustee in excess of his powers or in breach of trust cannot be specifically enforced.

SPECIFIC PERFORMANCE OF PART OF THE CONTRACT (SEC. 12)

BHAI GENRAL RULE TO YEH HAI KI,
POORA CONTRACT HI SPECIFICALLY PERFORM HOGA

The general rule is that the court does not grant the specific performance for performance of only a part of
the contract.
In the following cases the court normally grants specific performance of part of the contract:
a) The part which is left unperformed is considerably small & can be compensated in money.
b) When the part left unperformed is considerably large & the plaintiff agrees to take the small part and he
relinquishes all his further claims and pays the consideration for the performed part, or if the plaintiff
does not accept the compensation in terms of money than the plaintiff will not be given a specific
performance but the Court may on the suit of plaintiff direct the other party to perform as much as he
can and in this case the plaintiff will have to pay whole of the consideration and also relinquishes all his
further claims.

For example, A contracts to sell B a piece of land consisting of 100 bighas for Rs. 1,00,000. It turns out that
only 50 bighas of land belong to A. 50 bighas are substantial part of the contract. A cannot demand specific
performance of the contract but B can demand specific performance to get 50 bighas of land from A by paying
the full consideration i.e. Rs. 1,00,000.
c) When the part which is unperformed is a separate & independent part.

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

Section 13 states the rights of a purchaser or lessee against the seller or lessor with no title or imperfect
title.
It states that if a person contracts to sell or let (lease) certain immovable property having no title or only
an imperfect title, the purchaser or lessee, has the following rights, namely:–
(a) if the vendor or lessor has subsequently to the contract acquired any interest in the property, the
purchaser or lessee may compel him to make good the contract out of such interest.
(b) where the consent of other person is necessary for validating the title, and they are bound to consent at
the request of the vendor or lessor, the purchaser or lessee may compel him to procure such consnet, and
when a conveyance by other persons is necessary to validate the title and they are bound to convey at the
request of the vendor or lessor, the purchaser or lessee may compel him to procure such conveyance.
(c) where the vendor professes to sell unencumbered property, but the property is mortgaged for an amount
not exceeding the purchase money and the vendor has in fact only a right to redeem it, the purchaser may
compel him to redeem the mortgage and to obtain a valid discharge, and, where necessary, also a
conveyance from the mortgagee;
(d) where the vendor or lessor sues for specific performance of the contract and the suit is dismissed on the
ground of his want of title or imperfect title, the defendant has a right to a return of his deposit, if any, with
interest thereon, to his costs of the suit, and to a lien for such deposit, interest and costs on the interest, if
any, of the vendor or lesser in the property which is the subject-matter of the contract.

Above provisions shall also apply, as far as may be, to contracts for the sale or hire of movable property.
CONTRACT WHICH CANNOT BE SPECIFICALLY PERFORMED:
JAHA PAR PAISE SE MAMLA SHANT HO JAYE,
WAHA SPECIFIC PERFORMANCE KI JAROORAT NAI HAI

As per Section 14, In the following cases the court will not grant specific performance:
1) In cases of movable property.

Dushyant Jain^^ Dushyant Jain Classes New Syllabus!! -197-

2) When compensation in money is an adequate remedy.
3) The contracts which are dependent upon personal skills, personal qualifications, and personal volition of
the parties cannot be specifically performed. (as these contracts run in to minute & numerous details)
E.g.: Mr. M. F. Hussain agrees to portray a picture for Katrina Kaif but denies completing it.
4) A contract is of such nature that court cannot enforce its specific performance.
Example:
(a) The agreements which are of criminal nature cannot be specifically enforced.
(b) When the agreement relates to movable property and the movable property is easily available in the
market.
5) Specific performance cannot be granted for determinable contracts.
Determinable contract means a contract which can be cancelled any time at the option of the parties.
6) The contract which put a constant duty on the court to supervise the performance of the Contract.
However as per Section 14 (3), the court may use its discretion to grant specific performance in the following
cases:
a) When a suit has been filed in the court for executing a mortgage in favor of the lender when the borrower
is not willing to repay the loan.
b) When a party had agreed to subscribe & pay for the debentures but later on the party refuses.
c) When a suit has been filed in the court for executing a written partnership deed when the partnership
firm has commenced business.
Example: A, enters into a contract with B, an owner of Mall to give him space in exchange for sales of good
and provide him necessary appliances. Can specific performance be sought without defining the
consideration?
Here, the specific performance cannot be sought since the goods and appliances are not defined, neither
is amount and nature of accommodation is defined.

Power of court to engage experts – Section 14A

In respect of any suit, Court may engage experts to provide his opinion or evidence in relation to the suit of
specific performance.
The Court may order the parties to provide documents or records or property or information relating to the
Suit to expert.
The Court itself or on the request of the parties may examine the expert personally or in an open court in
respect of the matter that the expert has stated in his report and the report of expert may also be considered
as an evidence.

WHO MAY SUE FOR SPECIFIC PERFORMANCE: SECTION 15

Parties to an action for specific performance:
The parties who may obtain specific performance:
(a) Parties to the contract.
(b) The representative of the parties, or the principal of the party may also approach the court for specific
performance of the contract, however if the personal skill or personal consideration of the party is the
essential element of the contract or if the contract specifically provides that the rights under the contract
shall not be assigned, in this case the representative or the principal of the party can not sue for specific
performance unless such party has already performed his part of the contract, or the performance thereof
by his representative in interest, or his principal, has been accepted by the other party.
(c) Legal representatives of parties to the contract.
(d) Beneficiaries to the contract in case of Trust.
(e) Remainder man (absolute interest case)
(f) Reversioner (lessor & lessee).
(g) Where the contract is a settlement on marriage, or a compromise of doubtful rights between members of
the same family, any person beneficially entitled thereunder;
(h) when a company has entered into a contract and subsequently becomes amalgamated with another
company the new company which arises out of the amalgamation

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PERSONS AGAINST WHOM SPECIFIC PERFORMANCE CANNOT BE ENFORCED
Matlab yeh logon ko specific performance nahi milegi!!
Under Section 16, specific performance of a contract cannot be enforced in favour of a person —
(It means if these persons are plaintiff, the Court will not grant them specific performance)
1) A person who has become incapable for performing.
2) A person who violates any essential terms of the contract.
3) A person who acts in a fraudulent manner.
4) Any person who varies the terms and conditions of the contract in a wrongful manner.
5) The person who fails to perform his part cannot sue for specific performance against the other party.
6) Person who has accepted substituted performance under section 20
As per Section 17, if a person contracts to sell or give on lease a property of which he is not an owner & fails
to sell or lease the property, the other party will not get specific performance. This is due to the reason that
if specific performance is granted, the true owner of the property will suffer a loss. This contract runs in to
numerous details.
Example: Ram without permission of Shyam agrees to sell Shyam’s House to Mohan, the contract between
Ram and Mohan can not be specifically enforced.

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.

Example

‘A’ enters into a contract with ‘B’ to sell a piece of land with trees having ornamental values as to the market
value of the house.

‘A’ without ‘B’s’ consent removed the trees, thereby violating the terms of the contract. A cannot enforce
specific performance.

Non-enforcement except with variation

Where a plaintiff seeks specific performance of a contract in writing, to which the defendant sets up a
variation, the plaintiff cannot obtain the performance sought, except with the variation so set up, in the
following cases, namely:–

(a) where by fraud, mistake of fact or misrepresentation, the written contract of which performance is
sought is in its terms or effect different from what the parties agreed to, or does not contain all the terms
agreed to between the parties on the basis of which the defendant entered into the contact.

(b) where the object of the parties was to produce a certain legal result which the contract as framed is
not calculated to produce.

(c) where the parties have, subsequently to the execution of the contract, varied its terms.

ENFORCEMENT OF SPECIFIC PERFORMANCE

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According to Section 19, specific performance of a contract may be enforced against:
(a) Either party to the contract,
(b) Any person who has got the title in the property accept the transferee who has got the property in good
faith
Example: In order to avoid the specific performance if a party transfers his property to some other party than
the other party may also be sued for specific performance however if such transferee proves that he has
acquired the property in good faith than specific performance can not be enforced against him.
(c) Any person to whom a title has been given by the defendant and the plaintiff knew that the defendant
might transfer the title to such person, and the plaintiff had this suspicion at the time when he entered in to
contract with the defendent.
(d) When a company has entered into a contract and subsequently becomes amalgamated with another
company — the new company which arises out of the amalgamation.

Substituted performance of contracts, etc.

Section 20(1) lays down that without prejudice to the generality of the provisions contained in the Indian
Contract Act, 1872, and, except as otherwise agreed upon by the parties, 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.

According to section 20(2), no substituted performance of contract under above sub-section (1) shall be
undertaken unless the party who suffers such breach has given a notice in writing, of not less than thirty days,
to the party in breach calling upon him to perform the contract within such time as specified in the notice,
and on his refusal or failure to do so, he may get the same performed by a third party or by his own agency.

However, the party who suffers such breach shall not be entitled to recover the expenses and costs under
sub- section (1) unless he has got the contract performed through a third party or by his own agency.

Section 20(3) provides that where the party suffering breach of contract has got the contract performed
through a third party or by his own agency after giving notice under sub-section (1), he shall not be entitled
to claim relief of specific performance against the party in breach.

Section 20 shall not prevent the party who has suffered breach of contract from claiming compensation from
the party in breach.

In the case of Raman Vs Natrajan, it was decided by Supreme Court that a Court cannot grant the relief of
specific performance against a person compelling the other person to enter into an agreement with a third
party and seek specific relief against such a third party.

Special provisions for contract relating to infrastructure project

Section 20A lays down Special provisions for contract relating to infrastructure project.

1. The Court shall not grant an injunction in respect of infrastructure projects specified in the schedule
attached to the specific relief act, if through the injunction of the Court the project suffers a delay
2. The central government shall have the powers to modify the schedule by a notification in the official
gazette.
3. The notification as specified above shall be placed in both the houses of parliament for 30 days when
parliament is in session and if parliament makes any modification in the notification than the modification
shall not affect any transactions that had done earlier.
4. Section 20B authorises state government that it may in consultation with chief justice of the High Court
designate one or more civil judges as special courts for passing a decree (as soon as possible) in relation to

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the matters relating to contracts relating to infrastructure projects, such special courts will be established by
notification in official gazette.
5. As per Section 20C The special court shall dispose of the case within a period of 12 months from the date of
service of summons to the defendant and further extension of 6 months can be granted by recording reasons
in writing.

Court’s power to award damages in certain cases, Under Section 21 of the Specific Relief Act, the Court is
empowered to award compensation in certain cases:
1. In a suit for specific performance of a contract, the plaintiff may also claim compensation for its breach,
either in addition to, or in substitution of such performance
2. In any suit the Court decides that specific performance should not be granted but there is a contract
between that allows payment of compensation by the defendant in this case the Court asks the defendant to
pay the compensation.
3. In any suit the Court decides that specific performance should be granted, but that it is not sufficient to
satisfy the justice of the case, and that some compensation for breach of the contract should also be made to
the plaintiff, it shall award him such compensation accordingly

The conditions according to which damages may be awarded by the Court in addition to specific performance
are:
(i) the Court decides that specific performance ought to be granted but,
(ii) the justice of the case requires that not only specific performance but also some compensation for the
breach of the contract should also be given to the plaintiff.
Section 22 gives power to the Court to grant relief for possession, partitions, refund of earnest money.
Under Section 22 any person, suing for the specific performance of a contract for the transfer of immovable
property may, in an appropriate case ask for:

(a) possession or partition and separate possession, of the property in addition to any such performance; or
(b) any other relief to which he may be entitled in case his claim for specific performance is refused.

In the case of Jagtar Singh Vs Kartar Singh, defendant and plaintiff were real brothers residing jointly in a
house. The defendant executed agreement to sell the property of his share in favour of plaintiff.
Subsequently he sold the same property to another purchaser. The subsequent purchaser had no knowledge
about the earlier agreement. It was held that he (subsequent purchaser) is the bona-fide purchaser of the
property. The plaintiff can recover back earnest money paid by him to defendant.

Section 23 lays down that even if the parties have agreed for liquidated damages, in the contract itself,
specific performance of that contract may be decreed by the Court in proper cases but in that case the
payment of the sum named in the contract will not be decreed.

Section 24 imposes a bar on suit for compensation for breach of a contract after dismissal of the suit for
specific performance.

Section 25 provides that the provisions of Chapter II shall apply to awards to which the Arbitration and
Conciliation Act, 1996 does not apply and to directions in a will or codicil to execute particular settlement.

RECTIFICATION OF THE INSTRUMENT - Section 26

a) This concept is contained in Section 26 of Specific Relief Act, 1963.
b) Rectification means correction of mistakes in an instrument.
c) When contract between the parties fails to show the real intention of the parties, any of the parties who
is aggrieved by a mistake in the contract may approach the court for rectification of the instrument.
(d) Rectification would be allowed when there was a consensus between the parties as to the contract but,
through fraud of one of the parties, the instrument did not correctly express the real intention.

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(e) It will also be granted, at the instance of third party, where both the parties are equally innocent, but due
to a common mistake, the instrument does not express their intention.
(f)The only limitation placed on the Courts discretion is that the rectification can be done without affecting
the rights acquired by third persons in good faith and for value.
Rescission of Contracts - Section 27

“Rescission” means putting an end to a contract which is still operative and making it null and void ab initio.

It does not apply to void contracts.

Section 27(1) states that any person interested in a contract may sue to have it rescinded, and such rescission
may be adjudged by the court in any of the following cases, namely:–

(a) where the contract is voidable or terminable by the plaintiff;

(b) where the contract is unlawful for causes not apparent on its face and the defendant is more to blame
than the plaintiff.

As per Section 27(2) the court may refuse to rescind the contract–

(a) where the plaintiff has expressly or impliedly ratified the contract; or

(b) where, owing to the change of circumstances which has taken place since the making of the contract
(not being due to any act of the defendant himself), the parties cannot be substantially restored to the
position in which they stood when the contract was made; or

(c) where third parties have, during the subsistence of the contract, acquired rights in good faith without
notice and for value; or

(d) where only a part of the contract is sought to be rescinded and such part is not severable from the
rest of the contract.

The ‘contract’ in this section, in relation to the territories to which the Transfer of Property, 1882 does not
extend, means a contract in writing.

Rescission in certain circumstances of contracts for the sale or lease of immovable property, the specific
performance of which has been decreed

Section 28(1) provides that where in any suit a decree for specific performance of a contract for the sale or
lease of immovable property has been made and the purchaser or lessee does not, within the period allowed
by the decree or such further period as the court may allow, pay the purchase money or other sum which the
court has ordered him to pay, the vendor or lessor may apply in the same suit in which the decree is made, to
have the contract rescinded and on such application the court may, by order, rescind the contract either so
far as regards the party in default or altogether, as the justice of the case may require.

As per Section 28 (2), where a contract is rescinded under sub-section (1), the Court–

(a) shall direct the purchaser or the lessee, if he has obtained possession of the property under the
contract, to restore such possession to the vendor or lessor; and

(b) may direct payment to the vendor or lessor of all the rents and profits which have accrued in respect
of the property from the date on which possession was so obtained by the purchaser or lessee unit restoration
of possession to the vendor or lessor, and, if the justice of the case so requires, the refund of any sum paid by
the vendee or the lessee as earnest money or deposit in connection with the contract.

According to Section 28(3), if the purchase or lessee pays the purchase money or other sum which he is
ordered to pay under the decree within the period referred to in sub-section (1), the court may, on

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application made in the same suit, award the purchaser or lessee such further relief as he may be entitled to,
including in appropriate cases all or any of the following reliefs, namely:–

(a) the execution of a proper conveyance or lease by the vendor or lessor;

(b) the delivery of possession, or partition and separate possession, of the property on the execution of
such conveyance or lease.

Separate suit in respect of any relief which may be claimed shall not lie at the instance of a vendor,
purchaser, lessor or lessee, as the case may be. The costs of any proceedings under this section shall be in the
discretion of the court.

Alternative prayer for rescission in suit for specific performance

Section 29 of the Act, provides that a plaintiff instituting a suit for the specific performance of a contract in
writing may pray in the alternative that, if the contract cannot be specifically enforced, it may be rescinded
and delivered up to be cancelled; and the court, if it refuses to enforce the contract specifically, may direct
it to be rescinded and delivered up accordingly.

Court may require parties rescinding to do equity

According to Section 30, on adjudging the rescission of a contract, the court may require the party to whom
such relief is granted to restore, so far as may be, any benefit which he may have received from the other
party and to make any compensation to him which justice may be require.

CANCELLATION OF INSTRUMENTS – Section 31

If the instrument is left outstanding it may cause a serious loss to one of the parties, such party may apply the
court for cancellation of such instrument.
This principle is also known as Quara time.

Relief of cancellation under Section 31 would be available when:

(i) An instrument is void or voidable against the plaintiff; \
(ii) Where the plaintiff may apprehend serious injury if the instrument is left outstanding and.
(iii) Where it is proper under the circumstances of the case to grant the relief.

What instruments may be partially cancelled

According to Section 32 of the Act, where an instrument is evidence of different rights or different
obligations, the court may, in a proper case, cancel it in part and allow it to stand for the residue.

Power to require benefit to be restored or compensation to be made when instrument is cancelled or is

successfully resisted as being void or voidable

Section 33 provides that on adjudging the cancellation of an instrument, the court may require the party to
whom such relief is granted, to restore, so far as may be any benefit which he may have received from the
other party and to make any compensation to him which justice may require.

Where a defendant successfully resists any suit on the ground–

(a) that the instrument sought to be enforced against him in the suit is voidable, the court may if the
defendant has received any benefit under the instrument from the other party, require him to restore, so far
as may be, such benefit to that party or to make compensation for it;

(b) that the agreement sought to be enforced against him in the suit is void by reason of his not having
been competent to contract under section 11 of the Indian Contract Act, 1872, the court may, if the

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defendant has received any benefit under the agreement from the other party, require him to restore, so far
as may be, such benefit to that party, to the extent to which he or his estate has benefited thereby.

DECLARATORY DECREE – Section 34 and 35

1. Declaratory decree is included in Sec. 34 of Specific Relief Act.
2. Declaratory decree is an order of the court which makes a declaration. Declaration by the court relates
to legal character or any right of person for a specific property or a specific right.
3. Declaratory Decree is granted when the defendant (culprit) denies the right or title of the plaintiff.
Declaratory decree is the declaration of the right of plaintiff on any property or against a person.
4. Declaratory decree does not declare a title in favour of any person.

A is properly in possession of certain lands. The inhabitants of a neighbouring village claim a right of way
across the land. A may use for a declaration that they are not entitled to the right so claimed.

The relief by way of declaration is purely discretionary. Instances of legal characters are —
(1) Divorce on the ground of impotency
(2) Legal character by marriage
(3) Legitimacy or illegitimacy
(4) Status of an adopted son
(5) Priest of temple
Effect of declaratory decree:
1) The declaration creates obligation only on the parties to this suit.
2) It creates ‘just in personam’ (Right against a specific person only) does not create obligations against third
party.
3) It creates obligations for agent of the parties.
4) Declaratory decree cannot be used against any person who is not a party to the suit or in different
proceedings.
5) Example: If a Court makes a declaratory decree that Ram has conjugal Rights over Seeta, Suresh any other
person claims Seeta to be his wife, in this case the declaratory decree passed by the Court in favour of
Ram cannot be used as evidence.
PREVENTIVE RELIEF
• Preventive relief means a relief granted by the court through an injunction.
• When an aggrieved party suffers a loss due to continuing act of some other person which the other person
is under an obligation not to do. In this case, the court can stop the other person from continuing that act
by way of an injunction.
• Injunction means an order by the court stopping a person from doing, what he is under obligation not to
do.
TYPES OF INJUNCTIONS
a) Temporary Injunction: The injunction which is valid for a limited period of time & it is passed before final
decree, passed by the court. When final decree will be passed, Temporary Injunction will lose its effect.
Temporary Injunction is granted when the court believes that it is necessary to provide an immediate
relief to the aggrieved party before final decree is passed.
b) Perpetual Injunction: In order to prevent the breach of express or implied obligations by defendant the
Court can grant perpetual injunction to the plaintiff.

In cases where the defendant threatens the plaintiff that the defendant will not let the plaintiff enjoy any
right on the property the Court can grant permanent injunction:
a) When defendant is trustee of plaintiffs property and not returning the property.
b) When there is no standard for calculating the damage caused or may cause to plaintiff.
c) When compensation in money will not be adequate remedy.
d) When injunction is necessary to prevent multiple cases in respect of same matter.
Que: Under what circumstances perpetual injunction can be granted under the Specific Relief Act, 1963 ?

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c) Mandatory Injunction: When to prevent a breach of an obligation, it is necessary to compel certain acts
which the court is capable of enforcing, the court may grant mandatory injunction. At the time of
granting Mandatory Injunction the court may also compel the defendant to pay a reasonable compensation
to the plaintiff or performance of some specific acts for the plaintiff.
Conditions necessary for the Mandatory injunction are:
(1) The contract should comprise of two agreements, one affirmative and another negative.
(2) Both the agreements must be divisible.
(3) The negative agreement must relate to a specific act.
(4) The Court should be unable to compel specific performance of the affirmative agreement.
(5) The plaintiff must not have failed to perform the contract, so far as it is binding upon him.
(To stop negative terms and to start positive term)
In short by this injunction the court grants an injunction for the acts which the defendant should not do and
order the defendant to do the act which he must do under the contract.

WHEN INJUNCTION IS NOT GRANTED

As per section 41 of Specific Relief Act, 1963, in the below mentioned cases the Court does not grant an
injunction:
1. The Court does not grant injunction to stop any person from claiming an injunction during the
pendency of the suit.
2. The court does not grant injunction for stopping a party to the suit, to start any legal
proceeding in any inferior court.
3. The court does not grant injunction for stopping a party, to start any case in any criminal
matter.
4. The court does not grant injunction for stopping a party, from making a breach of contract
which can not be specifically enforced, for example if any contract is dependent on personal
skill of the party, the court can not ask a party, not to breach this contract.
5. The court does not grant injunction for stopping a party, from causing any nuisance when it is
not clear that such act will amount to nuisance.
6. The court does not grant injunction for stopping a party, when plaintiff has no interest in the
case.
7. The court does not grant injunction for stopping a party, when there is a breach of contract
and the plaintiff has given the consent to breach.
8. The court does not grant injunction for stopping a party, when the plaintiff or his agent has
become disqualified for getting the assistance of the Court.

EX-PARTE INJUNCTION
An injunction granted in presence of only one party to the suit & without hearing the other party to the suit is
known as ex-parte injunction.

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 CHAPTER: 10
INDIAN LIMITATION ACT,
1963
The intention behind passing limitation Act is to prescribe limitation
period for approaching the court and if a party approaches court after
expiry of limitation period the court will not accept the case.

According to above discussion we can conclude that if a party intends

approach the court it must approach within the period of limitation.

The limitation act applies to whole of India except the state of Jammu &
Kashmir.

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Q.: “Limitation Bars Remedy but does not extinguish Right”. Comment

Ans.: The limitation Act prescribes a period of limitation within which a court must be approached for
justice, if a party fails to approach court within the prescribed period of limitation. He will not be entitled to
any remedy through the court i.e. the parties cannot approach court after expiry of period limitation.
However such party always has a personal right to recover its right without the Aid of the court. So it can be
clearly stated that the limitation Act bars a remedy through court but does not extinguish the personal right.

In the case of Bombay Dying & Mfg. Co. Ltd. Vs State of Bombay, it was decided that if a claim is satisfied
outside the Court of law after the expiry of period of
limitation, it is not illegal.

For example, in the cases related to payment of the

money, a party may make personal demand for
recovery of his debt from the other party even after
the expiry of period of Limitation.

(Yeh dhyan rakiye ki

ke zariye aap ka court jane ka right khatam hota hai

par aap ka personal right jo hai use koi fark nai padta,
for example aap court ke bahr apne paise mang sakte
hai)

• Bars of Limitation: According to Sec. 3 of Act, if a party approaches the court after expiry of period of
limitation it is duty of court not to proceed with the case. When any suit is filed in the Court the Court
should on the date of filing of the plaint decide whether the suit or plaint is filed within or after the
period of limitation.

The effect of Section 3 is not to deprive the Court of its power to entertain the cases (jurisdiction).
Therefore, decision of a Court allowing a suit which had been started after the limitation period is not
affected for want of jurisdiction. A decree passed in a time barred suit is not a nullity.
(limitation act ka maksad parties ko court jane se rokna nai hai par parties ko zimmedar banana hai ki
parties time par court jayen jis se unhe jald nyay mile)

As per section 4 of Limitation Act, 1963, in case the limitation period expires on a day when the Court is
closed (court shall be deemed to remain closed if it is closed during any part of its normal working hour,
on that particular day) the suit, appeal or application may be made on the day when the Court reopens.

DOCTRINE OF SUFFICIENT CAUSE – Section 5

AGAR COURT JANE MAIN HO RAHI HAI DERI,
COURT SAMJHEGA TUMBARI MAJBOORI
1) Doctrine of Sufficient Cause is contained in section 5 of Indian Limitation Act, 1963 .According to this
doctrine if a party is able to prove that it was
prevented by a sufficient cause from
approaching the court. The court can accept
the case if the court is satisfied that there
was a sufficient cause.

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 The test of “sufficient cause” is purely an individualistic test, that means it is different in different
situations. It is not a neutral test. Two types of cases can not be given similar treatment. The limitation act
has not defined concept of ‘sufficient cause’ so basically Courts get a discretion to decide what is sufficient
cause and what is not depending upon the facts and circumstance of each case. There are no categories of
sufficient cause. In the case of R B Ramlingam v. R B Bhvansewari, it was decided that, The categories of
sufficient cause can never be fully defined. Each case has different circumstance and hence sufficient cause
in case differs.

2) Section 5 is an exception to section 3.

3) However it must be noted that this doctrine is applicable only to appeals and applications and not to the
suits. The section does not apply to suits because the suits already have long limitation period. Ranging
normally from 3 to 30 years in most of the cases.

• Case Laws :Ramlal Vs. RevaColdfails Ltd.

It was decided by the court that the sufficient reason must be beyond the control of parties.
It is the Court’s discretion to extend or not to extend the period of limitation even after the sufficient cause
has been shown and other conditions are also specified. However, the Court should exercise its discretion
judicially and not illogically.
(agar sufficient cause ke chalte aap court time par nai pahunch paye to aap ko extension of time milega)
Que: The decision of a Court allowing a suit which had been instituted after the period prescribed is not
vitiated for want of jurisdiction. Discuss it in the light of provisions under section 3 relating to Bar of
Limitation under Limitation Act, 1963.

Que: Discuss in brief the applicability and non-applicability of the doctrine of sufficient cause under section 5 of
The Limitation Act, 1963.

WHAT IS SUFFICIENT CAUSE AND WHAT NOT

BHAI LAW MAIN TO NAHI BATAYA HAI,
PAR APNE CONTROL KE BAHAR HOTA HAI!!

Sufficient cause depends upon the facts and circumstances of

each case. So below are the points that have been specified on
the basis of decisions of the Courts.
May be explained by below mentioned points:

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1) Wrong practice of High Court which mislead the applicant or his advocate in filing the Appeal is a
sufficient cause.

2) Sometimes wrong advice or mistake of counsel may also be considered a sufficient cause if the applicant
Acts in a good faith.

3) Sometimes mistake of law may be considered as sufficient cause but it must be noted that ignorance of
law is no excuse.

4) Serious illness or imprisonment of parties during the period of limitation can be considered as sufficient
cause.

5) Time taken for obtaining certified copy of decree with has to be attached with the Appeal can be ignored
from the period of Limitation.

6) Serious illness (ailment) of father during period of limitation can be considered as sufficient cause
(Mahendra Yadav v. Ratna Devi & others)

7) Non availability of the file with the state’s (Govt.) Counsel, is not a sufficient cause.

8) Imprisonment of the party may also be considered as sufficient cause.

Que: The test of ‘Sufficient Cause’ is purely an individualistic test, under the Limitation Act, 1963.
Clarify.

PERSON UNDER LEGAL DISABILITY : (SEC. 6, 7, 8)

DIABLE WALE KA LIMITATION PERIOD,
DIABILTY KHATAM HONE KE BAAD SHURU HOGA!!
Section 6 of Limitation Act, 1963 helps the persons
to file a suit who are under legal disability ex. :
Minor, lunatics, etc., in cases of these persons the
period of limitation starts after the cessation of
the disability.
Where the disability continues up to the death of
that person, his legal representative may institute
the suit or make the application within the period
of limitation after his death (means limitation
period will begin after death), but in that period if
legal representative is also under a legal disability,
then the limitation period will begin after the
ceasation of legal disability.

Where a person under disability dies after the

disability comes to an end but within the period of limitation, in this case his legal representative may
institute the suit or make the application within the period under which such deceased person whold have
instituted the suit if he had not died.

If the person was suffering from 2 disabilities then the limitation period will begin from the time when both
the disabilities come to an end or if before expiry of one disability if other disability arises in this case also
the limitation period will begin after end of both the disabiliites.

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Section 7 applies in the case where a group of persons are under a legal disability. In this case the period of
limitation starts on date on which any of group ceases his legal disability. This principle or rule is applied
when similar rights are to be claimed by Group of persons. In order to take the benefit of section 7, it is
necessary all the persons who have to claim a common right are under a legal disability.

For example, if the case is to be filed against the trustees by the beneficiaries on account of breach of trust
obligations, and all the beneficiaries are under legal disability, the period of limitation will begin from the
day when any one of the beneficiaries ceases his disability.

Section 8 puts an overall limit on section 6 and 7. The section provides that the fresh period of limitation
after cessation of disability cannot exceed 3 years. It means when the benefit of disability is availed under
section 6 or 7, the fresh period of limitation will be limited only to 3 years.

Continuous Running of Time (Sec. 9) : Section 9 of

Limitation Act, 1963 states that, once the time of
limitation has beuan to run no subsequent disability can
stop it.
Section 6 applies to the cases in which there was a legal
disability at some time of commencement of period of
limitation.

But section 9 deals with the cases in which legal disability

or inability arise after commencement of limitation
period.. So if any disability arises after commencement of
limitation period, no extension of time will be allowed by the court. It means section 9 will apply in the case
when on the date of start of limitatioin perid if there was no disability and the limitation period started so if
the limitation period is started, it can not be stopped later on.

Basically section 6 applies in the cases when on the But section 9 applies in the cases where on the date
date of commencement of limitation period any party of start of limitation period there is no legal disability
is subject to legal disability. and the period of limitation has begun to run.
Example of section 9:
Ram gave Rs. 700 to Shyam as debt and shyam promised to return the money on 25 th April 2011. On 26th April
Shyam refuse to make payment on 28th of April Ram goes mad. In this case no extension of time will be
allowed by the court.

However there is an exception to section 9: where letters of administration to the estate of a creditor have
been granted to his debtor, the running of the period of limitation for a suit to recover debt shall be
suspended while the administration continues.

It means if the debor during the period of limitation is appointed as executor by the Court by the issue of
letters of administration, for the estates of the creditors, in this case the limitation period against the debor
will be suspended, till the time the debtor has the administration of the estates of deceased creditor.

Letter of administration is issued for settlement of the property of the deceased person so if a person dies
without making a will then the court by issuing letter of administration appoints a person who will settle and
distribute the property of deceased amongst legal heirs of deceased.

So in the case of above exception if suppose creditor died without making a will, now the court has issues a
letter of administration in favour of debtor and the debtor was made incharge of properties of the creditor
now in this case if the limitation period against the debtor was already running (as the debtor would have
made a default in payments of the debts to the creditor when the creditor was alive and limitation period was

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started) will be suspended as soon as the debtor gets letter of administration and it will remain suspended till
the time the debtor manages the assets (estates) of deseased creditor.

Que: RAM BORROWED RS 10000 FROM SHYAM ON JAN 2009, AND PROMISE TO REPAY ON JAN.10.2010.
RAM FAILED TO PAY THE AMOUNT ON AGREED DATE, ON JAN-20-2010, SHYAM DIED LEAVING HIS MINOR
SON KUSHAL WHO WAS OF 14 YRS ON THE DATE OF DEATH OF SHYAM. KUSHAL FILED A CASE ON JAN 10,
2016. AFTER ATTAINING MAJORITY. WHETHER THE SUIT FILED BY KUSHAL IS MAINTAINABLE?
Que: Explain the nmeaning of continuous running of time under Section 9 of Limitation Act with exceptions
and applicability.

THE COMPUTATION OF PERIOD OF LIMITATION (Section 12 to 24)

1) In case of suits the period of limitation
will be calculated from next day from which
cause of action arose (it means we will exclude
the day from which the limitation period
begins to run, this rule also applies to appeals
and applications)

2) In case of Appeals and applications the

limitation period will start from the on which
the copy of order or decree passed by the
court is received.
However, the time taken by the Court to
prepare the decree or order before an application for a copy is made shall not be excluded in computing
the time for obtaining a copy of a decree or an order.
(It suggests that, as soon as decree is passed by the Court the appellant must file application to obtain the
copy of decree, if the he makes delay in filing the application for obtaining the copy of decree, than the
time that the court takes in preparation of decree will not be excluded while counting the period of
limitation – matlab order ki copy ke liye apply karne main jitna late kiya utna time limitation period main
count hoga)

3) In case where an appeal is made in a court against the award given by arbitrator. The period of limitation
will begin from the day on which copy of arbitral award is received.

4) In case where an appeal is to be made in the court against the award given by the arbitrator, the period
of limitation will begin from the day on which copy of arbitral award is received.
5) Exclusion of time during which leave to sue or appeal as bankrupt or indigent is applied for.
(Bankrupt or indigent person (the person who does not have the money to pay court fees) has the option
to apply to the Court for taking exemption from paying the Court fees, so if the indigent person applies
to the court for such expeption before starting the suit, the time that court takes in disposing of such
application will be excluded from the period of limitation)
5) In good faith if a party approached a wrong court, which did not have jurisdiction over such subject
matter, the time of such wrong suit can be excluded, however the plaintiff or the applicant must
prove that he acted with diligence.
Que: Explain the importance of ‘time requisite for obtaining a copy’ under Limitation Act, 1963 with the help
of case law.
Exclusion of time in other Cases
1) When a suit or application for the execution of a decree has been stayed by an injunction or order.
2) The time required to obtain the sanction or consent of the Govt. required, or a notice period shall also be
excluded in case of suits.

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 (In some cases, before the start of the suit we need to obtain the permission of the Central or State
Govt. before starting the case, so the time required to obtain such permission shall also be excluded from
the period of Limitaition)
3) If the receiver or liquidator has to execute any decree then the period of 3 months from the date of their
appointment shall be excluded.
(It means the receiver who is appointed to sell the property gets 3 months time extra from the date of
decree of the Court to execute the decree)
4) The time during which the defendant has been absent from India and from the territories outside India
administered by the Central Government, shall also be excluded.
5) In case of death of a person before the right to institute a suit accrues, the period of limitation shall be
computed from the time when there is a legal representative of the deceased capable of instituting such suit
or making such application. The same rule applies in case if defendant dies. It means if a person dies before
the arising of right to sue or making of application, then the period of limitation begins from the time when
there is legal representative of the deceased who is capable of instituting such suit (till the time the legal
representative becomes capable the limitation period will not commence, limitation period will start when 2
conditions are fulfilled, there is a legal representative + he is capable).

However, the above rule does not apply to suits to enforce rights of pre-emption or to suits for the possession
of immovable property or of a hereditary office (means in these cases even after death of the person the
limitation period will continue even if there is no legal representative or there is a legal representative and
he is not capable of filing a suit)

6) If a party could not approach the Court due to fraud or mistake of the other party i.e the defendant, the
time taken by the plaintiff in for discovering the fraud or mistake shall be excluded from the period of
limitation.
Que:Explain the importance of time requisite for obtaining a copy' under Limitation Act, 1963 with the help of
case law.
EFFECT OF ACKNOWLEDGEMENT ON PERIOD OF LIMITATION
BHAI KABUL HAI KABUL HAI KABUL HAI,
AGAR BOLA TO FRESH LIMITATION PERIOD SHURU HOGA
As per Section 18 of Limitation Act, 1963 if a debtor or his authorised agent, makes a written and signed
acknowledgement of his liability within the period of limitation the creditor is entitled for a fresh period of
limitation from the date of acknowledgement and the acknowledgement made by the debtor must relate to
the debt or any property. Acknowledgement must be made within expiry date of Limitation period i.e. 3
years.

So for example if the limitation period against Mr suresh started on 1.02.2021 then limitation period will
continue up to 01.02.2024, within this period if Mr. Suresh gives a written acknowledgement of his debt on
20.12.2020, then his creddior will get a fresh limitation period of 3 years from 20.12.2020.
If the signed acknowledgement is made but it is not dated then the date can be proved by oral evidences as
well.
If a Company or firm or individual shows in his signed balance sheet that he owes money to a specific person
then such balance sheet will also be considered as acknowledgement.

EFFECT OF PAYMENT ON ACCOUNT OF DEBT OR INTEREST

According to Section 19 of limitation Act, if a debtor or his authorised agent, makes a payment on account of
principle or interest before expiry of period of limitation the creditor is entitled for a fresh period of
limitation from the date of part payment made by the debtor.
The word debt used in this section does not include money payable under the order or decree of the Court.
That means if X was to pay Rs 10000 to Other person under the order of court, in this case on account of Rs
10000 if X makes any part payment then the other person is not going to get fresh period of limitation as this

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section applies only to the part payment of debts and debt does not include moany payable under the decree
of the Court.
(Note: If possession of property is given to the mortgagee & the mortgagee receives some profit from the
property, such profit will be considered as part payment of the debt.)
So for example if the limitation period against Mr suresh started on 1.02.2021 then limitation period will
continue up to 01.02.2024, within this period if Mr. Suresh makes payment of Rs 1000 on account of his debt
on 20.12.2020, then his creddior will get a fresh limitation period of 3 years from 20.12.2020.

Que: ARPIT TOOK A DEBT OF RS 10000 FROM BHARAT ON JAN, 1998 AND PROMISED TO PAY BY 31ST
DECEMBER, 2003. HE COULD NOT PAY SUCH DEBT WITHIN THE STIPULATED TIME ON 1ST DECEMBER,
2006, ARPIT PAID RS 500 AS INTEREST AGAINST SUCH DEBT TO BHARAT AGAINST RECEIPT, BHARAT FILED
A SUIT AGAINST ARPIT TO RECOVER SUCH DEBT ON 15TH DEC, 2008. WHETHER THE SUIT FILED BY
BHARAT IS WITHIN THE PERIOD OF LIMITATION? DECIDE WITH REASONS STATING RELEVANT PROVISIONS OF
THE LAW?

ACQUISITION OF OWNERSHIP BY POSSESSION SECTION 25

Section 25 applies to acquisition of easements. It provides that the right to access and use of light or air, way,
watercourse, use of water, or any other easement which have been peaceably enjoyed without
interruptionand for twenty years (thirty years if property belongs to Government) shall be absolute and
indefeasible. Suchperiod of twenty years shall be a period ending within two years next before the institution
of the suit.
(easement is basically a right that a person enjoys over the property of others and this right relates to right of
way, natural air, sunlight etc.) so as per section 25 if a person enjoys any easement without any intruption for
20 years or 30 years in case the property belongs to the Tovernemnt then such person gets the ownership of
property.
EFFECT OF LIMITATION UNDER CONSTITUTION
The Constitution of India gives the power to prescribe for limitation periods under the various laws, the power
also includes the power to make amendments in various laws for increasing or limiting the period of
limitation, however a reasonable time must be allowed for approaching the Court. The amendments made by
Constitution should not affect the fundamental rights of the citizens.

The law of limitation can not be declared as unconstitutional on the ground that it stops citizens from
approaching the Court. The law of limitation only affects the future right of action of the parties. It is a
protection and not a weapon of offence.

The State cannot place any difficulty by prescribing a period of limitation in the way of an aggrieved person
seeking to approach the Supreme Court of India under Article 32 of the Constitution. In the case of
Trilokchand Motichand Vs HP Munshi, it was decided that limitation act, does not apply, when the
fundamental rights of any person are violated, however in case of immoveable properties, if a suit has to be
filed under Constitution of India, then the limitation act will apply.

In the case of State of MP Vs. Bhai Lal Bhai, it was decided that, The Limitation Act does not in terms apply
to a proceeding under Article 32 or Article 226 (Right of Constitutional Remedies) of the Constitution. But the
Courts act on the ground of the law of limitation, refuse relief if the delay is more than the statutory period
of limitation

CLASSIFICATION OF PERIOD OF LIMITATION

Period of 30 years: The maximum period of limitation prescribed by the Limitation Act is 30 years and it is
provided only for three kinds of suits:
1. Suits by mortgagors for the redemption or recovery of possession of immovable property mortgaged;
2. Suits by mortgagee for foreclosure;

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3. Suits by or on behalf of the Central Government or any State Government including the State of Jammu and
Kashmir.

Period of 12 years: A period of 12 years is prescribed as a limitation period for various kinds of suits relating
to immovable property, trusts and endowments.

Period of 3 years: A period of three years has been prescribed for suits relating to accounts, contracts,
declaratory suits, suits relating to decrees and instruments and suits relating to movable property.

Period varying between 1 to 3 years: The period from 1 to 3 years has been prescribed for suits relating to
torts and other miscellaneous matters and suits for which no period of limitation is provided in the schedule
to the Act.

Period in days varying between 10 to 90 days: The minimum period of limitation of 10 days is prescribed for
application for leave to appear and defend a suit under summary procedure from the date of service of the
summons.
For appeals against a sentence of death passed by a court of session or a High Court in the exercise of its
original jurisdiction the limitation period is 30 days.
For appeal against any sentence other than a sentence of death or any other not being an order of acquittal,
the period of 60 days for the appeal to High Court and 30 days for appeal to any other Court is prescribed.
Que: State the Minimum and Maximum period of limitation under Limitation Act?

IMPORTANT LIMITATION PERIODS

[Link] Suits relating to contract – 3 years.
Suits Relating to Immoveable Property.
To enforce payment of money 12 years When the money
secured by a mortgage or otherwise sued for becomes
charged upon immovable property. due.
By a mortgage
(a) for foreclosure; Thirty years When the
money
secured
by the
mortgage
becomes
due.
(b) for possession of immovable 12 years When the mortgage becomes entitled
property mortgaged. to possession.
For possession of immovable property 12 years The date of dispossession.
based on previous possession and not
on title, when the plaintiff while in
possession of the property has been
dispossessed.
For possession of immovable property 12 years When the possession of the defendant
or any interest therein based on title. becomes adverse to the plaintiff.
Explanation – for the purposes of this article -
(a) Where the suit is by a remainder-

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SUITS RELATING TO MOVEABLE PROPERTY
For specific movable property lost, or 3 years When the person having the right to the
acquired by theft, or dishonest possession of the property first learns in
misappropriation or conversion. whose possession it is.
For other specific movable property. 3 years When the property is wrongfully taken.
To recover movfable property deposited 3 years The date of refusal after demand.
or pawned from a depositary or
Pawnee.
To recover movable property deposited 3 years When the sale becomes known to the
or pawned, and afterwards brought plaintiff.
from the deposited or pawned, and
afterwards brought from the depositary
or pawnee for a valuable consideration.

Division II
SL. DESCRIPTION OF SUIT PERIOD OF TIME FROM WHICH
NO. LIMITATION PERIOD BEGINS TO RUN

Appeal from an order of acquittal, -

(a) under sub-section (1) or sub-section (2) of section 90 days The date of the order
417 of the Code of Criminal Procedure,1898; appealed from.

(b) under sub-section (3) of Section 417 of the that 30 days The date of the grant
Code. of Special leave.
Under Code of Criminal Procedure,1898
(a) From a sentence of death passed by a court of 30 days The date of the
section or by a High Court in the exercise of its sentence
original Criminal Jurisdiction.
(b) From any other sentence or any order not being
an order of acquittal -
(i) to the High Court 60 days The date of the
sentence or order.
(ii) to any other Court 30 days The date of the
sentence or order.
Under the Code of Civil Procedure,1908
(a) To a High Court from any decree or order; 90 days The date of the
decree or order.
(b) To any other court from any decree or order. 30 days The date of the
decree or order.
From a decree or order of any High Court to the Thirty days The date of the
same Court. decree or order.
[Link]. DESCRIPTION OF SUIT PERIOD OF TIME FROM WHICH
LIMITATION PEROID BEGINS TO
RUN

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 For leave to appear and defend a suit Ten days When the summons
under summary procedure. is served.
Under the Arbitration Act,1940
(a) For the filing in court of an award; Thirty days The date of service
of the notice of the
making of the
award;
(b) For setting aside an award or getting Thirty days The date of the
an award remitted for reconsideration. service of the
notice of the filing
of the award.
Under the Code of Civil Procedure,1908, Ninety days The date of the
to have the legal representative of a death f the
deceased plaintiff or appellant or of a plaintiff, appellant,
deceased defendant or respondent, defendant or
made a party. respondent, as the
case may be;
Under the same Code for an order to set Sixty days The date of
aside an abatement. abatement.
To restore a suit or appeal or application Thirty days The date of dismissal.
for review or revision dismissed for
default of appearance or for want of
prosecution or for failure to pay costs of
service of process or to furnish security
for costs.

INDIAN LIMITATION ACT 1963 : Summary notes :

1) The objective of the act is to provide for limitation period for approaching the court in various
matters.
2) As per sections 3 of the act, if any party approaches the court after the expiry of period of limitations
the court shall not proceed with case.
3) However on its discretion if any court accepts the case offer expiry of period of limitations then it is
not illegal:- Bombay Dying case.
4) As per section 5 if a party approaches the court beyond the period of limitation, & court is satisfied
that such party was prevented by a sufficient cause then the court can extend the period of
limitations.
5) However, the benefit of section 5 is available only to appeals & not to the suit , as suits already have a
long limitation period.
6) Mistake of High court, Mistake of Counsel, serious illness, imprisonment, can be considered as
sufficient cause.
7) On the day of comments of period of limitations if any party was subject to legal disability then
limitations period disability , however the fresh period of limitation after expiry of legal disability, the
period of limitation starts when any member of group ceases its legal disability, it cannot exceed 3
years.
8) If group of persons who have common rights are under legal disability the period of limitation starts
when any member of group ceases its legal disability.

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9) If limitations period beings to run no subsequent disability can prevent it (sec 9) however the letter of
administrations of creditors property has been granted to debtor. The limitation period suspends the
debtor, till the time debtor is in charge of creditors property.
10) Commencement of period of limitation :
a) In case the decisions of any court is to be challenged then the time required for obtaining the copy of
appeal shall be excluded, the time period consumed in making app for the copy will not be excluded.
b) The period doing which app of bankrupt or indigent person is pending
c) In case of arbitral award, the period beings to run when the copy of arbitral award is received if suit is
to be file against the govt. then the period of statutory notice. To the Govt. is excluded in limitations
period
d) Receiver is granted 3 months time from the date of his appointment to execute the decree of the
court.
In the a party or it agents makes a written and singed acknowledgement is it’s debts or makes a part
payment of its debts or interest within the period of limitation from the date of such
acknowledgement or part payment.
11) If a person enjoys the continuous possession of an easements for a period of 20 to 30 years if the
property belongs to Govt. such persona gest ownership by possessions.
12) The limitations Act is not unconstitutional as the constitution allows for the period of limitations
however there should no limitation period for applying to the court in the case relating to breach of
fundaments rights but the court can refuse to entertain case relating to fundamental rights, if the
court is approached beyond limitation period (in exceptional case only)
13) Under the limitations Act, the limitations period is classified the period of 30, 12, 1-3 year

CHAPTER: 11
ARBITRATION & CONCILIATION

INTRODUCTION

COURT KE BAHAR JAKAR,

PYAR MOHABBAT SE JHAGDA SULJHANA

Arbitration is a procedure of settling a dispute related

to civil matters (business matters). Arbitration and
Conciliation Act was passed in the year 1996, to
promote the process of Arbitration & also compelling
the parties to follow the decision passed by an
arbitrator.

Our Arbitration & Conciliation Law is based on

UNCITRAL, model law on International Commercial
Arbitration. Arbitration has helped in receiving

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foreign investments by the country.

UNCITRAL

This is a core legal body of the United Nations system in the

field of international trade law. It is a legal body with
universal membership specializing in commercial law reform
worldwide for over 40 years. UNCITRAL's business is the
modernization and harmonization of rules on international
business.

IMPORTANT DEFINITIONS

Arbitration: Section 2(1) (a) of the Act, defines the term

“arbitration” as to mean any arbitration whether or not administered by a permanent arbitral institution.

Which basically means, settlement of dispute through third party, without following the normal course of
settling the dispute, by approaching the court.

Through arbitration, We settle the civil disputes between the parties. However the disputes given in section
145 of Criminal Procedure Code, relating to “possession” may be settled through arbitration.

ARBITRATOR

YAHI HAI WO INSAN, JO AAPKA JHAGADA SULJHAEGA,

AUR BANAEGA AAP KI LIFE AASAN
1) He is a person who is appointed to resolve the disputes between the parties.
2) The appointment of arbitrator is complete
when he accepts the appointment. There are no
qualifications prescribed in the Act for appointment
of an arbitrator. Both the parties, by an agreement,
can appoint an arbitrator.
3) Arbitrator should be an independent person.
4) He must not have any interest in the dispute.
5) He must be impartial.
6) He must disclose his interest, if any, on or
before his appointment.

The parties may appoint whomsoever they please to arbitrate on their dispute. Usually the parties themselves
appoint the arbitrator or arbitrators.

In certain cases, the Court can appoint an arbitrator or umpire. The parties to an arbitration agreement may
agree that the dispute shall be referred to a particular arbitrator or to the arbitrator designated by any
person or by any person who holds any particular office.

ARBITRAL TRIBUNAL

When more than one arbitrator is appointed, such panel or

group of arbitrators becomes arbitral tribunal.

ARBITRAL AWARD: Section 2(1)(c)

It means a judgement or an order passed by an arbitrator or

arbitral tribunal.

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Arbitral award is the decision of arbitrator or of arbitral tribunal.

CHARACTERISTICS OF AN ARBITRAL AWARD – Section 31

ARBITRATOR KE DWARA DIYA GAYA FIASLA,

ARBITRAL AWARD KAHLATA HAI!
1) Arbitral award should be in writing on the stamp paper. The award should be signed by all the members
of arbitral tribunal.
2) Signature of award by majority of members can be
taken as sufficient, in case the reason for omission of
signatures of remaining members is provided.
3) The arbitral tribunal should also give reasons for
passing an order / award.
4) However, in following 2 cases reasons are not
required :
a) If parties had agreed for non-providing of reasons at
the time of entering into agreement.
b) Where the award has been passed with mutual
consent of the parties.
5) Date of passing the award
6) Place of passing the award.
7) The award may contain a provision of interest.
Example: Bajaj should pay to Kawasaki a sum of Rs. 15 Crore for usage of technology for 4 years and if
Bajaj could not pay it within 2 months, it will be liable to pay interest @ rate of 12% p.a.

In case the arbitral tribunal does not specify the rate of interest, it shall be 2% higher than the current rate of
interest.

8) The award may also include decisions and directions of the arbitrator regarding the cost of thearbitration.

9) After the award is made, a signed copy should be delivered to each party for appropriate action like
implementation or recourse against arbitral award.

10) The arbitral tribunal may also pass an interim award during the arbitral proceedings. The interim award is
also referred as “partial award”.

QUE:- Explain the basic features of Arbitral Award under the Arbitration and Conciliation Act, 1996.

LEGAL REPRESENTATIVE – 2(1) (g)

This word has been defined in the same manner as it is defined under the provisions of Code of Civil
Procedure.

It means the person who represent the estate of deceased person,

or who handles the assets of deceased person or who represents
the deceased person in the capacity of representative.

It also includes the executers or officers appointed by the Court

or the person who has taken responsibilities & duties of the
executors. Hairs in law are also considered as Legal
Representative.

The term legal representative is defined because section 40

clearly states that the arbitration agreement is not discharged by
death of any party to the arbitration.

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AD HOC ARBITRATION

An arbitration in which the parties themselves make an agreement, appoint arbitrator & resolve the dispute
without administrative support or without the help of
any arbitral institution. This kind of arbitration is
called as ad hoc arbitration.

It can only be successful if it is done in good faith,

mutual respect & in the spirit of co-operation.

If properly structured ad hoc arbitration is less

expensive & fast. A distinct disadvantage of this
approach is that its effectiveness depends on the
willingness of the parties.

INTERNATIONAL COMMERCIAL ARBITRATION

ICA means setting the dispute outside the court &

the dispute relates to any business and commercial
transaction arising out of a legal relationship
between two / more parties and at least one of the
parties is:

a) An individual who is national of, or habitually

resident in, any country other than India, or

b) A body Corporate which is incorporated in any

country other than in India, or

c) Government of foreign Country, or

d) An association of persons or body of individuals whose central management and control is exercised in any
country other than india.

Mainly, the disputes related to international transactions are settled under WTO dispute resolution process.

COURT

Beta court hame kaam aata hai jab hamare arbitration procedure main kuch gadbad hai ya koi party
arbitrator ke faisle se khush nai hai, is case main parties court ja sakti hai, normal arbitration ke case
main court ek district court ke sath sath high court bhi ho sakta hai agar wo court arbitration wale
dispute ko entertain kar sakta agar parties ke beech main arbitration nai hota. Us ke bad internation
commercial arbitration main court ka matlab high court hoga!

(i) in the case of an arbitration other than (ii) in the case of international commercial
international commercial arbitration, the principal arbitration, the High Court in exercise of its ordinary
Civil Court of original jurisdiction in a district, and original civil jurisdiction, having jurisdiction to decide
includes the High Court in exercise of its ordinary the questions forming the subject-matter of the
original civil jurisdiction, having jurisdiction to decide arbitration if the same had been the subject-matter
the questions forming the subject-matter of the of a suit.
arbitration if the same had been the subject-matter
of a suit,
But does not include any civil court of a grade inferior
to such principal Civil Court, or any Court of Small

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Causes;

ARBITRATION AGREEMENT: SECTION 7

It means an agreement between the parties to refer their

dispute to an arbitrator or an agreement by which parties
agree to resolve their dispute through arbitration
procedure.

1) It must be in written & signed form.

2) Arbitration agreement can be separately entered
into by the parties or it can be included as a separate
clause into any other business agreement.
3) Shall considered to be in writing if it is in the form
of letter, a paper signed by the parties or in the form of
statement of claims &defense between the parties.
4) Certain disputes related to matrimonial issue,
criminal matters, questions related to guardianship, about validity of a will cannot be solved through
arbitration.
5) It should contain date of agreement, place of agreement and the name of arbitrator if any.

As per Section 31(8) the cost of arbitration shall be fixed by the arbitral tribunal in accordance with section
31A.

In the case of Rukmanibai Gupta Vs Collector, it was decided that there is no particular format of the
arbitration agreement, it just needs to be in writing and signed by the parties or their authorised agents.

In the case of Oil Production Association Vs United World Trade Association, the parties in their business
agreement agreed that, arbitration if any, will be done by the International Chamber of Commerce (ICC)
Rules, the Court decided that, it is a valid arbitration agreement.

An arbitration clause in the agreement does not attract separate stamp duty.

POWER TO REFER PARTIES TO ARBITRATION WHERE THERE IS AN ARBITRATION AGREEMENT

ARBITRARION AGREEMENT TO KAR LIYA HAI,

FIR BHI COURT JANE KA DIL KAR RAHA HAI!

As per section 8 of Arbitration and Conciliation Act, 1996, if

any party approaches the Court for resolving the dispute
which is a subject matter of arbitration agreement, on or
before the date of submission of statements to the Arbitrator
then, in spite of any judgment, decree or order of the
Supreme Court or any Court, refer the parties to arbitration
unless the Court is satisfied that there is no valid arbitration
agreement.

The party who is applying for relief from the Court shall
submit original agreement with the application or the duly certified copy of the agreement.

If the party is not able to produce the certified copy of the arbitration agreement as the same is not provided
by the other party in this case the party may produce the copy of agreement and request the Court to order
the other party to produce original agreement or its certified copy before the Court.

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Even if an application has been made in the Court, and the application is pending before the Court,
arbitration may be commenced or continued and an arbitral award made.

In the case of Aman Finance Corporation Vs, Nitesh Kumar Sinha, the buyer of a truck on hire purchase
basis, defaulted in payment of instalments and the hire purchase agreement contained the clause of
arbitration and in spite of this the buyer approached the Court, when his vehicle was seized by the financer,
the Court decided that the Suit is not maintainable as there is a valid arbitration agreement.

Beta kul milakar agar 2 parties ke beech main arbitration agreement hai to Court section 8 ke andar parties ko
order de sakta hai ki aap apna dispute arbitration ke zariye resolve kigiye, lekin Court aisa order tabhi dega
jab court is cheez se satisfied hai ki parties ke beech main ek valid arbitration agreement hai!

INTERIM MEASURES BY THE COURT: Section 9

1) Any party can before or during the arbitral proceeding or after the making of arbitral award and before
the enforcement of arbitral award, can approach the court for interim measures by the court.
sabse pahle parties interim relief arbitrator ya arbitral tribunal se mangti hai par agar wo relief tribunal
na de to apan section 9 ke andar court ja sakte hai aur court case ko dekne ke bad apni iccha ke aadhar
par interim relief de sakta hai!
2) This provision is based on UNCITRAL model law
on international commercial arbitration.
3) The parties can approach the court for getting
any interim relief. E.g. :
a) Appointment of guardian for a minor or a lunatic
person,
b) Protection of any assets,
c) Injunctions.
d) Appointing any receiver
e) Deposit of amount in dispute
f) The detention, preservation or inspection of any property or thing which is the subject-matter ofthe
dispute in arbitration.

The power to grant interim measure is purely discretionary power of the court.

Further, where, before the commencement of the arbitral proceedings, a Court passes an order for any
interim measure of protection (as given above in points a to f) the arbitral proceedings shall be commenced
within a period of ninety days from the date of such order or within such further time as the Court may
determine.

Once the arbitral tribunal has been constituted, the Court shall not entertain an application for interim
measure, unless the Court finds that circumstances exists which may not render the remedy provided under
section 17 effective (section 17 deals with interim reliefs by the Arbitrator).

“Iska matlab yeh hua pahle aap arbitrator se mango interim relief agar won a de to fir Court jao”

In the case of NPEC India Ltd Vs Sundaram Finance Limited, it was decided that relief under section 9 of the
Act can not be granted unless some proceeding is pending under Arbitration and Conciliation Act, 1996.

QUE: Explain the provisions for obtaining interim relief from Court, when there exists arbitration agreement
among parties

NUMBER OF ARBITRATORS – Section 10

If more than one arbitrator is appointed to resolve the disputes then such number of arbitrators has to be odd
in number.

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If more than one arbitrator could not be appointed, the arbitration tribunal shall consist of only one
arbitrator.

MMTC Limited vs. Sterlite Industries Limited

However section 7 of the act is silent on the part of mentioning number of arbitrator in the arbitration
agreement & hence the arbitration agreement will not be treated as invalid even if it specifies the even
number of arbitrator.

APPOINTMENT OF ARBITRATOR

Section 11 of Arbitration and Conciliation Act, 1996

contains the procedure regarding appointment of
Arbitrator.

Parties khud se decide kar sakti hai arbitrator appoint

karne ka tareeka agreement main, ya fir parties yeh bhi
kah sakti hai ki wo ek ek arbitrator appoint karnegi aur
wo arbitrators teesra arbitrator appoint karengi, agar
arbitrator in tareekon se appoint nai ho saka to koi bhi
party arbitral institution jise high court ya supreme
court ne designate kiya hai us ke pas ja sakti hai
arbitrator ke appointment ke liye, lekin agar agreement
main koi aur tareek likha hai to arbitral institution ke
pas jane ki jarrorat nai hai!

Agar koi arbitral institution maujud nai hai to Chief Justice of High Court, panel of arbitrator appoint kar dega
jo arbitral institution ke function nibh agar ek party ke request par dusri party 30 days ke andar arbitrator
appoint karne ke liye taiyar nai hoti ya 2 arbitrator 30 din ke andar teesra arbitrator appoint nai kar pate to is
case main arbitral institution arbitrator appoint kar sakti hai, arbitrator ko appoint karne ka application 60
days main nipat jana chahiye.

➔ The Arbitrator may belong to any Country. However the parties may in arbitration agreement provide that
the arbitrator shall not belong to any specific country.
➔ The parties may decide the procedure regarding appointment of arbitrator. The parties may also agree
that they will be appointing one arbitrator each and the appointed arbitrator will appoint the third
arbitrator to act as umpire.
➔ If the parties fail to appoint the arbitrator as per the procedure mentioned in arbitration agreement or a
person does not act as arbitrator as per the procedure mentioned in the agreement or if 2 arbitrators fails
to appoint the third arbitrator, in this case a party may request the Arbitral Institutions designated by
High Court or Supreme Court to take steps to appoint the arbitrator, however this process will not apply
when arbitration agreement provides any other matter.
➔ In case where no graded arbitral institutions are available, the Chief Justice of the concerned High Court
may maintain a panel of arbitrators for discharging the functions and duties of arbitral institutions.
➔ The parties may also agree that they will be appointing one arbitrator each, however in this case
arbitrators appointed by the parties shall appoint the third arbitrator.
➔ In case a party fails to appoint arbitrator within 30 days of the request from the other party or if
arbitrator fails to appoint the third arbitrator within 30 days of their appointment, in both of these cases,
the arbitrator shall be appointed on the request of the party by Arbitral Institutions designated by High
Court or Supreme Court.
➔ When such request is made to Arbitral Institutions designated by High Court or Supreme Court will check
whether there is an arbitration agreement or not.
➔ The decision of appointment of arbitrator by Arbitral Institutions designated by High Court or Supreme
Court shall be final.

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➔ Before appointing any person as arbitrator the Arbitral Institutions designated by High Court or Supreme
Court, may obtain disclosures from such arbitrator regarding his qualification or any other relevant
information.
➔ In the case of appointment of sole or third arbitrator in an international commercial arbitration, the
arbitral institution designated by the Supreme Court may appoint an arbitrator of a nationality other than
the nationalities of the parties where the parties belong to different nationalities.
➔ When the request has been made to Supreme Court or High Court to appoint arbitrator, the Supreme
Court or High Court shall try to dispose of the application within a period of 60 days from the date of
service of notice on the opposite party.
➔ The High court may make rules for payment of fees to arbitrator.
➔ The arbitrator, the arbitral institutions and the parties shall maintain confidentiality of information
relating to arbitral proceedings and also protect the arbitrator or arbitrators from any suit or other legal
proceedings for any action or omission done in good faith in the course of arbitration proceedings.
➔ Section 11(14) states that the arbitral institution shall determine the fees of the arbitral tribunal and the
manner of its payment to the arbitral tribunal subject to the rates specified in the Fourth Schedule.
➔ It may be noted that Section 11(14) shall not apply to international commercial arbitration and in
arbitrations (other than international commercial arbitration) where parties have agreed for
determination of fees as per the rules of an arbitral institution.

The organizations such as Indian Council of Arbitration, International Center for Alternate Dispute Resolution
etc. help the parties in resolving the dispute through arbitration.

In the case of Punjab Agricultural University Vs. Associates Construction, it was decided that, if the
Arbitration Agreement contained the name of arbitrator than the Court must appoint the same person as the
arbitrator, however if such person refuses to act as arbitrator or if the arbitrator fails to act as arbitrator than
the Court can appoint some other person as arbitrator.

In the case of ACC Limited Vs Global Cements Ltd, the Court decided that, survival of the arbitration
agreement post death of named arbitrator depends upon, the intention of the parties.

GROUNDS FOR CHALLENGE OF APPOINTMENT OF ARBITRATOR: SECTION 12

When a person is approached for his appointment as

arbitrator, he shall disclose his present or past interest or
relationship with the parties or any interest in the subject
matter of the dispute and the circumstances which may
affect his devotion of sufficient time to the process of
arbitration due to which he will not be able to complete the
process of arbitration in 12 months.

If any interest of arbitrator arises during the process of

arbitration the arbitrator shall disclose his interest to the
parties.

The appointment of arbitrator can be challenged on the

following grounds as provided under the Act:

a) Independence or impartiality is doubtful.

b) He does not have the qualification as agreed by the Parties.

A party may challenge an arbitrator appointed by him, or in whose appointment he has participated, only for
reason, of which he becomes aware after the appointment has been made.

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If the relationship of a person with the parties or the representative of the parties falls under the categories
as described under schedule VII, such person shall be ineligible to be appointed as arbitrator, irrespective of
any contrary agreement between the parties.

However the parties by an agreement can waive this ineligibility if this ineligibility arises after arising of
dispute.

In the case of International Airports Authority of India Vs KD Bali, it was decided that, in case the arbitrator
happens to be the employees of one of the parties, it can not be said that he is partial.

CHALLENGE PROCEDURE – Section 13

1) The parties are free to decide a procedure to challenge the arbitrator.

2) The party who wants to challenge the appointment of arbitrator shall, within 15 days of becoming
aware of constitution of arbitral tribunal or after becoming aware of any of the grounds for challenge
as given in section 12, write to the arbitrator with reasons for his removal.

Challenge Successful Challenge Unsuccessful

→ Then arbitrator → Then arbitrator

resigns. continues.
→ All the previous → In this case all the
decisions will previous decision given
become invalid. By the arbitrator will
remain valid.
→ The dissatisfied parties
can Approach the court,
for setting aside the
award under section 34
of the Act.

If the other party has also agreed on the challenge than the arbitrator may be removed. But if the arbitrator
neither himself resigns nor the other party agrees to the challenge than the arbitration tribunal shall decide
the question of challenge.

FAILURE / IMPOSSIBILITY TO ACT AS AN ARBITRATOR: Section 14

1. The mandate of an arbitrator shall terminate and he shall be substituted by the other if,

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 a. The arbitrator becomes disqualified as to perform his functions.

b. he himself resigns from his office or both the parties agree to terminate him.

2. If the controversy remains on disqualification of the arbitrator and the parties do not reach to a consensus
than any party may approach the Court.

SUBSTITUTION – Section 15

The parties shall substitute an arbitrator as per the rules which were applicable to the arbitrator being
replaced.

On the following grounds, the Arbitrator will be replaced.

If arbitrator withdraws
from office by himself.

If he becomes of unsound
mind / incapacitated.

If the parties remove him.

As per section 15, If parties do not agree otherwise, an order or ruling of the arbitral tribunal made prior to
the replacement of an arbitrator under this Section shall not be invalid solely because there has been a
change in the composition of the arbitral tribunal.

Note: If the arbitrator is substituted, the newly appointed arbitrator can decide whether to restart the
proceeding or to continue the proceeding.

COMPETENCE OF ARBITRAL TRIBUNAL TO RULE ON ITS JURISDICTION – Section 16

AGAR APNI AUKAR KAR RAHA HAI AT CROSS,

BATA DO AT, KO AUR NIKAL DO APNI BHADAS!

Yeh section basically arbitrator ko kuch powers deta hai

jaise ki agar arbitration agreement ki validiye pe koi
doubt hai to arbitrator faisla de sakta hai + arbitrator
yah bhi kah sakta hai ki bhale hi agreement invalid hai
par jo arbitration clause hai agreement main wo valid
hai + agar koi party kahna chahti hai ki yah particular
power arbitrator ke pas nai hai to use apna sdefence

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statement file karne ke time par kahna chahiye par arbitrator use bad main bhi allow kar sakta hai, aur bhale
hi aap ne arbitrator ko appoint karwaya tha aap us ke jurisdiction par question utha sakte ho!

The jurisdiction of arbitral tribunal is decided by the parties through arbitration agreement. Jurisidiction of
arbitral tribunal means the matters on which the arbitral tribunal can pass decision.

As per section 16 the Arbitral Tribunal may rule its own jurisdiction including the power to decide whether
the arbitral agreement is valid or not or whether the objections raised under the arbitration agreement are
valid or not.

The arbitration tribunal may also order that the arbitration clause in the business contract shall be treated as
a separate arbitration agreement and in case the business contract is void the arbitral tribunal may order that
the arbitration clause shall not be affected due to invalidity of business contract.

If any party wants to raise question on the jurisdiction of arbitral tribunal then it must do so before
submitting its statement of defence and a party shall not be stopped from raising such questing just on the
ground that it had participated in the appointment of arbitrator.

However the arbitral tribunal may also accept delayed applications if it considers it to be justified.

A request that the arbitral tribunal is exceeding its jurisdiction, shall be raised as soon as such matter is
raised in the arbitral proceedings. H!owever the arbitral tribunal may also accept delayed applications if it
considers it to be justified.

The arbitral tribunal will decide on the request or plea of the party, as to whether to continue or not, the
arbitral proceedings.

The dissatisfied party can approach the Court under section 34 of the Act.

In the case of Ispat Engineering Vs SAIL, it was decided that the arbitrator has no authority or jurisdiction
beyond what is stated in the terms of arbitration agreement.

In the case of Everest Holdings Limited Vs Shyam Kumar Shrivastava, it was decided by the Court that the
Arbitration Tribunal does not have the power to order for winding up of the Company as .this powers is given
to the Court or NCLT, however the Tribunal can decide the question of, whether the Company is operational
or not.

INTERIM MEASURES ORDERED BY ARBITRAL TRIBUNAL: SECTION 17

1) At any time during the arbitral proceedings or at any time after passing of the arbitral award but before
its enformcement, the Arbitral Tribunal can pass any interim measures to prevent any injustice happening
to a party.
2) Interim measures can be passed in the form of any interim award.
3) Interim measure will be valid until final measure is passed.

Any party can before or during the arbitral proceeding or before the enforcement of arbitral award, can
approach the Arbitral Tribunal for interim measures by Arbitral Tribunal.

This provision is based on UNCITRAL model law on international commercial arbitration.

4) The parties can approach the Arbitral Tribunal for getting any interim relief, such as:
a) Appointment of guardian for a minor or a lunatic person,
b) Protection of any assets,
c) Injunctions.
d) Appointing any receiver
e) Deposit of amount in dispute

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 f) The detention, preservation or inspection of any property or thing which is the subject-matter ofthe
dispute in arbitration.

Any order issued by the arbitral tribunal under this section shall be deemed to be an order of the Court for all
purposes and shall be enforceable under the Code of Civil Procedure, 1908, in the same manner as if it were
an order of the Court.

Arbitral award enforce hone ke pahle aap kabhi bhi arbitrator se interim relief mang sakte hai!

EQUAL TREATMENT OF PARTIES – Section 18

According to Section 18 of the Act, the parties

shall be, treated with equality and each party shall
be given a full opportunity to present his case.

DETERMINATION OF RULES OF PROCEDURE –

Section 19

Section 19 deals with determination of rules of

procedure. It says that:

1. The arbitral tribunal shall not be bound by the Code of Civil Procedure, 1908 or the Indian Evidence Act,
1872

2. The parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting its
proceedings.

3. Failing any agreement, the arbitral tribunal may, conduct the proceedings in the manner it considers
appropriate.

4. The power of the arbitral tribunal includes the power to determine the admissibility, relevance, materiality
and weight of' any evidence

Award of interest:

If the award relates to payment of money by a party to another party, such award may also contain the rate
of interest to be paid by a party to the another party in case the payment is not paid within stipulated time.

If the rate of interest is not decided by the arbitrator, then it will be paid at the rate of 18% p.a.

ARBITRAL PROCEEDING

➢ 2 parties
➢ Disputes,
➢ Arbitration,
➢ Arbitration agreement,
➢ Appointment of arbitrator,
➢ Decide the place and commencement of arbitration,

SECTION 20 – PLACCE OF ARBITRATION

Place can be decided by the parties.

If parties fail to decide the place, the arbitral tribunal shall decide the place as well after considering the
cercumstances of the case and the convenience of the parties.

COMMENCEMENT OF ARBITRATION – Section 21

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The date of commencement of arbitration is important for determining the period of limitation. If the parties
do not agree on any date for commencement of arbitration than the date on which request is received by one
party from other to make a reference of the dispute arbitration shall be considered as the date for
commencement of the period of arbitration.

Jis din ek party ki request dusri party ko milti hai, jis main yeh kaha gaya hai ki dispute arbitration ke zariye
resolve hoga, usi din se arbitration praoceedings shuru mani jayenge!

LANGUAGE OF ARBITRATION – Section 22

Parties can decide the language and if no language is decided, the Arbitral Tribunal decides the language. The
arbitral tribunal also decides the language of written statement and the award if arbitral agreement does not
specify any language.

ARBITRATION PROCEDURE : Section 23

Within the period of time agreed upon by the

parties or determined by the arbitral tribunal,
the claimant shall state the facts supporting
his claim, the points at issue and the relief or
remedy sought, and the respondent shall state
his defence in respect of these particulars,
unless the parties have otherwise agreed as to
the required elements of those statements.

The parties may submit with their statements

all documents they consider to be relevant or
may add a reference to the documents or
other evidence they will submit.

The respondent, in support of his case, may

also submit a counter claim or plead a set -off,
which shall be adjudicated upon by the arbitral tribunal, if such counterclaim or set-off falls within the scope
of the arbitration agreement.

If parties have not agreed anything else, either party may amend or supplement his claim or defence during
the course of the arbitral proceedings, unless the arbitral tribunal considers it inappropriate to allow the
amendment or supplement having regard to the delay in making it.

Statement of claim and defence under this section shall be completed within a period of six months from the
date the arbitrator or all the arbitrators, as the case may be, received notice, in writing, of their
appointment.

HEARINGS AND WRITTEN PROCEEDINGS: Section 24

Unless otherwise agreed by the parties, the arbitral tribunal shall decide whether to hold oral hearings for the
presentation of evidence or for oral argument, or whether the proceedings shall be conducted on the basis of
documents and other materials.

The arbitral tribunal shall hold oral hearings, at an appropriate stage of the proceedings, on a request by a
party, unless the parties have agreed that no oral hearing shall be held.

The arbitral tribunal shall, as far as possible, hold oral hearings for the presentation of evidence or for oral
argument on day-to-day basis, and not grant any adjournments unless sufficient cause is made out, and may
impose costs including exemplary costs on the party seeking adjournment without any sufficient cause

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The parties shall be given sufficient advance notice of any hearing and of any meeting of the arbitral tribunal
for the purposes of inspection of documents, goods or other property.

All statements, documents or other information supplied to, or applications made to, the arbitral tribunal by
one party shall be communicated to the other party, and any expert report or evidentiary document on which
the arbitral tribunal may rely in making its decision shall be communicated to the parties.

DETERMINATION OF RULES OF ARBITRAL PROCEDURE

a) Arbitrator can make his own rules for resolving the disputes. He is not guided by the principles of CPC or
any other law but he is guided by principles of natural justice.
b) The decision of arbitrator cannot be against any provision of law & against arbitration agreement.

POWER TO TERMINATE / CONTINUE THE PROCEEDINGS – Section 25

If claimant fails to communicate his statement on the day fixed for hearing, the arbitrator shall terminate the
proceedings,. If respondthent fails to communicate his statement on the day fixed for hearing, the arbitrator
can continue the proceedings in the absence statement of the respondent.

If any party fails to appear in the oral hearing or produce documentary evidence the arbitral tribunal may
continue the proceedings and make the arbitral award on the basis of evidence before it.

EXPERT APPOINTED BY ARBITRAL TRIBUNAL – Section 26

Subject to agreement between the parties, the arbitral tribunal may appoint one or more expert to report to
it on specific issues to be determined by the arbitral tribunal, and require a party to give the expert any
relevant information or to produce or to provide access to, any relevant documents, goods or other property
for his inspection.

If a party requests or if the arbitral tribunal considers necessary, the expertshall, after delivery of his written
or oral report, participate in an oral hearing where the parties have the opportunity to put questions to him
and to present expert witnesses in order to testify on the points at issue.

Expert shall, on the request of a party, make available to that partyfor examination all documents, goods or
other property in the possession of the expert with which he was provided in order to prepare his report.

COURT ASSISTANCE: Section 27

ARBITRATOT BHI COURT KI MADAT MAANG SAKTA HAI!

The arbitral tribunal or a party with the approval of the arbitral tribunal, can make an application to the
court for help related to the following matters:

a) For discovery of evidences.

b) For examining / verification of evidences.
c) For confusions related to law.
d) For examining the identity of a person or any witness.

The application to the Court shall specify:

[Link] names and addresses of the parties and the arbitrators,

b. the general nature of the claim and the relief sought,-

c. the evidence to be obtained, by the Court.

The Court may on such application, order the production of evidences or production of witnesses directly
before the arbitral tribunal, if the order of the Court is disobeyed penalties and punishments by order of

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theCourt on the representation of the arbitral tribunal as they would incur for the like offences in suits
triedbefore the Court.

SECTION – 28: Rules Applicable to Dispute

In other than international commercial arbitration, the law applicable to the dispute shall be substantive law
force in India.

In the case of International commercial arbitration:

a) The law applicable will be the rules designated by the parites.

b) the parties can also designate legal system of any country.

c) If no legal system has been designated by the parties than arbitral tribunal has to apply any rule of law that
it considers appropriate.

While deciding and making an award, the arbitral tribunal shall, in all cases, take into account the terms of
the contract and trade usages applicable to the transaction.

The arbitral tribunal shall decide ex aequo et bono or as amiable compositeur (from equity or conscience)
only if the parties have expressly authorised it to do so.

SECTION – 29: Decision by Panel of Arbitrators

In case there are more than one arbitrator in the arbitral tribunal, the majority takes the decision.

TIME LIMIT FOR PASSING ARBITRAL AWARD – SECTION 29A

1. It is the duty of the arbitrator to pass arbitral award within a period of 12 months from the date of
reference i.e. when the arbitrator receives notice of his appointment.
2. If the award is made within a period of 6 months from the date of reference, the arbitral tribunal shall be
entitled for such amount of additional fees as the parties may agree.
3. If the arbitrator is not able to pass an award within a period of 12 months from the date of reference, the
parties may extend the time limit by not exceeding the period of 6 months .
4. If the arbitrator could not pass the award within the prescribed time as well as the additional time, the
office of the arbitrator shall come to an end unless the time has been extended by the court and the court
will grant extension only when the court is satisfied that delay is due to sufficient reason and the court
may also order for reduction of fees by 5 % for each month of the delay, the court may also substitute one
or all the arbitrators while extending the period of arbitration.
5. When application is given in the court for extension of period the Court shall endeavor to dispose of the
application within 60 days of notice to the opposite party (we are assuming that one of the parties apply
to the Court for extension of period)
6. If the new arbitrotors are appointed than it shall be deemed as continuation of the previously appointed
arbitrator.

FAST TRACK PROCEDURE – Section 29B

1. Before appointment of or at the time of appointment of arbitrator the parties to arbitration may agree
that their dispute shall be resolved through a fast track procedure .
2. In case parties have agreed for fast track procedure, the arbitral tribunal shall follow the following
procedure :
a. The arbitrator will only accept the written pleading from the parties and there shall be no oral
pleading .
b. The Arbitral tribunal shall have the power to call for any additional information or declarations
from the parties in addition to written pleadings filed by the parties.

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 c. The parties may make a request to the arbitrator for conducting oral pleadings or the arbitrator
tribunal may himself hold oral proceeding if he believes oral proceedings are necessary for
clarifying certain issues, in respect of such oral proceeding the arbitrator may make rules and
regulations.
d. Within a period of 6 months from the date of request in respect of fast track proceedings the
arbitrator shall pass an award.

Que: What do you mean by ‘‘Fast Track Procedure’’ ? Discuss the procedure to be followed by arbitral
tribunal to resolve the dispute between the parties under the Arbitration and Conciliation Act, 1996.

SETTLEMENT AGREEMENT – Section 30

If during the process of arbitration, it appears to arbitrator that it will not be possible to resolve the dispute
through arbitration , the arbitrator may request the parties to resolve the dispute through conciliation or the
parties may themselves request the arbitrator to commence conciliation.

If during the proceeding the parties settle dispute than the arbitrator shall terminate the proceeding and if
the parties request and the arbitrator does not object than the arbitrator can record the settlement in form
of an arbitral award on the agreed terms.

FINALITY OF ARBITRAL AWARDS

The award given by arbitral tribunal is final and binding on the parties.

Section 31 – Nature of Arbitral Award (Covered Earlier)

COSTS OF ARBITRATION – SECTION 31A

Cost of Arbitration includes following expenses in relation to arbitration:

(i) the fees and expenses of the arbitrators, Courts and witnesses;

(ii) legal fees and expenses;

(iii) any administration fees of the institution supervising the arbitration; and

(iv) any other expenses incurred in connection with the arbitral or Court proceedings and the arbitral award.

The agreement which has the effect that a party is to pay the whole or part of the costs of the arbitration in
any event shall be only valid if such agreement is made after the dispute in question has arisen.

The Arbitral Tribunal or the Court shall have the power to determine, the following issues relating to cost of
arbitration:

(a) whether costs are payable by one party to another.

(b) the amount of such costs.

(c) when such costs are to be paid.

The rule regarding paying of Costs is:

(a) the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; or

(b) however the Court may decide any other mode of payment of cost by recording reasons in writing.

The Court or arbitral tribunal shall consider the following points at the time of deciding the coust of
arbitration:

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(a) the conduct of all the parties;

(b) whether a party has succeeded partly in the case;

(c) whether the party had made a frivolous counter claim leading to delay in the disposal of the arbitral
proceedings; and

(d) whether any reasonable offer to settle the dispute is made by a party and refused by the other party.

The Court or the arbitral trubnal may pass following orders with resoect to the costs of arbitration:

(a) a proportion of another party's costs;

(b) a stated amount in respect of another party's costs;

(c) costs from or until a certain date only;

(d) costs incurred before proceedings have begun;

(e) costs relating to particular steps taken in the proceedings;

(f) costs relating only to a distinct part of the proceedings; and

(g) interest on costs from or until a certain date.

Bacchon Cost ke bare main yeh samjhiye:

Sab se pahle agar parties yeh decide kare ki ek party poora ya kuch cost bear karegi arbitration ka to yeh
tabhi valid hoga jab yeh dispute ke bad decide hua hai + arbitration tribunal ya court decide kar sakte hai ki
cost kitna, kab aur kaun kis party ko dega + General rule yeh hai ki court unsuccessfull party ko cost pay karne
ke liye kahega par agar court chahe to reason dekar kuch aur bhi bol sakta hai + cost ke bare main faisla lete
samay court yeh consider kar sakte hai ki parties ka aachran kaisa tha, kon se party successful rahi, kisi party
ne jhoothe claims kiye the jiske karan procedding lambi chali, kya kisi party ne dispute settle karne ka offer
diya + Court aisa bhi order kar sakta hia ki, ek party dusri party ka kuch cost share karega, cost kuch ek
particular date tak ki proceeding ka hi bear karna padega!

Section 32 – Termination of Arbitral Proceedings

The arbitral proceedings shall automatically terminate when the final award is passed.

In the following cases an order for termination of arbitral proceedings has to be passed by the arbitral
tribunal:

a) When the parties agree for termination.

b) When the continuation of proceedings has become impossible.

c) When the claimant withdraws his claim.

CORRECTION AND INTERPRETATION OF AN AWARD – Section 33

➢ There can be some spelling errors, mistake or some grammatical error.

➢ Any party cannot understand the award. Such party can apply to AT for correction and interpretation
of an award within 30 days from the date of receipt of the award (x + 30).
➢ Arbitral Tribunal will proceed with the request within next 30 days (x + 30 + 30).
➢ If no request has been received from the parties than the arbitrator can also make suo motto
correction in the award within a period of 30 days from the date of passing of the award.

ADDITIONAL AWARD – Section 33

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 1) After passing of an arbitral award, if any party is not satisfied with the award and believes that the
award does not satisfy or excludes his claim, such party can give a notice to the arbitral tribunal for
passing of an additional award
(x + 30) & X is the date of receiving the order.
2) AT may pass an additional award within 60 days of the notice ( x + 30 + 60).
3) If the tribunal does not pass an additional award, party can approach the court for setting aside the
arbitral award (x + 30 + 60 + 30) within 30 days of rejection of request by AT.

APPLICATION TO THE COURT FOR SETTING ASIDE OF AN AWARD – Section 34

Setting aside of an award means, to reject the award as invalid.

The application for setting aside of the award has to made within a period of 3 months from the date of
receipt of copy of arbitral award, however if any delay is made beyond 3 months the Court can extend the
period by 30 days, if Court is satisfied that a party was prevented by sufficient cause.

An application to the Court can be made for setting aside of arbitral award or interim award as the
arbitral award also includes interim award on the following graounds :
(Before applying to the Court the party has to give prior notice of application to the other party)
a) Incapacity of the party – e.g. party becoming unsound minded during the proceedings.
b) Invalidity of an agreement. E.g. Agreement entered into by use of coercion.
c) If a party was not given notice of the appointment of arbitrator or the exact timings and places of arbitral
proceeding, such party may approach the court.
d) Award passed by an arbitrator does not relate to the dispute.
e) Unqualified person was appointed.
f) If the Court finds that, Subject matter of a dispute not covered under Arbitration Act – e.g. Criminal and
Marriage related.
g) Award being in conflict with public policy of India, the award may be considerd as against public policy of
India if, it has been given by use of fraud or corruption or it is against the fundamental policy of Indian
Law or it is against the basic notion of morality or justice.
h) The Composition of arbitral tribunal or the arbitration procedure was not as per the arbitration
agreement.

The Court shall endeavour to dispose of the application within a period of one year from the date on which
the applicant sent the copy of the notice to the other party (as given above)

In the case of Sasidharan Vs Sundaram Finance Limited (2018), it was decided that the place of arbitration
decides the jurisdiction of the Court where parties can approach the Court for getting relief under Arbitration
and Conciliation Act.

In the case of Keval Krishna Hitkari Vs Anil Keval Hitkari, the Court decided that, the objections against
arbitral award can be raised b=only by the person whose rights are curtailed by the Award.

As per Section 34(2A) an arbitral award arising out of arbitrations, other than international commercial
arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent
illegality appearing on the face of the award:

Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or
by re appreciation of evidence.

Que: Discuss the grounds on which an arbitral award can be set aside under Section 34 of the Arbitration and
Conciliation Act, 1996

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SECTION 35: Finality of Arbitral Award

The award passed by the arbitrator shall be final and binding on the parties.

An award passed by the arbitrator shall be a complete decision which decides the matter of dispute.

SECTION 36: ENFORCEMENT OF THE AWARD

Beta agar award final hai aap ne appeal nai ki aur appeal ka time expire ho gaya fir award ek dam decree
jaisa hai, aur agar award challenge bhi hua hai to bhi award enforced hi hota rahega jab tak court award ke
upar stay nail aga deta!

Where the time for making an application to set aside the arbitral award has expired, then, such award shall
be enforced in accordance with the provisions of the Code of Civil Procedure, 1908, in the same manner as if
it were a decree of the court.

Where an application to set aside the arbitral award has been filed in the Court under section 34, the filing of
such an application shall not make that award unenforceable, unless the Court grants an order of stay of the
operation of the said arbitral award on a separate application made for stay of the operation of the award.

Upon filing of an application for stay of the operation of the arbitral award, the Court may, subject to such
conditions as it may consider fit, grant stay of the operation of such award for reasons to be recorded in
writing.

Provided that the Court shall, while considering the application for grant of stay in the case of an arbitral
award for payment of money, have due regard to the provisions for grant of stay of a money decree under the
provisions of the Code of Civil Procedure, 1908.

In the case of Elecrosteel Castings Vs Reacon Engineers, it was decided that the award will be enforced in
same manner as the decree of the Court and thers is not provision for takeing of security from judgement
debtor, in the arbitration and conciliation act.

In the case of Subhas Projects Limited Vs Assam Urban Water Supply, it was decided that unstamped
arbitral award is curable irregularity.

In the case of Union of India Vs Madnani Construction Corporation, it was decided that if unstamped award
are presented in the Court for enformecemnt than the Court must give the parties an opportunity to rectify
the award.

APPEALS

Section 37 : Appelable Orders

An appeal can be filed against the following orders (and from no others) to the Court authorised by law
(Destrict Court):

(a) granting or refusing to grant any measure under section 9;

(b) setting aside or refusing to set aside an arbitral award under section 34.

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 An appeal can also be filed in a Court against the order of arbitral tribunal relating to:

(a) when the arbitral tribunal has accepted the request to exceed its jurisdiction under section
16.

(b) granting or refusing to grant an interim measure under section 17.

Under this section, if the court passes the order, no second appeal can be filed against such order of the
Court, however the parties can file an appeal to Supreme Court.

SECTION 38: DEPOSITS

Arbitration process ke charche ke liye court dono parties ko kah sakta hai ki thoda advance jama kar digiye agar
claimant paise mangta hai aur dusri party counter claim karti hai to court alag alag amount bhi deposit karne
ke liye kah sakta hai, agar ek party apna share na de to uska share dusri party de sakti hai aur agar donon party
apna share na de to arbitrator proceedings ko suspend kar sakta hai!

Towards the cost of arbitration in settling the claims of the parties the Arbitral Tribunal may ask both of the
parties to deposit an equal amount towards the advance against the costs of arbitration.

In case of claims by claimant and counter claims by respondent the arbitral tribunal may fix separate amount of
deposit for claim and counter claim, in all other cases both the parties shall pay equal share towards deposit.

If one party does not pay the amount of its share towards the deposit the other party may pay the share of such
party and if both the parties do not pay their share the Arbitral tribunal may suspend or terminate the arbitral
proceedings.

And upon such termination the arbitrator shall send the account of arbitration and return any excess money
that is with the arbitratior.

SECTION 39: LIEN ON ARBITRAL AWARD AND DEPOSITS AS TO COSTS

(Bhai arbitrator ko uska fees nai diya to uske pas poora adhikar hai ki wo apne award ko rok kar rakhega)

Unless the arbitration agreement contains otherwise, the Arbitral Tribunal shall have a right of lien on its
award if the parites does not pay it the cost of arbitration.

(it means the Arbitral Tribunal can claim the rights under arbitral award)

If the arbitral tribunal refuses to pass an arbitral award till the time the costs of arbitration are paid to arbitral
tribunal, in this case any party may make an application to the Court and in this case the court may ask the
applicant to deposit an amount in the court and than, the court orders the tribunal to pass the arbitral award.

On such order the Arbitral Tribunal Passes the award and the court pays fees to the arbitral tribunal as it thinks
fit from the deposit given by the applicant.

The arbitral tribunal has a right to make representation before the Court.

In the case of, Norjal AS, Vs Hyundai Heave Industries Limited, it was decided that, if the fees demanded by
the arbitrator has been ficed by written agreement between the applicant and the tribunal, no application can
be made to the Court to compel the arbitrator to deliver the award.

SECTION 40: ARBITRATION AGREEMENT NOT TO BE DISCHARGED BY DEATH OF PARTY THERETO

BHAI AGAR PARTY MAR GAI TO USKA,

LEGAL REPRESNTATIVE PARTY KO REPRESENT KAREGA

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An arbitration agreement shall not be discharged by the death of any party to arbitration and such arbitration
agreement shall be enforceable by or against the legal representative of the deceased.

The mandate (duties) of an arbitrator shall not be terminated by the death of' any party by whom he was
appointed.

Sabse pahle to yah samjhiye ki ek party ki death se arbitration proceeding nai rukegi aur uske legal
representative ke against shuru rahengi!

However this section shall not apply when the right to action of any party is extinguished due to operation of
law – this provision will apply when there was a contract of personal nature such as the contract to sing, paint
or the contract to marry.

The above rule is based on a principle “Actio personalis moritur cum persona”, which means certain rights oof
action die with Man.

SECTION 41: PROVISIONS IN CASE OF INSOLVENCY

During the arbitral proceeding if any party becomes insolvent , then the Court appoints receiver or official
assignee for such insolvent person and If the receiver or the official assignee adopts the contract, which
contains arbitration clause than, than he will become bound by the contract and the matter will have to be
decided by the arbitration.

Agar official assignee ne arbitration agreement accept kiya to fir wo proceedings ko continue rakhega.

If the matter in dispute has to be decided for the purpose of carrying out insolvency proceedings and the dipute
has been arisen from the contract which provided for the arbitration, the receiver or the other party may apply
to the court for an order.

Agar dispute ka resolve hona jaroori hai insolvency ki process ko complete karne ke liye + dispute usi contract
se create hua hai jis main arbitration ka provision tha to official assignee ya dusri party court ja sakte hai court
ke order ke liye aur court kah dega ki proceedings continue rakho arbitration main agar court ko lagta hai ki
mamla arbitration se solve hona chahiye.

The Court shall pass an order only when it appears to the Court that the matter should be decided by the
arbitration.

SECTION 42: JURISDICTION OF COURT

In spite of any thing contained else where, when, in respect of an arbitration agreement, any application has
been made in a Court, that Court alone shall have jurisdiction over the arbitral proceedings and all
subsequent applications arising out of that agreement and the arbitral proceedings shall be made in that
Court and in no other Court.

SECTION 43: LIMITATIONS

Limitation Act, 1963, shall apply to arbitrations as it applies to proceedings in court.

For the purpose of limitation act, arbitration shall be deemed to have commenced on the date when the
request for arbitration is received by the opposite party.

If the Arbitration agreement specifies that some action shall be taken to commence arbitration within a
specific time to claim relief under arbitration agreement, and if no such action is taken within the specific
time, in this case the court on an application may extend the time if the court believes that if such extension is
not given then a party may suffer a hardship.

SECTION 44: NEWYORK CONVENTION AWARDS

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Forreign Awards means the arbitral award on differences between persons arising out of legal relationship,
whether contractual or not. It is necessary that the the relationsip should fall within the meaning of word
“commercial” as per the law in force in India.

The foreign awards will be enfoced in India only when the it is made in such territories, as the Central
Government may declare by notification in the official gazette to be the territories to which the convention
applies.

SECTION 45: POWER OF JUDICIAL AUTHORITIES TO REFER THE PARTIES TO ARBITRATION

If any party under section 44 makes request to the Court the Court shall refer the parties to arbitration if the
Court finds tha arbitration agreement to be valid.

SECTION 46: WHEN FOREIGN AWARDS ARE BINDING

Section 46 declares that any foreign award which would be enforceable under the arbitration and Conciliation
Act, 1996, shall be treated as binding for all purposes on the parties to the agreement.

SECTION 47: MATTERS OF EVIDENCE

Evidence

Beta agar award pas hua hai outside India par use agar India main lagu karwana hai to koi bhi party court ja
sakti hai award ke sath, aur district ya high court main case shuru application dala ja sakta hai!

The party applying for the enforcement of a foreign award shall, at the time of the application, shall produce
before the court:

a. the original award or a copy of the award which is duly authenticated in the manner required by the law of
the country in which it was made;

b. the original agreement for arbitration or a duly certified copy of the arbitration agreement, and

c. such evidence as may be necessary to prove that the award is a foreign award.

If the award is not in English language then its certified copy of translation must be produced in the Court.

For the purpose of this section, the Court means Principal Civil Court of District and it also includes High
Court.

SECTION 48: Setting Aside of Foreign Award

On the following grounds, the award granted by New York / Geneva Conventions or any other foreign award
can be set aside:

a) Incapacity of the party – e.g. party becoming unsound minded during the proceedings.
b) Invalidity of an agreement. E.g. Agreement entered into by use of coercion.
c) If a party was not given notice of the appointment of arbitrator or the exact timings and places of
arbitral proceeding, such party may approach the court.
d) Award passed by an arbitrator does not relate to the dispute.
e) Unqualified person was appointed.
f) Subject matter of a dispute not covered under Arbitration Act –
g) Award being in conflict with public policy of India.
h) The Composition of Arbitral Tribunal not as per arbitration agreement.

SECCTION 49: CONDITIONS FOR ENFORCEMENT OF FOREIGN AWARDS

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 If the Court is satisfied that the foreign award is enforceable, the award shall be deemed to be the decree of
the Court.

Que: The enforcement of Foreign Award is subject to certain conditions. Explain this statement

SECCTION 50: APPELABLE ORDERS

Section 50 deals with the orders that are appelable and states that an appeal can be made against the orders
thrugh which the Court refused to refer the parties to arbitration under section 45 and if the Court has
refused to enforce the foreign award under section 48. Appeals will be made to the Court which is authoirsed
to hear appeals against such orders.

Against the order passed by the Court no second appeal can be filed however the appeal can be made to
Supreme Court.

Section 53, 54, 55, 56 deals with enforcement of the awards passed under Geneva Convention

SECCTION 57: CONDITIONS FOR ENFORCEMENT OF FOREIGN AWARDS

The foreign award can be enforced by Indian Courts, if the following conditions are satisfied:

a. the award has been made in pursuance of a submission to arbitration which is valid under the law
applicable thereto;

b. the subject-matter of the award is capable of settlement by arbitration under the law of India;

c. The award has been made by the duly constituted arbitral tribunal, as per the laws of the foreign Country.

d. The award is final in the Country in which it is passed .i.e. no appeal or proceeding is pending in the
foreign Country in respect of the award.

e. the enforcement of the award is not contrary to the public policy or the law of India.

The Court can also adjourn the enforcement of the foreign awards.

Confidentiality of information

Section 42A provides that notwithstanding anything contained in any other law for the time being in force, the
arbitrator, the arbitral institution and the parties to the arbitration agreement shall maintain confidentiality of
all arbitral proceedings except award where its disclosure is necessary for the purpose of implementation and
enforcement of award.

Protection of action taken in good faith

According to Section 42B of the Act, no suit or other legal proceedings shall lie against the arbitrator for
anything which is in good faith done or intended to be done under this Act or the rules or regulations made
under the arbitration act.”

Arbitral Council of India (ACI) Section 43A to Section 43 K of Arbitration & Conciliation Act, 1996

Basically under the Arbitration Act an Arbitral Council of India (ACI) has been established for various purposes.

Section 43B of the Arbitration Act, 1996 provides power to the Central Government to establish ACI for
performing various functions & duties under the Arbitration Act.

The ACI shall be a body corporate having a perpetual succession with its head office at Delhi & with the
approval of Central Government it an also establish its offices at the other places in India.

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Composition of Council

The ACI shall have following members as per section 43C of Arbitration Act, 1996:

a) A chairperson to be appointed by Central Government in consultation with chief justice of India, a person
who has been the judge of Supreme Court or Chief Justice of High Court or a judge of High Court or any
eminent person having special knowledge & experience of arbitration proceeding, can be appointed by
Central Government as Chairperson.

b) A member will be nominated by Central Government, who is an eminent arbitration practitioner who has a
significant knowledge & experience in institutional arbitration.

c) A member will be appointed by CG in consultation with the Chairperson of ACI, who is an academician &
has experience in research & teaching in the field of arbitration & alternate dispute resolution laws.

d) A member Ex-officio (full time member) who is secretary in the department of legal affairs or his
representative who is not below the level of joint secretary.

e) A member Ex-officio, who is secretary in the department of expenditure under the ministry of finance or
his representative who is not below the level of joint secretary.

f) One part time member – who will be representative of recognised body of commerce & industry (like FICCI),
chosen by Central Government on rotational basis.

g) One CEO, to be appointed by Central Government.

Duration of office of Chairperson & Members

The Chairperson, members other than ex-officio members will hold office for a period of 3 years from the
date when they enter upon the office, or up to the age of 70 years in case of chairperson or 67 years in case
of members, whichever is earlier.

The salaries to terms & conditions applicable to chairperson or member shall be such that as fixed by Central
Government. The part time members will also be entitled for travelling allowance as fixed by CG.

Duties & Functions of Council: Section 43D

1) In general the duties & functions of ACI is to promote & encourage the process of arbitration, mediation,
conciliation or other alternate dispute resolution process & for this purpose the ACI may make policies &
guidelines for maintaining uniform professional standards in respect of matters relating to arbitration.

2) For the purpose of achieving the above objectives the ACI may:

a) Make policies for Arbitral institutions.

b) It can grant recognition to the Institutes that provides accreditation to the arbitrators (the institutes that
maintain data base of arbitrators)

c) Review the process of grading of Arbitrators & arbitral institutions.

d) It conducts seminars, courses, trainings in the area of arbitration itself or in collaboration with law firms or
law universities or arbitral institutions.

e) It promotes institutional arbitrations for strengthening the arbitral institutions.

f) It establishes & maintain depository of arbitral awards.

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g) Conducts various examination on arbitration subjects & issues certificates.

h) Makes various national & international tie ups to promote domestic as well as international arbitration.

i) Such other functions as may be decided by Central Government.

Acts of ACI not to be treated as Invalid: Section 43E

The acts, proceedings or decisions given by ACI shall not be considered as invalid on the ground that there
was any vacancy or defect so the composition of council or there was any defect in the appointment of
member of council or there was any irregularity in the procedure followed by the ACI.

Resignation of Chairperson or Members: Section 43E

The Chairperson or member (full time or part time) may at any time by notice in writing to the central
government resign from his office.

However the resignation will be effective from, earliest of the following dates:

a) 3 months from the date of receipt of resignation by Central Government.

b) Till the time the successor is appointed to office.

c) Up to the Expiry of his term of office.

Removal of Member – Section 43G

If the member of ACI is undischarged insolvent or he has abused his position or he has become physically or
mentally incapable of acting as member or has acquired any financial or other interest which can affect his
functions.

In all the cases the member can be removed by Central Government. However if the member is to be
removed on the ground of “acquisition of interest, or abuse of position,” the removal will be made only when
the Central Government has referred the matter to supreme court & supreme court conducted an enquiry &
report of enquiry was sent is to the member & to the Central Government.

As per section 43H the ACI may also appoint experts & create experts committee as per the terms &
conditions as ACI may specify by making regulations.

General Norms for Grading of Arbitral Institutions: Section 43 I

The ACI shall make grading of arbitral institutions on the criteria of infrastructure, the quality, qualifications
& calibre of Arbitrators, whether time limits are compiled for disposal of arbitral proceedings etc. the manner
& made of grading will be fixed by ACI by making regulations.

The qualification, experience & norms (rules) for accreditation of arbitrators shall be as specified by ACI by
making regulations.

Eight schedule of Arbitration Act

A person will be qualified to be an arbitrator if:

a) He is a CA/CS/CMA/Advocate + 10 years’ experience in practice

b) He has been an officer of Indian legal service.

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 c) He has been an officer in government, Autonomous body, public sector undertaking or at senior position in
private sector + He has a law degree + 10 years’ experience.

d) He has been an officer in government, Autonomous body, public sector undertaking or at senior position in
private sector + He has an engineering degree + 10 years’ experience.

e) He has been officer at senior level & has experience of administration + in Central Government or State
Government or Public Sector Undertaking or private sector company having reputation.

f) He is a person with degree level education + 10 years’ experience in any specific or technical stream in the
field of telecom, Information Technology or Intellectual Property Rights or IPR or other areas in the
government or autonomous body or PSU or senior level managerial position in private sector.

General Rules applicable to Arbitrator

a) He should be independent, impartial & act with integrity & objectivity.

b) He should be neutral.

c) He should avoid conflict of interest with the parties.

d) He should not be convicted of any offence involving Moral Turpitude or economic offence or should not be
involved in any legal proceeding.

e) He should be familiar with constitution of India, principle of natural justice.

f) He should have understanding of domestic & international laws or arbitration.

g) He should be aware of contractual laws.

Depository of awards

According to the Section 43K the Council shall maintain an electronic depository of arbitral awards made in
India and such other records related thereto in such manner as may be specified by the regulations.

Power to make regulations by Council

Section 43L empowers the Council may, in consultation with the Central Government, make regulations,
consistent with the provisions of this Act and the rules made thereunder, for the discharge of its functions and
perform its duties under the Act.

Chief Executive Officer

Section 43M states that there shall be a Chief Executive Officer of the Council, who shall be responsible for
day-to-day administration of the Council.

The qualifications, appointment and other terms and conditions of the service of the Chief Executive Officer
shall be such as may be prescribed by the Central Government.

The Chief Executive Officer shall discharge such functions and perform such duties as may be specified by the
regulations.

There shall be a Secretariat to the Council consisting of such number of officers and employees as may be
prescribed by the Central Government.

The qualifications, appointment and other terms and conditions of the service of the employees and other
officers of the Council shall be such as may be prescribed by the Central Government.

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DISTINCTION BETWEEN

Arbitration Conciliation
It a formal process. Informal process.
Arbitrator passes arbitral award which is final Conciliator does not have the power to pass a
and binding. judgement / order; he brings the parties to
settlement or compromise agreement.
Arbitrator should always be in odd nos. They can also be in even nos.
Both the parties are required to terminate the One party can also terminate the proceeding at
proceeding. any time.
Arbitrator can be appointed even before Conciliator is appointed only after dispute has
dispute commences. arisen.
QUE:Distinguish between Arbitration and Conciliation under the Arbitration and Conciliation Act, 1996.

FEATURES OF CONCILIATION

The party that wants to settle the commercial dispute through conciliation has to send the other party a
written invitation to start the conciliation proceedings.

Conciliation proceedings will start only when the other party accepts the invitation of the first party.

If the second party does not give any reply to the invitation of the first party within 30 days of sending the
invitation then the first party should consider that the other party has rejected the invitation.

SETTLEMENT AGREEMENT

When the conciliator believes that there exists a ground for settlement, he will form a settlement agreement
& will send the same to the parties.

The parties may either:

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 Accept Reject
If parties do not sign the agreement,
Parties will sign the agreement. it will be treated that parties have
rejected the settlement

Agreement becomes a contract &

the Contract becomes final &
binding the conciliator will continue
settlement proceedings.

Conciliation proceeding would

come to an end

ARBITRATOR IS NOT BOUND TO FOLLOW THE LAWS

While settling the dispute, the Conciliator is not bound by the Civil Procedure Code, Indian Evidence Act. He
can decide his own procedure to settle the dispute.

ROLE OF CONCILIATOR

The conciliator has got the following roles:

a. The conciliator should promote communication between the parties.

b. He should be guided by the principal of objectivity, fairness& justice.
c. He should decide his own procedures as per the circumstances of the case.
d. He should make a settlement of the agreement whenever he believes there exist a ground for
settlement of the dispute.
e. The conciliator should maintain full confidentiality regarding the information that he receives during
the course of arbitration proceedings.

TERMINATION OF THE CONCILIATION PROCEEDINGS

The conciliation proceedings shall stand terminated when:

a. When the settlement agreement has been signed between the parties.
b. When after having discussions with the parties the conciliator declares that further arbitration
proceedings are no longer required or justified.
c. When parties mutually decide to terminate the proceedings & send a written statement to the
conciliator.
d. By a written declaration sent by one party to the other party & the conciliator regarding
discontinuance of the conciliation proceedings.

RESORT TO ARBITRAL OR JUDICIAL PROCEEDINGS

During the course of conciliation proceedings no arbitral or judicial proceedings shall be commenced in any
court on the subject matter that is being resolved through conciliation proceedings.

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However a party may approach court or refer to arbitral proceedings if he is of the opinion that any hardship
is done with him.

ALTERNATIVE DISPUTE RESOLUTION

ADR reduces the burden of court by providing alternative modes of solving the disputes i.e. by arbitration,
mediation, conciliation, negotiation etc. It provides procedural facility to save the time & money of the
convention trial.

ADR services are not provided appropriately in India; hence there is an urgent need to establish & promote
ADR services. The ICADR is a society registered under the Societies Registration Act, 1860 and is a non-profit
making organization which promotes research and training in the field of ADR. They maintain panels of
independent experts in the implementation of ADR process.

Almost all disputes including civil, labour and family disputes can be settled by the ADR. They have proved to
be equally effective in the business environment. This point proves that ADR is a boon to the modern
economy.

Mediation

As per Civil Procedure Code Mediation Rules, Mediation means a process by which a mediator appointed
by the parties or by the court mediates the dispute between them this is a non adversarial process
(based on trial) ADR.

The dispute is resolved by facilitating discussions between the parties and clarifying the priorities etc.

As per section 4 of Meditation Bill 2021, Mediation shall be a process whether referred as mediation Pre
Litigation Mediation or Online mediation or Conciliation, by which parties request a third person referred
as mediator to help them to reach out to amicable settlement.

Types of Mediation

Court Referred Meditation: the court refers pending cases under section 89 of CPC, 1908 to Meditation.
Courts have mediattion centers and skilled and qualified persons act as mediatiors who are assigned the
cases.

Court Annexed Mediation: Mediation provided by the court as part of same judicial proceedings instead
of referring the case separately to meditation.

Statutory or Mandatory Mediation: the disputes that are required by any law to be resolved through
mediation for example labour and family disputes.

Private Mediation: qualified mediator provides his services for a fees, to mediate the dispute between
the parties.

Online Meditation: at any stage of mediation, with written consent of the parties, mediation may be
done by use of electronic mode.

Merits of Mediation: fast, economical, harmonious settlement, creating solution and remedies, parties
controlling the proceedings.

Highlights of the Meditation Bill 2021: It is in the form of the Bill and when it will become act it will have
10 schedule and 65 clauses.

It will apply to mediation conducted in India:

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 a) When both the parties reside in India or incorporated or have a place of business in India.
b) If mediation agreement provides that dispute will be resolved as per the Act.
c) There is international mediation.

Companies Act 2013, CPC, 1908, Induastrial Disputes Act, RERA, 2016 and other laws have provisions of
mediation.

Salem Advocate Bar Association Versus Union of India, the supreme court justified section 89 of CPC
1908 allowing for meditation.

Afcons Infrastructure Limited VS Cherian Varke Construction Limited, it was decided that court can refer
the case to Meditation, Lok Adalats and Judicial Settlement after considering the facts of the case even
without the consent of the parties.

Mediation Rules Made by the Courts:

Supreme Court Manual:

1. Mediator Used 4 functional stages:

a. Introduction and opening statements.

b. Joint Sessions.
c. Separate Sessions.
d. Closing.

2. Manual Provides for Pracedures, Stages, Code of Conduct of mediation and also provides for training of
mediators.

Mediation Rules Made by the High Courts:

Chandigarh High Court has made Mediation Rules 2023, Highlights of the same are as follows:

1) High Courts shall take steps to provide trainings for smooth flow of mediation process.
2) In the panel of mediators or conciliators the following persons will be qualified for appointment:
a) Retired Judges of Supreme Court, High Court, Sessions Judge, Civil Judge or Legal Practicioners
with 5 years Experience.
b) Experts or professionals with 15 years of experience, retired senior buerocrates
c) Instititions recognized by High Courts.

The following will be disqualified for appointment:

Adjudged Insolvent, the person against whom case of moral turpitude is pending, the person who has
been convicted of moreal turpitude, person against whom disciplinary proceedings have been started
under any law or has been punished in such proceedings.

The Mediator shall:

1) Attempt to facilitate voluntary resolution of the dispute.

2) Reduce misunderstandings.
3) Explore different ways settelemt
4) Help the parties in identifying the issues.

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 CHAPTER: 12
INDIAN STAMP ACT 1899

BHAI SARKAR KO REVENUE COLLECT KARNA HAI PAISA,

ISLIYE BANA DIYA STAMP ACT, BOLO TARA RA RA!

INTRODUCTION

It is the duty of a CS to check whether all the instruments of a Company are properly stamped. If documents
are not properly stamped, the CS may be held liable.

OBJECTIVES

1) The object of the act is to raise revenues for the State Government.
2) Stamp duty is payable on the instruments. Instrument means a piece of paper which creates rights &
obligations on the parties.
3) Stamping is preliminary step to registration of documents.

BILL OF LADING

SHIP SHIP KHELTE HO,

SAMAN SHIP SE UTARNA HAI TO BILL OF LADING LAGEGA

“Bill of Lading” includes a ‘through bill lading’ but does not include a mate’s receipt. When the goods are
sent through ship the shipping authorities issue a bill of lading, it is a document of title of the goods loaded in
the ship.

When the receiver of the goods will produce the bill of lading then only the shipping authorities will release
the goods at the receiving end. Mates receipt is just an acknowledgement of the receipt of the goods in the
ship.

CONVEYANCE

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It means an agreement relating to transfer of a moveable or Immoveable Property between two living
persons.

EXECUTED & EXECUTION

Executed means signed & execution means signature. Signature includes mark by an illiterate person. An
instrument is liable to stamp duty on its execution or before its execution.

Under Section 2(12), the words “executed” and “execution” (used with reference to instruments), mean
“signed” and “signature” respectively “executed” and “execution” used with reference to instruments, mean
“signed” and “signature” and includes attribution of electronic record within the meaning of section 11 of the
Information Technology Act, 2000

The Collector can receive the stamp duty without penalty and certify an instrument as duly stamped, as from
the date of execution.

We can also say that executed means signed and execution means under the process of signing.

In the case of Mewa Kunwari Vs. Bourey, it was decided that, the instrument is duly stamped if it has been
duly stamped at the time of execution and is admissible in evidence, though the stamp is subsequently
removed or lost

QUE:Distinguish between executed and execution under Indian Stamp Act, 1889.

BOND

It means a written promise to pay money with a condition that if the specified act is performed then promise
to pay money shall become void.

It also means a written promise through which a person promises to transfer grain or produce of agriculture to
another person.

LEASE

Lease is transfer of possession of immoveable property & includes:

❖ Patta: Land given by collector of the district to the farmer against share of produce.
❖ Tolls: The instrument through which tolls are given on let.
❖ Kabuliyat: An instrument through which a person accept the terms & condition of lease.

RECEIPT

It means a document through which a person accepts that he has received money, cheque, promissory note or
bill of exchange.

It is an instrument through which a person accepts that he has received a moveable property in satisfaction of
his debts.

It is an instrument through which a demand part of demand is accepted to be satisfied.

Any other document that shows an acknowledgement in whether signed with the name if person or not.

An ordinary cash memo issued by a shopkeeper or another person selling the goods or other merchandise isnot
a receipt, unless it contains an acknowledgement of receipt of the money.

A letter acknowledging the receipt of money or cheque is a receipt. A document merely saying that the
signatory has received a sum of Rs. 500 is a receipt.

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Under Section 30 of the Act any person receiving any money exceeding twenty rupees in amount or any bill of
exchange, cheque or promissory note for an amount exceeding twenty rupees or receiving in satisfaction of a
debt any movable property exceeding twenty rupees in value, shall on demand by the person paying or
delivering such money, bill, Cheques, note, or property, give a duly stamped receipt for the same.

Promissory Note
It means a promissory note as defined by the Negotiable Instruments Act, 1881. It also includes a note
promising the payment of any sum of money out of a particular fund which may or may not be available, or
upon any condition or contingency which may or may not be performed or happen. [Section 2(22)]

Requisities of a promissory note as per the Negotiable Instruments Act, 1881 are the following:
(a) the document must contain an unconditional undertaking to pay;
(b) the undertaking must be to pay money only;
(c) the money to be paid must be certain;
(d) it must be payable to or to the order of a certain person or to bearer;
(e) the document must be signed by the maker.

BILLS OF EXCHANGE PAYABLE ON DEMAND

Under Section 2(3) of the Stamp Act, a “bill of exchange on demand” includes:

(a) an order for the payment of any sum of money by a bill of exchange or promissory note

or for the delivery of any bill of exchange or promissory note in satisfaction of any sum of money,

or in the payment of any sum of money out of any particular fund which may or may not be available, or upon
any condition or contingency which may or may not be performed or happen;

(b) an order for the payment of any sum of money weekly, monthly or at any other said period; and

(c) a letter of credit, that is to say, any instrument by which one person authorises any other person to give
credit to the person in whose favour it is drawn.

It may be noted that a bill of exchange payable on demand includes even a letter of credit, as per above
definition.

Thus, the definition in the Stamp Act includes many instruments which could not be classed as ‘bills of
exchange’ within the definition given by the Negotiable Instruments Act, 1881.

Instrument is a piece of paper which is written and signed, which creates, transfers, assings, limits, or
extinguishes rights or obligations of the persons who are the parties to the instrument.

For example, an unsigned draft is not an instrument, an entry in the register in which the conditions of hiring
of machinery is contained is an instrument, a receipt is an instrument, in the case of Kalam Capital Builders
Vs State it was decided that photocopy of an agreement is not an instrument.

When an instrument is properly stamped it is called as duly stamped.

Settlment means any non testamentary arrangement in writing of movable or immovable property which is
done in consideration of marriage or for distribution of property amogst family members or others or for any
religious or charitable purpose. Settlement is different from “will” as will operates after death of a person
but settlement operates immediately.

SUBSTANCE OVER FORM

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The court considers substance of the agreement before considering the title, or the form of the agreement. It
means if the title of the agreement is in contradict with the substance, in this case the court will consider the
substance or the content of the agreement before imposing a duty on the instrument. So if there is any
confict between the form and substance of the agreement then substance will prevail over form.

Que: It is the substance of the transaction as contained in the instrument that determines the stamp duty.
Elucidate.

POWER OF CENTRAL GOVERNMENT

Bond debentures and other securities issued by municipal authorities shall be chargeable with the duty not
exceeding 1% of the consideration .No further duty will be payable on consolidation or renewal of such bond.

The Central Government has the power to remit or exempt any instrument from the scope of stamp duty
which may include policies of insurance, shares issued by company to a single person etc.

INSTRUMENTS CHARGEABLE WITH STAMP DUTY

1) Any instrument which is executed in India & is mentioned in Schedule I of Indian Stamp Act. E.g.: Share
certificate, debentures, Power of Attorney etc.

2) Bill of exchange (except bills of exchange payable on demand) and promissory notes (Excluding cheques).

3) Bill of exchange and promissory note drawn or made out of India but accepted or paid or endorsed or
negotiated in India.

4) Instruments which is executed outside India but relates to any matter or thing or property situated in
India and the instrument is received in India.

5) Instrument relating to transfer of immovable property.

However, the following instruments are not changeable to stamp duty:

a) Instruments relating to transfer of immovable property having value less than Rs. 100.
b) Instruments executed by or on the behalf of the Govt.
c) Instrument relating to sale or mortgage of any ship or vessel.
d) Any instrument executed by, or, on behalf of, or in favour of, the Developer or Unit or in
connection with the carrying out of purposes of the special Economic Zone.
e) Bills of exchange & promissory notes made outside India & payable outside India (Foreign Bills).

In the case of Commissioner of Inland Revenue Vs G Angus and in the case of Sadeshi Cotton Mills, it was
decided that, the crucial factor that decides whether anything is liable to stamp duty is that whether such
thing falls within the definition of instrument.

NOTE: Securities that are held with depository are not to be considered as instrument & hence not chargeable
to duty. (jab issuer apne shares depository ko deta hai tab us ke upar stamp duty nai lagti)

The Instruments that are executed during the schemes of corporatization & demutualization (of stock
exchanges) are also exempt from duties.

SINGLE TRANSACTION EFFECTED BY SEVERAL INSTRUMENTS

TRANSACTION EK INSTRUMENT ANEK,

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 DUTY SIRF EK TRANSACTION PAR LAGEGI!
1) For effecting a single transaction, many agreements may be required to be executed.
2) This creates a hardship on the parties to pay stamp duty on every single instrument.
3) But the Indian stamp Act provides a relief from the above mentioned hardship.
4) Section 4 of the Indian Stamp Act, states that, if for effecting a single transaction many instruments
are executed, the stamp duty will be paid only on the principal instrument & the remaining
instruments will be chargeable with duty of Rs. 1.
5) The principal instrument will be the instrument on which highest stamp duty is payable.

Example

A person, X gifted all his property to his brother Y by a deed and in consideration of that the other brother
promised to pay Rs 1 lac per month to X and also mortgaged one of the gifted property by a deed, in favor of
brother X as a guarantee for performance of the promise, the court decided that both the instruments relate
to one transaction only.

SECTION 4 NOT APPLICABLE

(i) A lease deed is made and after some time another lease deed is made to modify the previos lease deed,
both the leases are several matters and not covered under section 4.

(ii) A person purchases the land makes the half payment and for the remaining half payment, mortgages the
same land to the seller. (separate matters not covered in section 4)

INSTRUMENTS RELATING TO SEVERAL DISTINCT MATTERS

BHAI BHAUT SARE TRANSACTIONS EK INSTRUMENT PAR KIYE,

TO DUTY SAB KI DENI PADEGI!!

Section 5 of the Indian Stamp Act deals with the single instrument & distinct matters.

When in a single instrument, many transactions are mentioned the instrument will be charged with separate
duty related to each transaction and sum of the duties for all transactions so effected will be paid as stamp
duty.

e.g. : ‘A’ sells house to ‘B’ for Rs. 5,00,000 & in the same instrument ‘B’ sells his house to A for Rs.
10,00,000 the duty on the instrument will be the total of separate duty to be paid on each transaction i.e. on
15,00,000.

Illustrations:

(i) An agreement to dissolve the partnership deed and in the same agreement the prropety of firm was
mortgaged with a partner for payment of his settlement amount. The two are “distinct matters”(Chinmoyee
Basu v. Sankare Prasad Singh,)

(ii) A person makes an agreement and creates a mortgage in favour of the lender and also states that if the
mortgaged properties are insufficient than he will mortgage his other properties, in this case section 5 will
not apply which means here section 4 can apply. (Tek Ram v. Maqbul Shah,).

(iii) A grant of annuity by several persons requires only one stamp (because there is only onetransaction).

(iv) A lease to joint tenants requires only one stamp.

(v) When joint shareholder jointly transfer their shares in the company, section 5 does not apply.

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(vi) A power of attorney executed by several persons authorising the agent to do similar acts for them
inrelation to different subject matter is chargeable under Section 5, where they have no commoninterest.

PRINCIPAL AND ANCILLARY

The test is – “What is the leading object? Which is principal and which is ancillary?

If an instrument’s primary object is exempted from stamp duty then stamp duty cannot be charged only
because matter ancillary to primary matter is chargeable to stamp duty. A very common example of this is an
agreement for sale of goods, which also contains an arbitration clause.

The latter clause is result of the former agreement. Where a deed of dissolution of partnership contains a
clause charging the partnership assets for payment of certain amounts to outgoing parties, the instrument is
chargeable separately for the charge and the partnership. The former is not ancillary to the latter.

Where a document contains a transfer of mortgage and an agreement to make a loan, the mortgage and the
loan are distinct matters and separately chargeable.

If in a lease there is also an agreement to pay a certain sum on account of the balance of previous year, the
document is chargeable (I) as a lease and (ii) also as a bond.

A lease reserving separately rent for house and rent for furniture is chargeable separately for each of the
items.

Where, at an auction, a purchaser purchases several lots and there is only one instrument in respect of all of
them the separate purchases are, nevertheless, separate and distinct matters and so, the stamp duty must be
determined separately.

SECTION 6: INSTRUMENT COMING UNDER SEVERAL DESCRIPTIONS

If a single instrument falls within two different descriptions in schedule I of Stamp Act, such instrument will
be chargeable with the highest duty given in the schedule 1.

e.g.: A document fell within definition of both bond and promissory note. It was decided by the court that
stamp duty payable will be higher of promissory note or bond.

Section 8A – Securities held with Depository Not liable to Stamp Duty

When a Company issues securities to any depository in this case duty will be paid on the total amount of
security which is issued to depository however such security will not be stamped (duty bharo par stamp
lagane ki jaroorat nai hai)

When securities are transferred from a person to depository or from depository to beneficial owner or transfer
of beneficial ownership in mutual funds or when the depository deals in beneficial ownership in respect of the
securities no stamp duty will be charged. (depository jab internal transfers karti hai tab stamp duty nai
lagegi)

When a shareholder opts for dematerialisation under section 14 of Depository Act, the stamp duty will be
payable as is paid on the issue of duplicate share certificates.

When the transaction of short sell is done and in that transaction securities are also lent whether in shares or
in the units of mutual funds and the transaction is done by the beneficial owener through depository on such
transaction also stamp duty is not payable.

REDUCTION, REMISSION AND COMPOUNDING OF DUTIES

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Section 9 empowers the Government, (Central or the State as the case may be), to reduce or remit,
whetherprospectively, or retrospectively, the duties payable on any instrument or class of instruments or in
favour ofparticular class of persons or members of such class.

Section 9 also empowers the Central Government toprovide for the composition or consolidation of duties of
policies of insurance and in the case of issues byany incorporated company or other body corporate or of
transfers where there is single transferee (whetherincorporated or not) of debentures, bonds or other
marketable securities.

Section 10 deals with the manner of payment of stamp duties as per the section stamp duties must be paid as
per the sections of stamp act or if no specific section is given then as per the rules made by the state
governements.

MODE OF PAYMENT OF STAMP DUTY

1) Adhesive Stamps, 2) Impressed Stamp.

ADHESIVE STAMP

CHIPKANE WALA STAMP LAGAO

When adhesive stamps have been used, they should be cancelled in an effective manner so that they cannot
be reused.

Section 11 deals with the use of adhesive stamps. This Section provides that the following instruments shall be
stamped with adhesive stamps, namely:
a. Instruments chargeable with a duty not exceeding 10 naya paisa except parts of bills of exchange
payable otherwise than on demand and drawn in sets.
b. Bills of exchange and promissory notes drawn or made out of india.
c. Entry as an advocate, vakil or attorney on the roll of a high court.
d. Notarial acts; and
e. Transfers by endorsement of shares in any incorporated company or other body corporate.

Que: What do you mean by stamp under The Indian Stamp Act, 1899 ? Which instruments are stamped with
adhesive stamps ?

IMPRESSED STAMPS

These stamps are impressed on a sheet of paper where other conditions of agreement are mentioned.

Impressed stamps are used for effecting following transactions:

1) Agreements related to immovable property like :

a) Sale, Lease, Mortgage, Special Power of Attorney for registration of immovable property.

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 b) Will
c) Joint venture agreement,
d) Partnership agreement,
e) Affidavit, etc.

CANCELLATION OF THE STAMPS

STAMP AGAR CANCEL NAI KIYA TO,

LOG USE WAPS ISTEMAL KARENGE!

Section 12 states that the adhesive stamp may be cancelled by writing across stamp, signing on the stamp,
putting initials or any title on the stamp or by drawing a line across it or in any other effective manner which
has the effect of restricting its reuse.

Section 13 states that the Impressed stamp may be cancelled by writing or by signing on the face of the
stamp, normally the name of the purchaser and identity of stamp vendor is written on the face of the stamp
so that its reuse can be avoided.

Under Section 14, no second instrument chargeable with duty shall be written upon piece of stamp paper
upon which an instrument chargeable with duty has already been written.

However, on a single stamp paper, the other instrument may be written if:

a) Such instrument is not chargeable to separate stamp duty.

b) Such instrument is chargeable to separate stamp duty and such stamp duty has been duly paid.

c) The second instrument, just acknowledges, the receipt of goods or money, in respect of the transaction
relating to first instrument.

In Mahadeo Koeri v. Sheoraj Ram Teli, it was held that a stampmay be treated as having been effectively
cancelled by merely drawing a line across it.

But, in Hafiz Allah Baksh v. Dost Mohammed, it was held that if it is possible to use astamp a second time,
inspite of a line being drawn across it, there is no effectual cancellation. Again, thequestion whether an
adhesive stamp has been cancelled in an effectual manner has to be determined withreference to the facts
and circumstances of each case.

INSTRUMENTS STAMPED WITH IMPRESSED STAMPS HOW TO BE WRITTEN (WRITING ON STAMP PAPER)

Section 13 provides that every instrument written upon paper stamped with an impressed stamp shall be
written in such manner that the stamp may appear on the face of the instrument and cannot be used for or
applied to any other instrument.

Under Section 14, no second instrument chargeable with duty shall be written upon piece of stamp paper
upon which an instrument chargeable with duty has already been written. However, this shall not prevent any
endorsement which is duly stamped or is not chargeable with duty, being made upon any instrument for the
purpose of transferring any right created or recorded.

The object of Section 14 is to prevent a stamped paper which has been used for one instrument, from being
used for another instrument thereby avoiding payment of duty in respect of second instrument.

As per section 15, the instruments that contravene section 13 or 14 shall be considered as unstamped.

DENOTING DUTY – Section 16

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HAR BAR AAP KO PRINCIPAL INSTURMENT SATH RAKHNE KI JAROORAT NAI HAI

When the duty is paid on principal instrument & the remaining instruments charged with the duty of Rs. 1
because all the instruments were executed for effecting a single transaction.

In this case, the parties always have a burden to carry the principal instrument along with the other
instruments in order to prove the payment of stamp duty.

So as per section 16 of Indian Stamp Act, to get a relief from carrying the principal instrument every time, an
application can be made to the collector to issue a certificate evidencing the payment of stamp duty on the
other instruments & for this purpose, a duty is required to be paid to the collector, which is known as
Denoting duty.

The same certificate by th

TIMING OF STAMPING

Instruments executed inside India: Section 17 provides that all instruments chargeable with duty and
executed by any person in India shall be stamped before or at the time of execution. The scope

of Section 17 is restricted to only instruments executed in India.

In the case of Rohini v. Fernandes, a promissory note was executed by‘A’ and ‘B’ and a stamp is afterwards
affixed and cancelled by ‘A’ by again signing it, the stampinghas taken place subsequent to the execution and
hence, the provisions of Section 17 are notcomplied with.

As per section 18, If the instrument is created in a foreign country but deals with some property or the right
situated in India, the instrument shall be stamped within 3 months from the date of its first arrival in India.

Where an instrument is brought to theCollector after the expiry of three months, the Collector may, instead
of declining to stamp it,validate it under Sections 41 and 42 if he is satisfied that the omission to stamp in
time was due to areasonable cause.

Any bill of exchange payable otherwise than on demand or promissory note drawn or made out of India must
be stamped and the stamp cancelled, before the first holder in India deals with the instrument, i.e., presents
the same for acceptance or payment, or endorses transfers or otherwise negotiates the same in India.

e.g. : Agreement was made in America on 1st April 2009 related to transfer of Immovable property situated in
Chandigarh. The instrument was received in India on 1st July 2009 the period of 3 months shall be counted
from 1st of July 2009.

As per section 19, the first holder in India who receives the bills of exchange or promissory note drawn out of
India, shall get the instrument stamped and cancel the stamp before he starts to deal (present, endorse or
negotiate) in the instrument. if stamp is not affixed or cancelled penalty will have to be paid.

VALUATION OF STAMP DUTY: Section 20 to 28

Where an instrument is chargeable with ad valorem duty (ad valorem duty means the duty as per the value of
transaction, most of the duties in respect of instruments are paid on advalorem basis) in respect of any money
expressed in foreign currency, such duty shall be calculated on the value of such money in the currency of
India according to the current rate of exchange on the day of the date of the instrument.

The Central Government may, from time to time, by notification in the Official Gazette, prescribe a rate of
exchange for the conversion of British or any foreign currency into the currency of India for the purposes of

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calculating stamp-duty, and such rate shall be considered to be the current rate for the purposes payment of
stamp duty.

Stock and marketable securities how to be valued. — If an instrument is chargeable with ad valorem duty in
respect of any stock or of any marketable or other security, such duty shall be calculated on the value of such
stock or security according to the average price or the value of such stock on the day of the date of the
instrument (share transfer agreement).

(jis din share bechne ka agreement hua us din jo market main average price tha us par duty charge karnge)

Effect of statement of rate of exchange or average price. — if an instrument contains a statement of current
rate of exchange, or average price, as the case may require, and is stamped in accordance with such
statement, it shall, so far as regards the subject-matter of such statement, be presumed, until the contrary is
proved, to be duly stamped.

(agar aap ne average price ya currency ka conversion ka rate agreement main hi lik diya to use sahi mana
jaega agar kuch aur sabi nai ho jata)

When a person sells mortgaged property to the mortgagee, the amount of debt together with the amount of
consideration of the sale of property shall be the value for purpose of payment of stamp duty.

For example: if loan was taken for Rs 20 lacs and a property of Rs 50 lacs was mortgaged with the mortgagee,
now the loan of Rs 10 lacs is remaining and the mortgagor decides to sell the mortgaged property to the
mortgagee for Rs 90 lacs, then the stamp duty will be paid on The outstanding debt of Rs 10 lacs +
consideration of 90 lacs.

Amar sells a property to Bimal for rs 500, However at the time of sell the property was mortgaged to Chaman
against the loan of Rs 1000, and interest on such loan was outstanding of Rs 200, now the stamp duty will be
on consideration + outstandning debt which is 500 + 1000 + 200 = 1700 Rs.

When the mortgagor sells mortgaged property to the mortgagee, the stamp duty paid on mortgage shall be
adjusted from the stamp duty payable on sale. This benefit of reduction will be available if entire mortgaged
property is transferred and not any part of it.

For example: if loan was taken for Rs 20 lacs and a property of Rs 50 lacs was mortgaged with the mortgagee,
now the loan of Rs 10 lacs is remaining and the mortgagor decides to sell the mortgaged property to the
mortgagee for Rs 90 lacs, then the stamp duty will be paid on The outstanding debt of Rs 10 lacs +
consideration of 90 lacs (consideration) and at the time of mortgage if 1 lac was paid as stamp duty then the
stamp duty of Rs 1 lac will be reduced from the stamp duty payable on sale.

In the Case of Re. Mirabai and Laxman and Ganpat, it was decided that, when the mortgaged property is sold
to the mortgagee along with other properties, the stamp duty alreadypaid is to be deducted from the duty
payable on the deed of sale. In order to entitle the mortgagee to adeduction of the duties payable the entire
property mortgaged should be transferred and not merely a portionof it.

CALCULATION OF STAMP DUTY IN CASE OF ANNUITY – Section 25

When an Instrument is executed to secure the payment of annuity, stamp duty is paid in the below
mentioned manner:

1) Where, the period of annuity is fixed, the stamp duty will be paid on the total amount of annuity paid.

2) Where the period of annuity is not fixed, annuity period will be considered as 20 years and stamp duty
will be payable on the annuity paid in 20 years commencing from the date on which first annuity
payment became due.

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 3) Where the annuity period is subject to life of a person, stamp duty will be calculated on the basis of
annuity payable for the period of 12 years commencing from the date of 1st payment. (Hint: the period
of 12 years will be calculated from the date on which the 1st annuity becomes due).

(basically we can consider annuity payment as payment of premium in order to receive annuity
benefits in future)
As per section 26 if the value of subject matter is not capable of being ascertaiened on the date of its
execution then in this case the maximum duty that can be charged for such instrument can not
exceed, the maximum duty which is paid on the instrument of same description on the day of
execution of the instrument.
(agar samaj nai aara ki kitni duty bharni hai to us din koi doosra instrument execute hua hai usi
description ka to us par jinni duty lagi hai utni lagai ja sakti hai maximum)

SECTION 27: FACTS AFFECTING THE DUTY TO BE SET FORTH IN THE INSTRUMENT

If any instrument is not property stamped, it is the duty of the parties to disclose this fact along with the
reasons for improper payment of the stamp duty. This situation normally arises when the property is
transferred for less then the market price. So we need mention in the instrument that due a particular reason
we have paid insufficient duty.

SECTION 28 : APPORTIONMENT OF STAMP DUTY

(Property agar chote chote hisse main transfer kar rahe ho to stamp duty bhi chote chote hisson main hi
lagegi)

• When a person purchases a property for one consideration but it is agreed that property will be
transferred in parts & consideration will also be paid in parts by different conveyances (sale deeds).
Now in this case the duty will be paid on advalorium basis for each separate part.
• When 2 or more persons jointly purchase property for for one consideration but it is agreed that
property will be transferred in parts & consideration will also be paid in parts. Now in this case the
duty will be paid on advalorium basis for each separate part
• If a person agrees to purchase a property but before the conveyance (execution of deed) transfers the
property to a sub – purchaser, now in this case duty will be charged on advalorium basis for
consideration paid by sub – purchase to the original seller.
• When a person agrees to buy (original buyer) a property form other person (original seller) but before
conveyance (sale deed) sells the property to some other person (sub purchaser), now the original
seller transfers the property to sub – purchaser in parts, stamp duty will be charged on advalorium
basis on consideration paid by sub – purchaser to original seller. Separate duty will be paid on excess
amount of consideration paid by the original purchaser to original seller for the part of the property
which the original purchaser will keep.

For example: if Ravi agrees to sell the property to Mahesh for Rs 10000 for 10 acres of land now
before the conveyance deed Mahesh sells 8 acres to Ram for 12000 now the stamp duty will be paid on
Rs 12000 which is paid by Ram to Ravi, now Mahesh has kept 2 acres for himself and will pay Rs 2000
for 2 acres (as for 10 acres he was paying 10000) so here there will be stamp duty payable on the
excess amount of Rs 2000 also, and the rate of stamp duty shall not be less then Rs 1.

WHO SHOULD PAY THE STAMP DUTY – Section 29

❖ In case of promissory notes, Bill of exchange - the person drawing, making or executing such
instrument.
❖ In case of conveyance or re-conveyance of mortgaged property - by the grantee.

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 ❖ In case of share transfers, the transferee.
❖ In case of indurance other then fire insurance - the person issuing the policy.
❖ In case of lease - the lessee.
❖ In case of partition – the parties to partition.
❖ In case of sale deed – the purchaser of preperty.
❖ In case of exchange – the parties to exchange in equal share.

Que: Answer the following with legal provisions under The Indian Stamp Act, 1899 : (i) There is a contract of
exchange, in which, Amit transfers his land to Sanjay, in return Sanjay transfers his house to Amit. By whom will the
stamp duty be paid ? If it was a contract to sell and Sanjay paid money in return, would your answer be same ? (ii)
Three brothers A, B and C are joint owners of a land. They divide this land in the ratio of 1 : 1 : 2 through a mutual
agreement. By whom will the stamp duty be paid ?

Instrument Lost in Transit

❖ - If any instrument is sent to collector and is lost or destroyed during the transmission, the person
sending the same shall not be liable for the loss or destruction.
❖ - The person who sends any instrument to the officer may require a copy of certificate at his own
expense from the officer regarding receipt of instrument.

Section 30: Obligation to Give Recepit:

Any person receiving any money exceeding twenty rupees in amount, or any bill of exchange, cheque or
promissory note for an amount exceeding twenty rupees, or receiving in satisfaction or part satisfaction of a
debt any moveable property exceeding twenty rupees in value, shall, on demand by the person paying or
delivering such money, bill, cheque, note or property, give a duly stamped receipt for the same.

Any person receiving or taking credit for any premium or consideration for any renewal of any contract of
fire-insurance, shall, within one month after receiving or taking credit for such premium or consideration,
give a duly stamped receipt for the same.

IMPOUNDING OF THE INSTRUMENTS AND COLLECTORS POWER TO STAMP THE IMPOUND INSTRUMENTS –
Section 33, 38 39 and 40

JIS INSTRUMENT PAR DUTY NAI BHARI SAHI,

WO HO JAEGA JABT JABT JABT!

If any instrument bears improper stamps, then the officers in whose possession the stamp comes while
discharging his duties (except polic officer) shall have the power to impound the same. As per section 38,
when such impounding is made the officers have to send the instrument to the collector along with the
certificates and the details of penalty charged. The affected parties may make an application to the collector
and if collector is satisfied that, the parties are given a hardship then collector may refund the penalty,
whole or in part.

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As per section 39 and 40, If the collector believes, the above instrument is not subject to any stamp duty then
he may endorse this fact on such instrument along with his signature or if he believes, such instrument is
subject to a stamp duty in this case he may require the proper payment of stamp duty along with penalty of
Rs 5 or up to 10 times of the deficit stamp duty.

The collector can also refund the amount of penalty if the penalty was charged due to improper use of the
stamp papers bearing the impressed stamps. However, when such instrument has been impounded only
because it has been written in contravention of section 13 or section 14, the Collector may, if he thinks fit,
remit the whole penalty prescribed by this section.

The certificate given by the collector shall be a proof against the impounding of the instrument.

As per section 34 if any receipt chargeable with stamp duty is produced before the officer unstamped then
instead of impounding the receipt the officer shall ask the parties to replace the unstamped receipt with the
duly stamped receipt.

Que: Explain the difference between the powers of the Collector under Section 39 and the powers of the
Controlling Revenue Authority under Section 45 of Indian Stamp Act, 1899

Application to Chief Revenue Controllling Authority for a Relief: Section 45

Under Section 45, Where any penalty is paid under section 35 or section 40, the Chief Controlling Revenue-
authority may, upon application in writing made within one year from the date of the payment, refund such
penalty wholly or in part.

Where, in the opinion of the Chief Controlling Revenue-authority, stamp-duty in excess of that which is legally
chargeable has been charged and paid under section 35 or section 40, such authority may, upon application in
writing made within three months of the order charging the same, refund the excess.

So this action allows us to move to the authority in case the collector does not grant us any relief against
impounding or charges excess duties.

CONSEQUENCES: IF STAMP DUTY IS NOT DULY (PROPERLY) PAID:

1) Duly paid means proper payment of stamp duty according to the law.
2) As per section 35 of Stamp Act,If the instrument does not have or bear the stamps of correct value as
required by law, it is treated that instrument is not duty stamped & such instrument is inadmissible as
evidence for any purpose whatsoever by any person authorized by law (such as judges or
commissioners) or by the consent of the parties (such as arbitrators) to record evidence or shall be
acted upon or registered or authenticated by any such person as aforesaid or by any public
officerunless such instrument is duly stamped.

In the case of K. Narasimha R Vs Sai K Vashu, it was decided that,an insufficiently stamped
instrument is not an invalid document and it can be admitted in evidence on payment of penalty.

EXCEPTION TO THIS RULE:

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In these cases, an instrument will not bear proper stamp duty but will be still considered as evidence.

1) Improperly stamped document can be considered as evidence in the criminal court.

2) A receipt can be taken or considered as an evidence of payment. The party will have to produce a
certificate given by the Collector regarding payment of the penalty.
3) If the instrument is executed by or on behalf of the Government.
4) Where a contract or agreement of any kind is affected by the correspondence consisting of two or
more letters and any one of the letters bears the proper stamp, the contract or agreement shall be
deemed to be duly stamped.
5) Where an unstamped document is admitted in proof of some collateral matter, it is certainly admitted
in evidence for that purpose.
(example: A business agreement and arbitration clause)
6) Any instrument shall be admitted as evidence on payment of duty with which the instrument is
chargeable or if the instrument is insufficiently stamped then on payment of of defecit dutyalong with
penalty of Rs 5 or 10 times of deficit duty, whichever is more.
In the case of Prasad v. Sorjoo Nonia, it was decided that, the words ‘shall not be admissible in evidence’
used in this Section only means that the document shall not be made the basis of the decision or should not
be relied upon to support any finding.
In the case of n Ram Ratan v. Parmanand, it was decided that an unstamped partition deed cannot be used to
corroborate the oral evidence for the purpose of determining even the factum of partition as distinct from its
term. The words ‘for any purpose’ would in effect mean ‘for each and every purpose whatsoever without any
exception
Que: Whether an insufficiently stamped instrument is a valid document ? Can it be admitted in evidence on
payment of penalty ?

Admission of Instruments

Section 36 provides that where an instrument has been admitted in evidence, such an admission shall not
(except as provided in Section 61) be called in question at any stage of the same suit or proceeding on the
ground that the instrument has not been duly stamped. Section 36 is mandatory (Guni Ram vS Kodar).

Section 61 states that, if a Court accepts any instrument as evidence on payment of penalty or on payment of
stamp duty and then the order of such Court is challenged in the Superior court (by appeal or by revision) and
the superior court states that the instrument should have not been considered as evidence or the superior
court requires payment of higher penalty , then such superior court may ask the collector to charge higher
duties or impound the instrument which was previously accepted as evidence by the inferior court. (in this
case section 36 will not apply)

CONFUSION REGARDING PAYMENT OF DUTY

AGAR CONFUSION HAI STAMP DUTY PAYMENT MAIN,

TO EK BAR COLLECTOR SE MIL KAR APNA CONFUSION DOOR KAR LO

If any party has a confusion relating to payment of stamp duty on any instrument, then such party may
produce such instrument before the collector and may request the collector to determine the correct amount
of stamp duty on such instrument, the request has to be made with a fees of (50 paisa to Rs 5) as decided by
the collector.

When any instrument is brought to the collector, the collector is required to give his opinion about the
correct stamp duty, he cannot punish the parties for payment of improper stamp duty.

However the instrument has to be brought to the collector within a period of 1 month from the date of its
execution and within a period of 3 months from the date of its first receipt in India, if the instrument was
executed outside India.

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INTIMATION TO COLLECTOR REGARDING INSUFFICIENT DUTY – Section 41

BHAI COLLECTOR KE BOLNE SE PAHLE AAP,

HI BATAA DO KI AAP NE INSUFFICIENT DUTY PAY KI HAI

A person may himself bring to the notice of the collector that any instrument is not properly stamped by
making an application and if on such application the collector is satisfied, that the instrument is not duly
stamped due to a mistake or accident, in this case the collector may collect the deficit amount and issue a
certificate stating that the instrument is stamped properly.

However such application to the collector must be made within a period of 1 year from the date of execution
of such instrument. If the instrument is produced after 1 year the collector may impound such instrument.

If the instrument has been brought within 1 year and the collector has any doubt relating to chargeability of
stamp duty then the collector may refer the matter to the Chief Revenue controlling authority. If the matter
is not refereed to Chief Controlling revenue authority then decision of the collector shall be final.

ADMISSION OF IMPROPERLY STAMPED INSTRUMENT

Stamp Duty to Sahi Pay Kiya hai,

But Instrument Ko Describe Galat kiya ha!

Under Section 37, opportunity is given to a party, of getting a mistake rectified when a stamp of proper
amount,but of improper description has been used.

Under this section, the State Government may make rules providingthat, where an instrument has a stamp of
sufficient amount but of improper description, the instrument may,on payment of the duty with which the
stamp is chargeable, be certified to be duly stamped, and any instrumentso certified shall then be deemed to
have been duly stamped as from the date of its execution.

SECURITIES DEALT IN DEPOSITORY NOT LIABLE TO STAMP DUTY

If the securities are issued through depositories (NSDL and CDSL), if the security certificates are issued as per
Depositories Act, 1996, if the securities are transferred or the beneficial ownership in securities is transferred
through depository or the units of mutual funds are transferred, no stamp duty is required to be paid as per
section 8A of Indian Stamp Act.

The Amendments in the Indian Stamp Act, 1899 brought through the Finance Act 2019 and Rules made
under the Finance Act, 2019 have come into effect from 1st July, 2020 vide notifications dated 30th
March, 2020, so the provsions relating to stamps on share transfer including the electroic shares will be
chargeable to duty as per the below mentioned points:

➢ The stamp-duty on sale, transfer and issue of securities shall be collected on behalf of the State
Government by the collecting agents who then shall transfer the collected stamp-duty in the account
of the concerned State Government.

➢ In order to prevent multiple payment of duties, no stamp duty shall be collected by the States on any
transaction associated with a transaction on which the depository / stock exchange has been
authorised to collect the stamp duty.

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 ➢ The collecting agents shall be the Stock Exchanges or authorized Clearing Corporations and the
Depositories.

➢ For all exchange based secondary market transactions in securities (through brokers), Stock Exchanges
shall collect the stamp duty, and for off-market transactions and initial issue of securities happening
in demat form, Depositories shall collect the stamp duty.

➢ The Central Government has also notified the Clearing Corporation of India Limited (CCIL) and the
Registrars to an Issue and/or Share Transfer Agents (RTI/STAs) to act as a collecting agent.

➢ The objective is to bring Over the Counter derivative transactions reported to CCIL and physical space
(non-demat) transactions in mutual funds handled through RTI/STAs under the scope of stamp duty so
as to avoid any tax arbitrage.

➢ The collecting agents shall within three weeks of the end of each month transfer the stampduty
collected to the respective State Government, under whose jurisdiction the residence of the buyer is
located and in case the buyer is located outside India, to the State Government having the registered
office of the trading member or broker of such buyer and in case where there is no such trading
member of the buyer, to the State Government having the registered office of the participant.

➢ The collecting agent shall transfer the collected stamp-duty in the account of concerned State
Government with the Reserve Bank of India or any scheduled commercial bank.

➢ The collecting agent may deduct 0.2 per cent of the stamp-duty collected on behalf of the State
Government towards facilitation charges before transferring the same to such State Government.

➢ Mutual funds, being delivery-based transactions in securities, were supposed to pay the duty as per
various State Acts.

➢ All mutual fund transactions are now liable for stamp duty and the new system has only standardized
the charges across states and the manner of collection of stamp duty.

E-STAMPING

E-stamping is a computer based application and a secured electronic way of stamping documents. The
prevailing system of physical stamp paper/franking is being replaced by E-stamping system. To reduce the
instances of counterfeits and errors, government introduced the e-stamping facility in 2013. The Stock
Holding Corporation of India Limited (SHCIL) is the Central Record Keeping Agency (CRA).

Through modernisation, there has been an introduction of E-stamp or as known as an electronic stamp. E-
Stamping is a computer-based procedure and a secure manner for the state to pay non-judicial stamping
duties. The prevailing system of physical stamp paper / franking is being replaced by E-Stamping system. The
benefits of e-Stamping are as under :

Benefits of E-stamp

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1. E-stamps are less time-consuming;

2. They are very easily accessible;

3. They are cost saving;

4. e-Stamp Certificate generated is tamper proof e-Stamp Certificate generated has a Unique
Identification Number;

5. Easy accessibility;

6. Security;

7. Cost savings and User friendly.

Government of India, Ministry of Finance, Department of Economic Affairs appointed Stock Holding
Corporation of India Limited (SHCIL) to act as Central Record Keeping Agency (CRA).

verification of e-stamping

An e-Stamp can be verified online by clicking on verify e-Stamp certificate and entering the required details
i.e

1. State

2. Certificate Number (UIN)

3. Stamp Duty Type ( Description of Document )

4. Certificate Issue Date

5. 6 character alphanumeric string

UIN is a Unique system generated number mentioned on the e-Stamp Certificate. Anybody, having the Unique
Identification Number, can check the authenticity of the Certificate through [Link].

Authorised Collection Center (aCC)

ACC means Authorised Collection Center (ACC). Its an agent appointed by SHCIL. ACC is the intermediary
between the CRA and Stamp Duty payer. Schedule Banks and Post Offices can become ACCs by completing the
registration process.

Mode of Payment of stamp Duty

The stamp duty may be paid through the following modes:

1. Cash

2. Cheque

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3. Demand Draft

4. Pay Order

5. RTGS

6. NEFT

7. Account to Account transfer.

PRACTICAL ASPECTS WITH REgARD TO THE CALCULATION AND PAYMENT OF STAMP DUTY

Through this example, we will understand the process of making the payment related to the issue of shares in
the state of NCT of Delhi.

As we know that the Stock Holding Corporation of India Limited is an Indian custodian and depository
participant, based in Mumbai, Maharashtra. SHCIL was established in 1986 as a public limited company and is
a subsidiary of IFCI. It is also responsible for e-stamping system around India.

HOW TO PAY

1. Go to SHCIL official website i.e. [Link]

2. Click on e-Stamping

3. A separate web page will be opened

4. Click on Stamp duty Payment - Issuance of New Shares for NCT of Delhi

5. After clicking, a separate web page will be opened like this

6. After that, click on register now

7. After signing in, the above page shall be displayed.

8. Click on Share Details Entry Form.

9. Fill the form and attach the files attachments in PDF.

10. After filling the form and attaching all the files, Click on Submit button.

11. Your form will be submitted.

Notes:

1. You will not be demanded for payment unless the form got approved from SDM office.

2. Once the form is approved, you need to make the payment electronically and generate the challan.

3. Print the challan after payment and visit to either SDM office, Sham Nath Marg, Delhi or any nearest
office of SHCIL.

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4. They will issue a Stamp paper equivalent to the amount of stamp duty.

5. Submit the stamp paper to the SDM office, Sham Nath Marg, Delhi.

6. The SDM office will provide you the certificate of payment of stamp duty.

The certificate issued by the department will be under the seal of the SDM. Nowadays, the certificate is
issue electronically.

Allowances for Stamps: Section 49

Under section 49 of Indian Stamp Act 1899, application for allowances for spoiled stamps can be made to the
collector within the time limits as given in section 50 in the following cases:

(a) in case the stamp on the paper has been inadvertently or unintentionally spoiled or destroyed or in any
manner has become unfit, before the instrument or transaction could be written on such paper.

(b) in case an instrument is written wholly or in part on stamp paper but it has not been signed by all the
parties or any of the parties to the instrument.

(c) The bill of exchange or promisory notes have been drawn but not accepted or used.

(d) The stamped instrument has been found to be void or useless or any party to the instrument is dead.

(e) The instrument has been executed but afterwards it is discovered that it is unfit on account of any error
or mistake.

(f) If any person refuses to act on the instrument. For example a person refuses to make payment on bond.

(g) If any material party to the instrument does not sign or refuses to sign.

(h) The parties have used some other stamp paper of same value due to which the stamp paper already
purchased become useless.

(i) The parties have used some other stamp paper of same value, as the first stamp paper has been spoiled.

However it must be remembered that no legal proceeding should have been commenced to claim the refunds,
then only the collector will accept the application.

(the manner of making allowance is given in section 53)

Section 50: Time Limits for Claiming Allowances under Section 49

As per section 50 of Indian stamp Act 1899 , the time limit for claiming allowances under section 49 are as
follows :

(a) In case instrument become useless due to any party to instrument refusing to act on the instrument
.the application will be made within 2months from the date of instrument.
(b) In case no instrument has been executed on the stamp paper in this case application has to be made
within 6 months from the date on which the stamp was spoiled . (so instrument was not executed as
stamp was spoiled )
(c) In case the instrument has been executed by any of the parties but not by all the parties to the
instrument the application for refund will be made within 6 months from the date of instrument or if
it is not dated then within 6 months from the date when the instrument was first or alone executed.
(d) In case spoiled stamp has been signed outside india ,application wil be made within 6 months of
receiving the instrument within india .

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 (e) In case parties purchased stamp but due to unavoidable circumstances use the stamp and have
substituted the stamp by purchasing the other stamps of same value and instrument is written on new
stamp in this case application to collector will be made within 6 months of execution of substituted
stamp.

These are the limits for claiming allowances under section 49.

Section 51 - Allowance in case of printed Section 53 - Allowance for spoiled or misused

forms no longer required by Corporations stamps how to be made.
The Chief Controlling Revenue-authority 2 In any case in which allowance is made for spoiled or
[or the Collector if empowered by the Chief misused stamps, the Collector may give in place of
Controlling Revenueauthority in this behalf] such stamp:
may, without limit of time, make allowance
for stamped papers used for printed forms of [Link] stamps of the same description and value, or
instruments 3 [by any banker or] by any
incorporated company or other body b. if required and he thinks fit, stamps of any other
corporate, if for any sufficient reason such description to the same amount in value, or
forms have ceased to be required by the said
3 [banker], company or body corporate: c. at his discretion, the same value in money,
provided that such authority is satisfied that deducting 1[ten naye paise] for each rupee or
the duty in respect of such stamped papers fraction of a rupee.
has been duly paid.
Section 52 – Allowances For Misused stamps

Under section 52 of Indian Stamp Act 1899, allowances for misuse of stamps may be claimed if:

(a) Stamps of wrong description have been used.

(b) Greater stamp duty has been paid then the required stamp duty.
(c) If the stamp duty has been paid on instrument which was not chargeable to stamp duty.
(d) If the stamp duty has been useless under section 15 of Indian stamp Act 1899 on account of
contravention of section 13.

In all these cases an application can be made to collector within 6 months from the date of instrument or
if there is no date on the instrument then within 6 months from the date on which the instrument was
first or alone executed.

The collector may give following remedies:

(a) Re-stamping with proper stamp duty.

(b) Give allowances as spoiled stamp u/s 49. Inrespect of misused or useless stamps.

Section 54 of the Act enables a person to obtain refund of the value of stamps purchased by him, if he
has no immediate use of stamp.

Under this section, when any person is having stamp or stamps which have not been spoiled or rendered unfit
or useless for the purpose intended, but for which he has no immediate use, the Collector shall repay to such
person the value of such stamp or stamps in money, deducting ten naya paise for each rupee or portion of a
rupee, upon such person delivering up the same to be cancelled and proving to the Collector’s satisfaction:

(a) that such stamp or stamps were purchased by such person with a bona fide intention to use them; and

(b) that he has paid the full price thereof; and

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(c) application to the collector is made within 6 months from the date of purchase of the stamps.

However, in case the application is made by the licensed vendor the collector may refund the duty without
deducting any amount.

Section 55 is intended to relieve companies renewing debentures issued by them from the liability to pay
stamp duty on both the original and the renewed debenture.

As per this section, when any duly stamped debenture is renewed by the issue of a new debenture in the same
terms, the Collector shall, upon application made within one month, repay to the person issuing such
debenture, the value of the stamp on the original or on the new debenture whichever shall be less.

However the original debenture is produced before the Collector and cancelled by him in such manner as the
State Government may direct.

A debenture shall be deemed to be renewed in the same terms within the meaning of this section
notwithstanding the following changes:

(a) the issue of two or more debentures in place of one original debenture, the total amount secured being
the same;

(b) the issue of one debenture in place of two or more original debentures, the total amount secured being
the same;

(c) the substitution of the name of the holder at the time of renewal for the name of the original holder; and

NOTES

1. If any instrument was charged to duty and penalty but such penalty has been relieved by the court or
any other body or by the collector, in this case, such body shall also issue a certificate or
endorsement, regarding release of such penalty and on such release the instrument will be admissible
as evidence.
2. If the collector is satisfied that any party intentionally paid insufficient stamp duty to evade the
payment of stamp duty in this case the collector can start a criminal prosecution.
3. If the person who was not liable to pay stamp duty pays the stamp duty or the penalty in such case the
person may recover the amount of stamp duty or penalty from the person who is liable to pay it and
the collector may also issue a certificate in this regard.
4. Sections 73 to 78 deals with supplemental provisions regarding inspection ofrelevant registers, books,
records, etc; to enter the premises for that purpose, powers of Government toframe rules for the sale
and supply of stamps and to make rules generally to carry out the provisions of theAct.

TAKING COGNIZANCE – Section 70

A prosecution shall not be commenced in respect of any offence punishable under this Act without the
permission of the Collector or such other officer as the State Government generally or the Collector specially,
authorises in that behalf.

The Chief Controlling Revenue Authority, or any officer generally or specially authorised by it in this behalf,
may stay any such prosecution or compound any such offence.

The amount of any such composition shall be recoverable in the manner provided by under the Act.

SECTION 47: Collection of Duty by Collector

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 - If any bill of exchange or promissory note chargeable with duty not exceeding 10 naya paisa, is presented to
collector, unstamped, the collector may charge the stamp duty and collect the money or deduct such amount
from the instrument.

Que: Explain the time limit set up under the Indian Stamp Act, 1899 for making an application for relief in
respect of impressed spoiled stamps.

REFERENCE AND REVISION

Section 56-61 deals with reference and revision.

If the collector has doubt regarding the payment of correct stamp duty, he may refer the case to Chief
Revenue Controlling Authority.

The Chief Revenue Controlling Authority will send its decision to collector and the collector shall charge the
duty.

The Chief Revenue Controlling Authority may also refer the case to the High Court and the case shall be
decided by not less than 3 judges by vote of majority.

If High Court is not satisfied with information provided, the High Court may send back the case to the Chief
Revenue Controlling Authority for further feed back. The High Court shall decide the question raised and give
its judgement to the authority

As per Section – 60 any subordinate court may also refer the case to High Court but through proper channel.
The court may on its own or on application of collector, may consider, the order of lower court regarding an
instrument duly stamped or not. The High Court, if not satisfied with the decision of lower court, it may call
for such instrument or may also even impound it and the decision of High Court shall be given to the collector
and the lower court.

- The collector has the power to start prosecution, if the collector is of the opinion that the party was
intending to evade the payment of stamp duty. This power of collector is notwithstanding the decision of
lower court.

SECTION 62-69: These Sections deal with Penalties

If any person draws an unduly stamped instrument including improper stamped proxy form. The collector will
make enquiry and pass decision of penalty.

Other Penalties:

1. Share warrant not stamped: Rs 500

2. Failure to cancel Adhesive stamps: Rs 100
3. if Facts affecting the stamp duty are not disclosed under section 27: Fine up to Rs 5000 (matter will go
in criminal court in this case – section 64)
4. Adhesive stamp not cancelled: Rs 100
5. Executes Stamp with intention of defrauding the Government: Rs 5000
6. Refuses to give receipt : Rs 100
7. Making post dated bills to defraud reccvenue: fine up to Rs 1000.
8. Fails to Stamp the Insurance Policy or does not stamp the preminum receipt within one month of
receiving the amount of premium or of insurance : Rs 200

As per section 70, for offences under this Act, Magistrate whose powers are not less than those of a Magistrate
of the second class, shall try any offence under this Act.

Taking Cognizance

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Under the stamp Act, no case shall be started or repealed without the permission of the Collector or any
other officer who is authorised by the State Government.

The Chief Revenue Controlling Authority or the officer Authorised by the State Government may make
compromises under the act or can apply for the stay of suit.

CHAPTER: 13
REGISTRATION ACT, 1908

INTRODUCTION

The word Registration in simple sense means making an entry into a Register, maintained by the Registrar.
The Registrar is appointed by the Government. Generally the process of registration takes place after the
process of stamping.

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Instrument is a piece of pap er creating & defining obligations.

Registration is the process of recording a document with an assigned officer and to keep it as public record.
Following are the objectives of registration of documents under the Registration Act, 1908:

1. Registration of a document ensures proper preservation and record of such document. It is

particularly important in the case of immovable properties because the history of rights need to be
established.

2. Documents which are required to be registered act as valid evidence in a court of law. Documents
which need to be compulsorily registered are not admissible in court if they are not registered.

3. Registered documents assist in the prevention of fraud.

4. Registration gives people information regarding legal rights and obligations arising or affecting a
particular property.

IMPORTANCE OF REGISTRATION ACT FOR THE COMPANY SECRETARY

As a company secretary is an in charge for maintaining all the records of the properties of the company, he
must know the documents whose registration is compulsory & the documents whose registration is optional.

DOCUMENTS CAN BE CLASSIFIED INTO TWO CATEGORIES

Documents of which registration is

compulsory (Sec. 17).

Documents of which registration is

optional (Sec. 18).

DOCUMENTS OF WHICH REGISTRATION IS COMPULSORY (SEC. 17 (I)):

1. Instruments relating to gift of immovable property.

Any agreement (instrument) which has the effect of transferring an immoveable requires a compulsory
registration.

In case of KalyanaSundaram V/s. Karuappa it was decided that the instruments of gift become effective
from the date on which the instrument was executed (signed). Even if the registration is done after the
death of the donor, the gift is valid. Neither death nor the express revocation by the donor, is a ground
for refusing registration, provided other conditions are complied with (donor has signed the gift deed and
the donee has accepted the gift)

Delay in registration of a gift does not postpone its operation. Section 123, Transfer of Property Act, 1882
merely requires that donor should have signed the deed of gift. Hence a gift deed can be registered even
if the donor does not agree to its registration.

A transfer of property as a gift is valid even if it is given to the person with whom the donor has illicit
relation if the person (donee) accepts such gift.

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 QUE: Yash signed a deed of gift in favour of Raja. If Yash does not agree to its registration, will the gift
deed be registered ? Explain, whether delay in registration of a gift deed will postpone its operation ?

2. Non-testamentary instrument :
It means the instruments other then will, thorugh which any property is transferred. The Instruments
which are not will are Non-testamentary instrument. Any other instrument which is made with
consideration & creates, declares, assigns, limit or extinguished, transfers any right, immovable property
of Rs. 100 or upwards requires compulsory registration. e.g. : Mortgage deed, Rental agreement of more
than 12 months, sales deed etc.
Whether a document requires registration under this point, depends upon the fact wheter the instrument
change legal relation between the parties.

The words “create”, “assign”, “limit” or “extinguish” suggests a change of legal relation to a property by
an expression of will through the document. It suggests declaration of will.

In the case of Bageshwari Charan v. Jagarnath Kuare, it was decided that, the expression “declare”
used in Section 17 has also to be interpreted on the same lines. It does not mean a only declaration of
fact, but there has to be (in writing) a change of relation.

Whether an instrument requires registration under Section 17(1)(b) depends upon whether it changes in
legal relation in respect of some property.

For purposes of this clause, difference must be made between:

(i) a right in aproperty and

(ii) whether such rights relate to the ownership of property and are in the nature of powers or options
which every owner is free to exercise in dealing with his property in a particular way.

The latter (point ii) may be described as rights in relation to the property, but strictly speaking, they are
not rights in or to property.
(matlab yeh right jo hai, ki aap apni property main freely exercise kar sakte hai par wo reality main rights
nai hai, kyunki registration ke liye rights wo hai jo legal relation kisi property main change karta hai)

Generally, when a right in or to property is assigned, created, declared, limited or extinguished, then
there must be a definite change of legal relation to the property.

3. A Non testamentary instrument which acknowledge (accept) receipt of monetary consideration in respect
of the creation, declaration, assignment, limitation or extinction of any such right, title or interest an
immovable property of Rs. 100 or upwards.

To be registrable under this clause a receipt must satisfy the following two conditions:

(i) it must be the receipt of a consideration; and

(ii) it must on the face of it be an acknowledgement of payment or some consideration on account of the
creation, declaration, assignment, limitation or extinction of an interest of the value of Rs. 100 or upwards in
immovable property.

The receipt must be such as to be linked with the creation etc. of a right. A mere acknowledgement of
payment is not compulsorily registrable.

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4. Non testamentary instrument transferring the immovable property in favour of any person by the order of
the court where the value of Immovable property of Rs. 100 or upwards.

Transfer through decree or order of a court or of any award (arbitral awars) when such decree or order or
award operates to create, declare, etc. any interest of the value of Rs. 100 and upwards in immovable
property, requires registration.

However , the State Government is empowered to exempt any leases executed which do not exceed five years
and the annual rents reserved which do not exceed 50 rupees, from the operation of this Sub-section.

5. If the document was not registered at the time of sale u/s. 53(a) of Transfer of Property Act, 1882 then
later on registration of such a document will be compulsory.
6. Leases of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent;

EXCEPTION OF SEC. 17(I) DOCUMENTS OF WHICH NO REGISTRATION IS REQUIRED:

1. Compromise agreement or th deed essence of whih is composition.

2. Shares of a company.
3. Debentures of a company at the time of issue.
4. A decree or the order of Court
5. Transfer of Debenture does not require registration.
6. Order of the Court related to immovable property (testamentary transfer)
7. Any grant of immovable property from the government.
8. Any partition of the property made by the Revenue (Collector) officer.
9. A loan granted under land improvement act does not require registration.
10. Any loan under Agriculturist Act.
11. An order made under Charitable Endowment Act, 1890, vesting any property in the treasurer of
charitable endowmwnt.
12. A certificate of sale granted by civil or revenue officer for sale of any property on account of an
auction.
13. Lease for a period of up to 1 year i.e. 12 months.
14. Any endorsement on a mortgage-deed acknowledging the payment of the whole or any part of the
mortgage-money, and any other receipt for payment of money due under a mortgage

DOCUMENTS OF WHICH REGISTRATION IS OPTIONAL: (SEC. 18)

1. Instruments (other than instruments of gift and wills) which create, declare, assign, limit or extinguish,
whether in present or in future, any right, title or interest, of a value less then one hundred rupees, to or
in immovable property;
2. instruments acknowledging the receipt or payment of any consideration on account of the creation,
declaration, assignment, limitation or extinction of any such right, title or interest (property of less then
100).
3. Transfer of immovable property by the order of the court of less than Rs. 100.
4. Lease of the period not exceeding period 12 months.
5. Wills (Vasiyat)
6. Instrument relating to transfer of moveabe property.
7. Instruments which acknowledge Receipt of money for transfer of immovable property of less than
Rs. 100.
8. All other documenets not required to registered under section 17.

Note:

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Under Section 107 of the Transfer of Property Act, a lease of one year or reserving a yearly rent can be made
onlyby a registered instrument.

Cases under Section 107 of Transfer of Property Act, and Section 17(1)(d) of Registration Act

A comparison of both these Sections would show that a lease of immovable property is compulsory
registrable:

(a) if it is from year to year; or

(b) if it is for a term exceeding one year; or

(c) if it reserves a yearly rent.

If a lease is of a very high value but is neither from year to year, nor for any term exceeding one year, nor
reserving a yearly rent, it does not require registration under Section 17(1)(d).

Que: Write any four exceptions to the registration of non-testamentary documents under Sub-section (2) of
Section 17 of Registration Act.

TIME LIMIT FOR PRESENTATION: (To present before Registrar)

The registration has to be done within 4 months from the date of execution of doecument, additional period
of 4 months is granted in case of necessity on payment of higher fees.

If the documents are executed outside India then it must be registered within 4 months from the date of its
first arrival in India. (no extension of 4 months is given)

If delay is due to the act of Court than such delay shall not be considered.

A document executed outside India is not valid unless it is registered in India (Nainsukhdasv. Gowardhandas)

Unstamped document
If the document is not sufficiently stamped its presentation is still good presentation though penalty under
the Stamp Act can be levied (Mahaliram v. Upendra Nath).
RE-REGISTRATION – Section 23A

In any case a document requiring registration has been accepted for registration by a Registrar or Sub-Registrar from
a person who was not authorised to present the same, and has been registered, then any person who has an interest
in such document may, within four months form becoming aware that the registration of such document is invalid,
present such document as per Part VI of this act, for re-registration in the office of the Registrar of the district in
which the document was originally registered.

If Registrar being satisfied that the document was so accepted for registration from a person not authorised to
present the same, he shall proceed to the re-registration of the document as if it has not been previously registered,
and it shall be considered that the document was presented within the time required for presentation of such
document.

SEVERAL EXECUTANTS

Under Section 24 a document executed by several persons at different times may be presented for
registration and re-registration within four months from the date of each execution.

The registration is “partial” in regard to each party.

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PLACE OF REGISTRATION

REGISTRATION OF IMMOVABLE PROPERTY: SECTION 28

Any document that we discussed in section 17 + if that document relates to immovable property must be
registered:

a) In the office of the Sub-Registrar under whose jurisdiction whole or some part of the property is
situated.
b) If it is difficult to ascertain the Sub-Registrar in whose jurisdiction the whole or some part is situated
then registration can be made in any Sub-Registrar on the basis of assumption or belief.

WHOLE OR SOME PART OF THE PROPERTY

If One person is residing in Sangli and he transfers a property to another person residing in Kolhapur & the
property is also in Kolhapur. Now the person who transfers the property can ask the person who has
purchased the property to accept one of the properties situated in Sangli, so that the Registration of both the
properties can be done at Sangli. Samllness of the area must not suggest the existance of fraud.

In the case of Harendra Lal Roy Chowdhuri v. Hari Dasi Debi, it was decided that, Registration elsewhere
done shall be treated invalid.

REGISTRATION OF OTHER DOCUMENTS

Other Documents can be registered in the office of any Sub-Registrar within whose sub-district the all the
persons who executed the document are residing or with any office of the sub registrar under same state
government.

REGISTRATION OF ORDER OF THE COURT

If the order of the court relates to an immovable property it shall be registered in the office of the Sub-
Registrar under whose jurisdiction the court is situated.

If the decree or order does not affect immovable property, it may be presented for registration in the office
of any other Sub-Registrar under the State Government at whose office all persons claiming under the decree
or order desire it to be registered.

[Note : Property situated anywhere in India may be registered in New Delhi].

Note: Under Section 31, registration is permitted in cases of necessity under extra-ordinary circumstances, at
the residence of the executant.

THE PERSON WHO CAN PRESENT A DOCUMENT FOR REGISTRATION ARE

As Per section 32 following persons are authorised to present the document for Registration:

(a) by some person executing or claiming under the same, or, in the case of a copy of a decree or order,
claiming under the decree or order, or
(b) by the representive or assign of such a person, or
(c) by the agent of such a person, representative or assign, duly authorised by power-ofattorney executed
and authenticated in manner hereinafter mentioned

It is immaterial whether the registration is compulsory or optional; but, if it is presented for registration
by a person other than a party not mentioned in Section 32, such presentation is wholly inoperative and
the registration of such a document is void (Kishore Chandra Singh v. Ganesh Prashad Bhagat)

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For the purpose of Section 32, a special power of attorney is required as provided under Section 33. A general
power of attorney will not do. Section 33 requires that a power of attorney, in order to be recognised as
giving authority to the agent to get the document registered, should be executed before and then
authenticated by the Registrar within whose district or sub-district the principal resides.

ENQUIRY BEFORE REGISTRATION BY THE REGISTRAR

As per section 34, for registering a document the persons executing such document or their representatives,
assigns orauthorised agents must appear before the registering officer within the time allowed for
presentation.

The Registrar may make following enquiries at the time of Registration :

(a)enquire whether or not such document was executed by the persons by whom it should have been executed;

(b) satisfy himself as to the identity of the persons appearing before him and alleging that they have executed the
document; and

(c) in the case of any person appearing as a representative, assign or agent, satisfy himself of the right of such person
so to appear.

This requirement doest not apply when we register the decree of the Court.

PRESENTING WILL & AUTHORITY WHO CAN ACCEPT THE WILL

1. The Donor or after his death his executor or any person who claims to be his executor in any other
manner, (the person appointed by deceased donor through his will as executor) or the agent of donor
or after the death of the donor, the donee (the person to whom properties are given by will, or the
person who will adopt the will (the person for whom will is made) or the adoptive son (son for whom
will is made), may present the will for registration.
2. A Will, will be registered by the Registrar on being satisfied with the signature of donor and other
particular as mentioned in the will, if the will is presented by donee or any other person (not by the
donor).
3. The person who makes the will is referred as donor or testator.

Que: Answer the following with help of legal provision of The Indian Registration Act, 1908.

(i) On 20th January, 2023, Anil made a will in favour of his nephew Ronak. Anil submits the
documents for registration on 25th July, 2023. Will Anil be successful ?
(ii) Nandita leased her premises to Sohan for a period of 8 months. Is registration of lease deed
compulsory ?

DEPOSIT OF WILL – Section 42 & 43

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Any testator may, either personally or by duly authorised agent, deposit with any Registrar his will in a sealed
cover along with the name of the testator and of his agent, if any.

On receiving such cover, the Registrar, if satisfied that the person presenting the same for deposit is the testator or
his agent, shall transcribe in his Register-book No. 5 the superscription aforesaid, and shall note in the same book
and on the said cover the year, month, day and hour of such presentation and receipt, and the names of any persons
who may testify to the identity of the testator or his agent, and any legible inscription which may be on the seal of
the cover. The Registrar shall then place and retain the sealed cover in his fire-proof box.

The testator may also withdraw the will which is deposited, by applying for the withdraw of the will and the
Registrar shall deliver it accordingly.

REGISTERED DOCUMENTS WHEN OPERATIVE

1. As per section 47 of Registration of Document Act, 1908, The Registered document gets a legal effect
from the date of execution / signing & not from the date of registration.
2. In case two registered documents are made for transferring the same property the document which
was executed first will get first priority on the property.
Case: K.J. Nathan V/s. S.V. MarutiRai.
[Note: Registered documents will always have priority over the oral agreements.]

EFFECT OF NON-REGISTRATION OF THE DOCUMENT WHICH ARE REQUIRED TO BE REGISTERED

There are following consequences which the parties will have to suffer if the Registration is not done:

It will not give No ownership

any power to will be
the transferee transferred by
to acquire the an unregistered
property. document.

It will not be
It won't affect
taken as
the immovable
evidence in any
property which
suit related to
is mentioned in
immovable
the document.
property.

However an unregistered instrument under section 53A of Transfer of Property Act, 1882 will be considered as
evidence.

In the case of K. Narasimha Rao v. Sai Vishnu, it was decided that, though unstamped instrument is
inadmissible as an evidence even for collateral purposes, but if an unregistered instrument is also unstamped
and if it is subsequently stamped as per the provisions of Indian Stamp Act, in this case such an instrument

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can be considered as evidence for collatral purposes even though it continues to be unregistered, but in this
case the actual terms of the transaction will not be considered.

So if a dipute relates to settlement deed which was insufficienty stamed and also unregistered in this case the
Court directed for impounding of the instrument which was not complied by the defendant so in this case the
Court did not accept the instrument as an evidence even for the collateral purpose, and application if any
filed for admission of such document for collateral purpose will be dismissed.

DUTIES AND POWERS OF REGISTERING OFFICER

Duties:
1. It is a first duty of Registering officer to maintain the following Books :

BOOKS

Book A Book B
[In all the registrar offices] [In the office of Registrar]
[Registrar + Sub-Registrar] [Only Registrar]

• Book A:
Book 1: Documents relating to transfer of immovable property against Consideration.
Book 2: Reasons for refusal to register.
Book 3 : Register of Wills.
Book 4: Miscellaneous Registers (documents that do not relate to immoveable property)

• Book B: Register of Deposit of Wills.

PROCEDURE ON ADMISSION TO REGISTRATION – Section 35

Procedure of Registration:

If all the persons executing the document appear personally before the registering officer and are personally known
to him, or if he be otherwise satisfied that they are the person they represent themselves to be, and if they all admit
the execution of the document, or

if in the case of any person appearing by a representative, assign or agent, such representative, assign or agent
admits the execution, or

(c) if the person executing the document is dead, and his representative or assign appears before the registering
officer and admits the execution,

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the registering officer shall register the document as directed in sections 58 to 61 inclusive.

If any person by whom the was to be executed denies its execution, or

(b) if any such person appears to the registering officer to be a minor, an idiot or a lunatic, or

(c) if any person by whom the document purports to be executed is dead, and his representative denies its
execution, the registering officer shall refuse to register the document as to the person so denying, appearing or
dead.

When the copy of any document (other then decree of the Court or order of the Court) is sent to the
Registrar, following documents must also be sent or endorsed with the document:

e. The signature and name of the peson who has admitted that the document has been executed and
if the execution of the document is accepted by some agent or assign or representative of the any
person then name and signature of such person.
f. The signature and name of every person who has been examined in relation to such document
under any provision of Registration Act, 1908.
g. The payment of money or delievery of goods which is made in the presence of registering officer in
relation to the execution of the document and any acceptance of consideration whole in part
made in the presence of Registrar.

If any person who admits the execution of the document refuses to give any of the above documents or
endosements (statements) the resitering officer shall regiter it, and shall also mention on the instrument that
above endorsements were refused.

CERTIFICATE OF REGISTRATION

After all the formalities of registration are fulfilled, the reigstrering officer gives a certificate containing the
word “Registered” along with the number and page of the book in which such registered document is copied.
The Certificate of Registration is a prima proof that all the requirements of registration are properly followed
& entry will be made in Book 1 and also the registrar has followed all the process given in law with regard to
registration.

PROCEDURE AFTER REGISTRATION

1. After Registration is done the Sub-Registrar shall forward a Notice of Registration to other sub-
registrars & the registrar of the district.
2. The sub-registrar or the registrar in whose office the registration has been done will send a copy of
map to other sub registrars within the same district & the registrar will make an entry in Book No. 1.
3. Every Registrar and sub registrar who receives the notice of registration shal make an entry in book 1.

REFUSAL TO REGISTER BY THE SUB-REGISTRAR –Section 71

1. If the registrar refuses the registration he will make an entry in Book No. 2 along with the reasons for
refusal to register.
2. If the registrar refuses registration on the ground that property is not located in his jurisdiction than
no entry is required to be made in the register.
3. If a document does not require registration under this act, such documents shall not be registered by
the registering officer.
4. On application made by any person executing or claiming under the document, shall without payment
and unnecessary delay, the Sub registrar shall give him a copy of the reasons of refusal which are
recorded in the register.
5. Registration cannot be refused on the ground of undervaluation for stamp or any other unnecessary
reason. (Mulla (1998), page 308)

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Que: Explain the reasons for refusal to register a document by sub-registrar under the Registration Act, 1908.

APPEAL TO THE REGISTER – Section 72

Except where the refusal is made on the ground of denial of execution, an appeal shall lie against an order of a Sub-
Registrar refusing to admit a document to registration (whether the registration of such document is compulsory or
optional) to the Registrar who is superior to sub registrat, if presented to such Registrar within thirty days from the
date of the order; and the Registrar may reverse or alter such order.

If the order of the Registrar directs the document to be registered and the document is duly presented for
registration within thirty days after the making of such order, the Sub-Registrar shall obey the same, and follow the
procedure for registration and on registration it shall be considered as if the document had been registered when it
was first duly presented for registration.

PROCEDURE BEFORE THE REGISTRAR – Section 74

If Registrar receives the appeal, he will consider the following factors:

a) He will see whether the documents have been properly executed.

b) All the requirements of law i.e. signature of the parties, witnesses, stamp duty etc. are followed.

If the Registrar is satisfied that order of refusal was not proper he will order the Sub-registrar for registration
of the documents.

As per section 77, The Aggrieved party (in case the registrar does not give relief) or his representative, assign or
agent, may, within thirty days after the making of the order of refusal, start a suit in the Civil Court, within the local
limits of registrar in whose office the document was to be registered, within thirty days after the passing of such
decree.

Exemption of Certain Documents Executed by or In fovor of the Government

 Documents issued, received or attested by any officer engaged in making a settlement or revision of
settlement of land revenue and which form part of the records of such settlement.
 Documents and maps issued, received or authenticated by any officer engaged on behalf of
Government in making or revising the survey of any land which form part of the record of such survey.
 Documents which, under any law for the time being in force are filed periodically in any revenue
office by patwaris or other officers charged with the preparation of village records.
 Sanads, inam, title deeds and other documents purporting to be an evidence, grants or assignments by
Government, of land or of any interest in land.
 Notices given under section 74 or section 76 of the Bombay Land Revenue Code, 1879 of
relinquishment of occupancy by occupants or of land by holders of such land.

PROVISIONS OF TRANSFER OF PROPERTY ACT, 1882 AND REGISTRATION OF DOCUMENTS

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INTRODUCTION
As a Company Secretary is also the legal officer of the company so he must be aware with the laws that relate
to transfer of immoveable properties. Many times in the organization the Company Secretary may be asked to
make compliances related to purchase or sale of immoveable properties. The TOPA, 1882 will make the
students familiar with the laws related to immoveable properties.
The Act deals with inter vivos transfer that means transfer between two living persons.
Yeh act basically immoveable property ke transfer se deal karti hai.
DEFINITIONS:
▪ Instrument :
Any piece of paper which creates, transfers limits, extinguishes, assigns, rights or obligations on the
parties is known as Instrument.

▪ Attached to Earth :
Attached to earth means:
a) Rooted on earth for example trees, shrubs, standing timbers etc as long as they are rooted to earth
they will be immoveable property as soon as they are severed they will become movable property.
b) Imbedded in earth e.g. houses, building or walls
c) Anything which is attached permanently to the earth or to something which has been permanently
imbedded in the ea rth e.g. : Chimney, Machines, Oil Rigs, Doors, windows etc.
(basically jo attached to earth hota hai wo immoveable property banta hai)
▪ Absolute Interest :
a) Absolute interest means a complete or full right in the property.
b) The owner of the property has got absolute interest in the property.
c) The person who has absolute interest in the property is authorised to exercise all the rights in the
property (mainly) viz. Sale, Mortgage, Gift, exchange, lease etc.
d) All the transactions done by a person who has absolute interest in the property are legally
enforceable. (allowed in the court of law).
(aisi property jo poorie tarah aap ki hai us main aap ka absolute interest hota hai)

▪ Reversion :
(a) Reversion means right of receiving back the property by the owner.
(b) When the owner of the property transfers his property on lease basis, it is the right of the owner of
the property to receive or make re-entry on his property after expiration of the period of lease. This
right of owner is known as Reversion of owner.
E.g. : Ramesh gives his property on lease to Rupesh for 11 months. Ramesh gets a right of reversion on
the property after 11 months i.e. expiry of lease.
(apni property ko vapas lene ka adhikar Reversion kahlata hai)

▪ Right of Remainder :
a) An individual can create two kinds of interest in the property i.e. limited interest & absolute interest.
b) Limited interest can be created in favour of one or more individuals till their life & then after
completion of limited interest the property is transferred in favour of a person who has been given an
absolute interest in the property.
c) So the person who has got absolute interest in the property can exercise the Right of Reminder. This
Right means right to receive remaining interest in the property after expiry of all the limited interest
created in the property, ex. : X transfers his property to Y for life then Z for life then K for life & then
to P permanently. In this case P has the right of Remainder.
(jis insan ke pas limited interest hota hai us ke rights khatam hone ke bad property absolutely jise milegi
uske pas right of remainder hota hai)

▪ Vested interest : Section 19

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In case of transfer of a property if an interest is created in favour of a person without specifying the time
limit within which the interest will take effect or if it is specified that the interest will take effect
immediately or on happening of event which must happen, such interest is vested unless any contrary
intention appears from the terms and conditions relating to transfer. A person takes vested interest in the
property when he acquires the ownership rights but the right of enjoyment is postponed till a future event
happens, which is certain to happen.
For example, a hindu widow adopts a son but there is an agreement between the widow and the adopted son,
that the adopted son will get the properties of widow after the death of widow, so the sons estate is
postponed till life time of widow, we can say that vested interest is created in favour of adopted son.
Even if the transferee dies before obtaining possession, the vested interest is not affected.
Vested in possession Vested in interest
Vested in Possession it means the right of the It is the Right of the person who has received an
person who receives limited interest in the absolute interest on the property or the Right of
property. Remainder.
It is the present right of present possession. It is the present right of future, permanent
possession.
The person to whom property is given for life gets The person to whom property is given permanently
the right of vested in possession. or absolutely gets the vested in interest.

▪ Contingent interest: Section 21

− Contingent interest means an unascertained right in the property.
− When property will be transferred to an individual on satisfaction or fulfilment of some conditions or
on happening or non-happening of future unascertained events such kind of transfer creates a
contingent interest in the favour of transferee.
− If the conditions of transfer are fulfilled, in this case the contingent interest creates / amounts
absolute interest but absolute interest can’t become contingent interest.
− Every contingent interest can become absolute interest or Vested interest. E.g. Ram says to Khush, if
you marry my daughter I will transfer you my bungalow.
− If the transferee dies before happening of the event the contingent interest fails and property reverts
back to the transferor.
− If the conditions of transfer are not fulfilled in this case the transfer becomes invalid transfer.
(property ki ownership agar kisi shart ke poora hone ke bad milegi to aap ka us property main contingent
interest hota hai)
Difference between vested interest and contingent interest:
[Link]. Vested Interest Contingent Interest
1. It is the Transfer of Property without Property is transferred with conditions.
conditions.
2. The transfer is dependent on any event The transfer is dependent on an uncertain
which is bound to happen. event.
3. Vested interest takes effect from the date Contingent interest has the effect of
of transfer of vested interest. transferring the property from the date on
which condition is fulfilled.
4. A vested interest is transferable as well as Contingent interest will become
inheritable. transferable or inheritable from the date of
fulfilment of the condition if transfer dies
before fulfilment of the condition the
transfer become invalid.
5. Property is transferred to X for life & Y If I say to Y if you marry P I will transfer you
completely. So Y gets vested interest. my bungalow.

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 6. Present and immediate right just the There is no present right of enjoyment, just
enjoyment is postponed. a promise is made to transfer the property.

1. Not affected by death of transferee before It becomes void if transferee dies before
obtaining the possession. fulfilment of condition.

▪ Moveable property:

The property which can be shifted from one place to another is

called moveable property it includes shares, stock, ship etc.
Some moveable property:
a) Right of Worship.
b) Government Promissory Note.
c) Royalty.
d) A Right to recover arrears of past
maintenance.
e) Copyright.
f) A Decree of sale on a mortgage
deed.
g) A decree of arrears of Rent (order of a Court).
h) Machinery which is not attached to earth.
i) Standing timber, Growing Crops & Grass.

▪ Immovable property:

− The term “immoveable

property” is also not defined under the Act. However, it is
defined in the negative sense as “the immoveable property
does not include standing timber, growing crops, or grass”.
− Standing timber are trees fit for
use for building or repairing houses. It is immoveable property
as long as it is attached to earth.
− "Immoveable property" means land, benefits to arise out of land, and things attached to the earth, or
permanently fastened to anything attached to the earth.
− In the case of Sukry Kurdepa v. Goondakull., it was held that: Movability may be defined to be a
capacity in a thing of suffering 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 affected they become moveable.
Some immovable properties:
a) Right to collect rent.
b) Right to way
c) Right to collect dues from fair on a piece of land.
d) Hereditary offices (An interest of legal representative in the property of his
father).
e) The equity of Redemption.
f) Right to collect lac from trees.
g) Right of Ferry.
h) Right to Fishery

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 i) Factory, Etc.
In the case of Ananda Behra v. State of Orissa, it was decided that all the benefits that generate from
immoveable properties are also immoveable properties and will be transferred in the manner as immoveable
property is transferred.
RULES RELATING TO TRANSFER OF PROPERTY:
Only a living person (living person includes a Company) can transfer his property to some other person in
present or in future living persons includes a Company too.
Who can transfer the property – Section 7
Any person who is capable of entering into a contract can transfer his property. Minor can not transfer a
property, however the minor can be a transferee as there is nothing in the transfer of property act which
prohibits the minor to be a transferee.

In the case of Hari Mohan Vs Mohini, it was decided that mortgage can be executed in favour of minor who has
paid the consideration.

Generally minor can not transfer the property however this rule is subject to the following exceptions:
a) When he acts with the consent of the true owner of the property.
b) In the case of Doctrine of feeding the grant by estoppel.
Subject matter of transfer:
Subject matter of transfer will always be an immovable property. Even a future property may be transferred.
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 (Jugal Kishore Vs Ram Cotton Company)

Formalities / requirements of transfer:

1) Two parties having opposite intention.
2) Agreement of transfer of immovable property. Agreement should be made with attested documents & in
presence of at least 2 witnesses.
Attestation: It means to be a witness through signatures. Through attestation, 2 witnesses by putting their
signatures state that they have verified the correctness of the signature of the executants on the deed. Sale
and lease deed do not require mandatory attestation, however gift deed and mortgage deed require
mandatory attestation.
In attestation, as per section 3 there should be at least 2 witnesses who must ensure:
a) Executants have signed, or
b) The persons who are directed by the executants have signed, or
c) Witnesses have received an acknowledgement from the executants that they have signed the deed.
In the case of Yakub Vs Kalzukran, it was decided that the witnesses need not be present at the time of
execution and can be done later on also, however no attestation can be done before execution.
Attesting witness must put his signature Antmus Attestendi “with the intention to attest”

3) Newspaper Notice or notice of any charge or encumbrance to the other party.

Notice includes actual and constructive notices.
A person is in the process of transferring a property to the other person and before the transfer such person
says the transferee to check the title deeds of the property that are in the possession of the bank, but the
transferee does not check the title deeds and buys the property without going through title deeds in this case
the transferee will not get any right i.e he will not be protected by TOPA.
4) The intention of giving notice is to call for abjections
5) If no objections are received then stamp duty may be paid at the office of the registrar
6) After paying the stamp duty the parties may proceed for registration.

RULES AGAINST INALIENABILITY / RESTRAINT ON TRANSFER / CONDITIONS RESTRAINING ALIENATION – SECTION

10
1. According to this Rule no one should be stopped from transferring a property.

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2. If a person transfers his property & adds a condition that if the transferee further transfers the property in
favour of some other person the property will again comeback to the transferor. Such condition is void.
3. The Transferee may freely transfer the property without any restrictions.
So as per the section if the property is transferred subject to condition or restriction which absolutely or
completely restrains the transferee from further transferring the property such condition or limitation is
void.
For example: A made a gift of house to B with a condition that if B sold the house during the time when
A is alive, A will have the option to purchase the property for Rs 5000. The original value of house was 10
lacs. The condition imposed by A was held to be absolute restraint and hence it was void.

KINDS OF RESTRAINT

So a property may be transferred to a married women for her life without giving her power to transfer the
property, if she is not a hindu, muslim or buddhist.

TRANSFER OF PROPERTY FOR BENEFIT OF UNBORN PERSON: Section 13, 14, 18 of TOPA & Section 113 of Indian
Succession Act, 1925
BACCHA NAI HUA HAI PAIDA,
PAR US KE BENEFIT KE LIYE PROPERTY TRANSFR KARNA
Under this section we are not transferring the property to an unborn person but we are creating an interest on
the property for the benefit of an unborn person.
As the transfer of property is valid only when it happens between 2 living persons so normally the transfer of
the property in favour of unborn person is void. However if the following conditions are satisfied then the
property can be transferred in the favour of an unborn person:
A) The property must be transferred for life (limited interest) in favor of living person.
B) Unborn person must be born before expiry of the limited interest i.e. the unborn person must be born
before the death of living person to whom the property was transferred for life.
C) Once the unborn person is born, he shall be given absolute interest (whole interest) on attaining the
age of majority.
D) Such transfer for the benefit of unborn person can be made by will or trust.

If the above conditions are satisfied then the property can be transferred for the benefit of an unborn person.
CONDITIONAL TRANSFER: SECTION 25
a) Conditional Transfer means transfer of property subject to fulfilment of certain conditions. The transfer
will fail in case the fulfilment of condition becomes impossible, or is forbidden by law, or is of the nature

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 that if it permitted it will defeat the provisions of law or is fraudulent or involves injury to person or
property or the court considers it to be against public policy or immoral.
b) The conditions are to be fulfilled by the transferee. E.g. : X agrees to transfer his property to Y if Y wins
a gold medal in Olympics.
c) Conditional transfer creates contingent interest & not absolute interest.
Where A transfers, Rs. 5,000 to B on condition that he shall marry with the consent of C, D and E. B marries
with the consent of C and D only as E has died earlier. B is deemed to have fulfilled the condition.
Because the compliance of entire condition was not within the control of B.

Where A transfers, Rs. 5,000 to B on condition that he shall marry with the consent of C, D and E. B marries
with the consent of C and D only and obtains the consent of E after the marriage. B has not fulfilled the
condition.

RULES REGARDING CONDITIONS

1) Condition should not be impossible to fulfil. E.g.: I will transfer you my land if you work on water.
2) The condition must not be illegal. E.g. I will transfer you my land if you murder 2 people.
3) The condition should not be fraudulent. E.g. : I will transfer you my land if you transfer me 10,000
personal computers of your employer.
4) The condition should not be opposed to public policy. E.g. : I will transfer you land if you take divorce
from my husband & get marry with me.
5) The condition must not defeat the provisions of law.

CONDITION
▪ Condition Precedent:
The condition which is to be fulfilled before getting the property is called condition Precedent.
E.g. Of Condition Precedent:
I will give you my property on lease if you get married with my daughter.

▪ Condition Subsequent:
Condition subsequent is to be fulfilled to retain the property. This condition is to be fulfilled after the
transfer of property.
E.g. Of Condition Subsequent:
I give you my flat for 5 years on lease. If you sub-lease the property to any other person, I will cancel your
lease & take back my property.

DOCTRINE OF ELECTION
AGAR MIL RAHA HAI BENIEFIT,
TO BURDEN BHI SAHNA PADEGA!
1) This rule has been defined u/s. 35 of Transfer of Property Act, 1982.
2) when a person professes (contracts) to transfer a property in which he has no right to transfer, and in the
same transaction or contract, creates a benefit for the owner of the property, such owner must elect
either to accept or reject the transfer or contract, and if he rejects the transfer (means he refuses to
accept the benefit and chooses not to bear the burden of transferring his property) he shall also reject
the benefit which is given to him by the transfer, the benefit which is rejected shall revert back to the
transferor or his agent. Now in case the owner (who rejected the benefit) has deprived the transferee of a
property, by not making election so such transferee will become the disappointed transferee and in case
the transfer between the transferor and the disappointed transferee was for consideration and if the
transferor has died or has become incapable of making a fresh transfer, in this case the disappointed
transferee will be entitled to reasonable compensation.
Lets See an Example:
Amar: Transferor (transfers a property in which he has no right)
Akbar: Owner (who has to elect)

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Anthony : (will be disappointed if rejection is made by owner)
Amar transfer the property of Akbar worth Rs 10 Lacs to Anthony and also Amar gives Akbar a Cheque of
Rs 10 Lacs, now in this example Akbar has to make a choice or elect whether to accept the cheque of Rs
10 lacs or not and if he accepts the cheque of Rs 10 lacs, he will also have to bear a burden of transferring
his property to Anthony. In this case if Akbar does not make any election Rs 10 lacs will revert to Amar or
in case Amar dies before Akbar makes a choice, Anthony will be a disappointed transferee and will be
entitled to compensation of Rs 10 lacs if the transfer was a gratuitous between Amar and Anthony.
3) This doctrine states that a person who is getting some benefit shall also bear a burden.
4) A person (owner) is not allowed to accept the benefit & Reject the burden at the same time. He has to
make a choice or an election that if he wants to enjoy a benefit he will also have to suffer a burden.

“A” transfers his property to “B” by an agreement and “A” transfers B’s property to “C” by another
agreement, in this case “B” can keep “A” property himself and he will not be required to transfer his own
property to “C”. The doctrine of election will not apply in this case as “B” did not get any choice.

Ex: There is a farm in Delhi, which belongs to C and it is worth Rs 800, A by an instrument of gift transfers it
to B and in the same deed gives an instrument of Rs 1000 to C. Now C has a choice, to retain the farm or to
take Rs 1000, if C wants to retain the farm he will have to sacrifice Rs 1000. Now if C rejects the transfer he
will keep the farm and reject Rs 1000.
In this case if A dies before election by C, B will be dissatisfied transferee and he will be given a
compensation of Rs 800 by representative of A.

A person “K” made a settlement with his wife that after death of “K” she will get his flat located at Pune.
Before his death “K” also made a will in which he mentioned that on his death Rs 200 p.m. will be given to his
wife if she leaves her right on the flat located in Pune. The wife was also given Rs 1000 p.m.
After death of “K” the wife chose the flat in Pune and left the option of getting Rs 200 p.m. This case was
held to be the case of doctrine of election. The wife also received a sum of Rs1000 p.m.
(aap ko choice milti hai ki agar dusre ki property ka maja lena hai to apni property bhi transfer karni padege)
TRANSFER BY OSTENSIBLE OWNER OR DOCTRINE OF HOLDING OUT

OWNER TO NAHI, PAR OWNER SE KAM BHI NAHI,

ISKE TRANSFER KO CHALLENGE KARNE KA KISI MAIN DAM BHI NAHI

1) Defined in section 41 of Transfer of Property Act.

2) A person who is not the true owner of the property but represents himself as an owner of the property
with the consent of the true owner of the Property is known as ostensible owner.
3) An ostensible owner can transfer the property against a consideration.
4) The transferee should accept the property in good faith & he should believe that the transferor is
authorized to transfer the property.
If any one of the above mentioned condition is not fulfilled than the transfer is not valid.
E.g. : The Holder of the Power of Attorney can be treated as an ostensible owner.
5) In an HUF, the manager of HUF transferred the property of HUF to “X”, the HUF also had some minors.
Later on “X” transferred the property to “Y”. When the minors knew about the transfer, they sued “Y” for
recovery of the property “Y” said that he bought the property from “X” who was the ostensible owner of
the property. The court said that “X” cannot be considered as ostensible owner as he did not take the
consent of minor members of HUF and when property was transferred “X” it could not be proved that
minor members give consent. Hence the property was restored to minors.
6) “A” made gift of the property to “Z”. However the “ A” continued to occupy the possession of property
that was gifted and later on sold it to “Y” when “Y” occupied the property “Z” sued “Y”. “Y” said in the
court that he bought the property from “A” who was ostensible owner of the property. The court held
that “A” has made a valid gift to “Z” so “Z” was the original owner and “Z” did not give any consent to
“A” to see the property hence “Y” cannot claim the property and “A” is not the ostensible owner.

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(agar transferee good faith main kam kar raha hai to agar aap true owner nai hai par true owner ka consent
aap ki pas hai, to bhi transfer valid hoga)
DOCTRINE OF FEEDING THE GRANT BY ESTOPPELS

1) This principle is defined in Sec. 43 of Transfer of Property Act, 1882.

2) As per this rule/principle if a person is not the owner of the property but he fraudulently represents
himself as an owner of the property & makes the transfer of the property to a transferee who has bought
the property in good faith & for consideration.
3) In this case the person who has bought the property may either cancel the contract or may keep the
contract alive. If the transferee keeps the contract alive & in future if the transferor receives such
property (which did not belong to him at the time of sell) in future, then the transferee may ask the
transferor such property to the transferee.
E.g. : X sells a bungalow to Y representing that he is the owner of bungalow which he was not in Reality.
Y purchases the bungalow in good faith & for consideration. If Y does not cancel the contract & X
Receives the ownership of bungalow in future, Y can ask X to transfer the bunglow.

Ram sells his fathers property to Shyam which did not belong to him at the time of transfer for Rs 20000.
Shyam had purchased the property in good faith and did not cancel the contract, now on death of father
of Ram, Ram gets the property, now in this case shyam can ask Ram to transfer the property.
(agar promsise kiya tha property bechne ka par poreprty aap ke pas nai thi, transferee good main kam kar
raha tha, aur us ne contract bhi cancel nai kiya, agar ap ke pas future main wo property aai to transferee
us property ko mang sakta hai)
DOCTRINE OF PART – PERFORMANCE
PROPERTY KA NAI HUA REGISTRATION,
BUILDER TUMHARE KO FLAT SE NIKALNE KA, NAI LE SAKTA ACTION

1) Defined in Sec. 53 (a) of Transfer of Property Act, 1882.

2) According to this principle when all the formalities of transfer are done perfectly except the Registration,
the contract remains partly performed.

Following are the essential conditions for applicability of 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 contract of transfer shows the intention to transfer the property.
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.

In case all the above 6 conditions are satisfied, this principle protects the transferee if Registration has not
been made.

If the possession is disturbed on the ground of non-registration, the transferee may get an injunction from the
court. The order of the court does not establish any title in favour of transferee, it is just a declaration
presenting possession of transferee.

However, the doctrine of part-performance will not affect the right of a subsequent transferee for
consideration without notice of the earlier contract and of its being partly performed (which means the
transferee who acts in good faith)

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(sari formalities ho gai registration ko chod kar to builder possession cheen nai sakta, par yeh rule good faith
wale buyer ko apply nai hoga)
Que: A contract for the sale of land has been entered into between Vishal and Akash. Akash, the transferee,
has paid the price entering into possession and is willing to carry out his contractual obligations. As
registration has not been effected Vishal, the transferor, seeks to evict Akash from the land. Whether Vishal
can do so ? Give reasons in support of your answer.
Que: A contract for the sale of Beauty Palace has been entered into between Karisma and Keshav. Keshav, the
transferee has paid the price entering into possession and is willing to carry out his contractual obligation. As
registration of the Beauty Palace has not been effected, Karisma, the transferor seeks to evict Keshav from
the Beauty Palace. Can she do so
RULE AGAINST PERPETUITY: SECTION 14
PROPERTY KA TRANSFER EK PARTICULAR PERIOD MAIN KHATAM KARO
NAI TO TRANSFER BHASMA HO JAEGA

1) According to this rule there must be a time limit within which transfer of property must be completed.
2) The transfer of property must take place within a perpetuity period, perpetuity period means life of living
persons on the date of transfer plus a further period of minority of an unborn person.
3) If transfer of any property is to be completed beyond a perpetuity period such transfer in an invalid
transfer.
The vesting of absolute interest in favour of unborn person can be postponed until he attains the age of
majority.
4) Though it appear that perpetuity period is very long but in the word of Lord Maslow “if all the candles are
ignited at the same time they will lose their flame together” so there is a limitation of time.
Example: if A transfers a property to B for life and then to C for life and then to d for life and then to unborn
son of A, absolutely when he attains a majority. This transfer takes place within perpetuity period and is
valid.
(ek time limit ke andar transfer complete hona chahiye, time limit hai; life of living persons on the date of
transfer + further period of minority of unborn child, agar is ke aage tranfer gaya to wo void hoga)

DOCTRINE OF LIS PENDANCE (SECTION 52)

Lis Pendens means transfer of property during pending litigation.
According to the doctrine if any case is pending in the court of law relating to any immoveable property, such
property cannot be transferred.
Essential Conditions relating to Lis Pendens:
1. There should be a suit or proceeding before competent court .
2. The suit is not malafide.
3. The suit must be relating to immoveable property.
4. Neither party to the suit shall transfer or otherwise deal in the property which
is the subject matter of dispute, which can affect the right of the other party.
5. Proviso: With the permission of the Court the property can be transferred even
during the pendency of the suit. The court can take security from the parties
before granting the permission.
6. If transfer is made in violation of this provision then such transfer is not
recognized by law.
Exception to the rule of lis pendens:
If any party has purchased the property for value in good faith, without the notice of dispute in the Court
then this doctrine shall not apply on such purchaser and the doctrine will not apply on such purchaser.
DOCTRINE OF FRAUDULENT TRANSFER: Section 53
CREDITOR KO ULLU BANANE KI LIYE JO TRANSFER HAI,
USE HUM FRAUDULANT TRANSFER KAHTE HAI!
1) This principle has been defined in Sec. 53 of Transfer of Property Act, 1882.

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2) According to this principle if a person transfers his property so that the Creditors are not able to use the
property in discharging their Debts, such transfer of property shall be voidable at the option of the
creditor.
3) Such transfer will be valid till the time the creditor does not approach the Court and the Court makes a
declaration that the transfer is invalid. Such suit in the Court shall be for benefit or on behalf of all the
creditors.
The Creditor must prove in the Court that the debtor transferred the property in order to deceive him.
Suppose a man takes a loan from the creditor. He does not pay the loan. Then the creditor sues him in a Court
to get back his debt. On seeing this, the debtor transfers his property to a friend of his or some other person
who simply holds the property on behalf of the transferor. Again, the debtor may make a gift of his property
to his wife or sell it to a friend who will afterwards retransfer the same to the transferor. Under these
circumstances, we can easily say that the debtor’s intention was to prevent the creditor from taking the
property by a suit in the Court and to realise his debt

If a person has many Creditors but he transfers his property only to 1 Creditor, in this case the transfer will
not be treated as a fraudulent transfer but other Creditors may approach the Court, within 3 months from the
date of transfer for the declaration of the debtor as insolvent & can ask the Court to cancel the transfer &
utilize the property in satisfaction of debt Of all the Creditors proportionately on the ground of fraudulent
preference.
Exception:
This doctrine will not apply in case the transferee of the property acquires the property for value in good
faith without the knowledge of fraudulent transfer by the transferor or in case the transferee is the creditor
and property is transferred to him in satisfaction of his debts.
(creditor ko bevkoof banana ke liye transfer agar kiya to wo fraudulent transfer hoga)

PROPERTIES WHICH CANNOT BE TRANSFERRED: Section 6

1) Chances of heir apparent or specs successions:
Apparent means appears to be. Heir means legal representatives.
a) Heir apparent is a person who is not the owner of property at present but he appears to be or can become
owner of the property after a certain period of time when the true owner passes away/dies and there is a
blood relation of the heir apparent with the owner who dies.
b) The heir apparent cannot transfer the property unless the property comes into his hands or he becomes
true owner of the property.
A mere possibility of an heir succeeding to properties is excluded from the category of transferable
properties, this prohibition exists on the ground of public policy.
c) Even if the heir apparent transfers the property & after a certain period of time the heir apparent
receives the property in this case Doctrine of feeding the grant by estoppel will not be applicable.
Que: Swami transfers to Radha for valuable consideration his reversionary interest in a property. When Swami
succeeds to the property, Radha sues him for possession of the same. Decide whether Radha will succeed ?
2) Right of re-entry :
Also called as Reversion:
a) Right of re-entry arises when a property has been given on lease.
b) When a property is given on lease it is only a lessor who can make a Re-entry on the leased property.
The lease or any other person may not transfer this right to any other person.
c) However, Right of Re-entry can be transferred only by the lessor in case he sells the leased property.
For instance, if A leases his property to B and adds a condition that if B sub-lets the leased land, A will
have the right to re-enter, i.e., the lease will terminate if the lessee breaks the condition by subletting
to a third person.

3) Transfer of easement :
a) Easements are defined under Indian Easements Act, 1882.
b) Easement means a Right of a person who is not the owner the land, over land of some other person.

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c) This right includes right of way, right of light, right of air and water.
d) Easement cannot be transferred independently by the owner of the property.
e) Easements are also known as servitudesunder English laws.
f) An easement includes a right to enjoy a profit out of the land of another.
Example: A person has a right over the land of his neighbour if A uses land of his owner as a way.
For example, the right of certain villagers to bath in another’s tank cannot be transferred.
4) Mere right to sue and actionable claim.
There are some claims which gives mere right to sue such as past mesne profits, damages for breach of
contract, suing an agent for accounts, pre-emption. These rights are just the right to sue and can not be
transferred to prevent gambling in litigation.

Only the person who is the owner of the property can approach the court for filing cases in respect of the
property so that the filing of multiple cases in respect of a single property can be avoided.
For example of there is a contract between A & B, A breaches the contract in this case B may approach the
court for claiming damages but B cannot transfer the right to any other person to approach the court.

When a party has a right to claim an ascertained sum of money from other person, this will become an
actionable claim. Actionable Claim is a property & hence can be transferred only when conditions given in the
act are fulfilled.
A beneficial interest in specific moveable property is also an actionable claim. In the case of Jaffer Meher Ali
v. Budge Jute Mills, It has been held that the right to claim the benefit of an excecutory contract constitutes
a beneficial interest in moveable property

5) Restricted interest or personal interest :

These officer are attached to a property share and hence these offices can not be transferred by the
person who holds these offices, for example a trustee can not transfer his office as it is based on the
person confidence of the donor or settler of the trust.
a. The right of pre-emption given under the Mohammedan Law.
b. The office of a Shebait of a Temple or mohunt of a mutt or mutuwalli of a wakf.
c. Emoluments attached to a priestly office.
d. Service tenures.
6) Right of Future maintenance :
This again is a personal right in the property which the law says that it cannot be transferred. The right of a
Hindu widow to maintenance is a personal right which cannot be transferred. This is a personal right of the
person to whom it is granted, Under the law the arrears of past maintenance can be transferred, but not the
right to future maintenance.
ACCUMULATION OF INCOME
Section 17 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 certain period only. The
period for which such accumulation is valid is:
(a) The life of the transferor, or
(b) 18 years from the date of transfer.
However in the following cases such income may be accumulated for a period beyond the above mentioned
time:
A. The payment of the debts of the transferor
B. Portions for children
C. For the preservation and maintenance of the property transferred.
THE MODE OF TRANSFERRING A PROPERTY UNDER TOPA
▪ Sale
− It means transferring a property for consideration paid or partly paid or part paid & part promised.
− In sale there must be a transfer of ownership from a person to other qualified person against a
consideration. The subject matter has to be the present or future immoveable property.

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▪ Exchange
− When two persons mutually transfer their ownership of one thing for the ownership of another it is kwon
as exchange. The subject matter of exchange has to be moveable or immoveable property.
− The transaction must happen with the consent of both the parties.
▪ Gifts
− Gift means transfer of an immoveable property without consideration. Gifts of immoveable property can
be made by written and registered agreement.
− Every gift of immoveable property in excess of Rs. 100 requires compulsory registration.
− The person who gives the gift is called donor & the person to whom gift is given is called the donee. If the
donee dies before acceptance of the gift in this case the gift becomes invalid.
− If the gift is given but is not accepted by the donee then it cannot be registered by the done.
− In the case of Kalyan Sundram v. Kumarappa, it was, decided that after acceptance of the deed of gift
and before registration, the donor cannot revoke the gift. The gift which is accepted by the donee, will
take effect from the date of the execution of the document by the donor, even though it is registered at a
later date.
− Where a person wants to make a gift of the property which is to come in his hands in future, he cannot
transfer it because a gift is a voluntary transfer without any consideration. Thus a gift of future property
is void.
If the deed of gift is executed by the donor but not communicated to the donee, such gift can be revoked
by the donor as it has not been communicated to the donee.
− A revocable gift, which is voidable at the option of donor is void, however conditional gifts can be made
which can be revoked on the happening or non happening of future event.
− A gift may, however, be revoked if it is brought about by a fraud or misrepresentation or undue influence
▪ Onerous gift
− A gift attached with liability or an encumbrance is known as onerous gift.
− Example: Gift of a bungalow on which payment of loan is outstanding.
▪ Leases:
1) Lease has been defined u/s. 105 of Transfer of Property Act, 1882.
2) Lease means transfer of possession of immovable property in favour of a person for a limited period or for
perpetuity .
3) Lease is against a premium (premium means a deposit or rent).
4) The lease should be accepted by the lease.
5) There are two parties to lease, the party who transfers possession is known as lessor, while the party in
whose favour the possession is transferred in called lessee.
DIFFERENCE BETWEEN LEASE & LICENSE
[Link]. Lease License
1. It is transfer of possession of a property in favour It is a permission to do or not to do some acts in
of some other person. the property.
2. Lease is defined under TOPA, 1882 License is defined under Indian Easement Act,
1882
3. Lease is inheritable (transferable). License is not inheritable.
4. Lease involves two parties: lessor & lessee. License too involves two parties Licensor &
Licensee.
5. After expiry of lease the leasee can continue on After expiry of license the licensee can not
the leased premises. continue on the licensed premises.
Formalities of Lease :
1) If Agreement is of less than 12 months, than only stamp duty is payable.
2) If lease is for 12 months or more, agreement plus registration is made.
Types of Tenancies :
1) Tenancy from year to year :

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 In this type of tenancies the tenancies starts on a particular date but finishes after expiration of 1 year.
After expiration of one year the tenant continues to occupy the possession & pays the rent to the
landlord. To terminate this lease 6 months’ notice is required to be given by the either party.
2) Tenancy from month to month :
This lease is renewed after expiration of each month. To terminate this lease 15 days’ notice will be
required to be given.
3) Tenancy by will :
a) The tenant continues to be in the possession of the leased property after the expiration of leased
period & the landlord or lessor does not take any objection.
b) However the tenant pays rent & the lessor accepts the rent without any objection. This kind of
tenancy is known as Tenancy at the will of lessor.
4) Tenancy by sufferance :
The lease period has been expired & the tenant continues to be in the possession of leased property without
consent of the lessor, such kind of tenancy is known as tenancy by sufferance.
Determination of lease:
1) By efflux of the time or lapse of time :
It means the period for which lease was granted has been expired, the lease will come to an end.
2) By – Happening of a Special Event :
In the lease agreements events may be mentioned on happening of which lease may come to an end. E.g.
: If the lease is granted for life, death of lessee will complete the lease.
3) Merger :
If the lessee purchases the leased property, leases, lease will come to an end.
4) By surrender :
− Express Surrender
Lessee discontinues the lease with the permission of lessor.
− Implied Surrender
Cancels the old agreement &make a new agreement for more or lesser period.
5) By Forfeiture :
If the lessee does not fulfil the conditions or makes any breach in conditions given by the lessor, the lessor
may forfeit the lease.
Duties of the lessor :
a) To disclose all the defects in the property.
b) Lessor should take steps for transferring the possession to the lessee.
c) To pay municipal Taxes, water taxes & society maintenance charges.
d) To refund the security deposits if any, to the lessee after the expiration of the lease.
Rights of the lessee :
a) To know all the defects in the property.
b) To recover the security deposit after the expiration of the lease.
c) To take a possession of a property.
d) If the lessee has incurred on behalf of the lessor, the lessee can recover it from the lessor.
e) Right of inheritance.
f) Right to remove furniture after expiration of lease.
g) If, due to no fault of lessee, the lease comes to an end (i.e., when the lease is of uncertain duration), the
lessee or his legal representatives are entitled to all the crops planted or grown by the lessee.
Right of lessor :
1) To recover rent.
2) Right to restrict or prohibit the lessee from sub-leasing the property.
3) Right of reversion.
4) Right to recover damages or compensation, in case any destruction or damage has been done to the
property.
5) Right of forfeiture.
Duties of lessee :

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1) Duty to pay rent on time.
2) Duty not to sub-lease the property.
3) Duty not to harm or damage the property etc.
4) Duty to fulfil all stated conditions.
▪ Actionable claim: (S 131) Means Demanding a Right:
1) Actionable claim means right to approach the court for recovering an unsecured Debt.
2) Actionable claim means an action in the court of law, recover an unsecured debt.
3) As a General rule an actionable claim cannot be transferred.
4) But by a written & a signed Agreement an actionable claim can be transferred.
5) An actionable claim acquires the status of immovable property under transfer of property Act, 1882.
6) If prior transfer of Actionable claim is valid than subsequent transfer of actionable claim is invalid.
7) E.g. : X transferred his actionable claim to Y. Y transferred the actionable claim by a gift to Z and Y again
transferred it to N.
Here Z is entitled for the claim.
8) In the same manner if prior transfer of actionable claim is invalid in the same manner the subsequent
transfer will also be invalid.
9) Arrears of rent, insurance claim, provident fund due, partners claim on dissolution are the examples of
actionable claim.
10) Arrears against secured debenture cannot be treated as actionable claim as it is a secured debt.
▪ Mortgage
1) Mortgage means transfer of an interest (right) in an immovable property for securing the repayment of the
money.
2) Mortgage deed should be written & registered. Mortgage deed is not a contract but a conveyance (deeds
that transfer immoveable property)
3) There are two parties in mortgage, mortgagor & Mortgagee.
4) The person who gives the loan & takes the security is known mortgagee.
5) The person who Receive loan & gives security is mortgagor.
Essential conditions of mortgage:
a) Transfer of interest in specific immoveable property b) To secure the repayment of the debt
KINDS OF MORTGAGE
APNI PROPETY KO RAK DENA GIRVI,
KYUNKI JAROORAT HAI PAISE KI!
1) Simple Mortgage:
a) In this kind of mortgage no possession or ownership is transferred to the mortgagee, neither any title deed
is given.
b) Just an agreement is made between mortgagor & Mortgagee & it is mentioned in the agreement that in
the event the mortgagor could not repay the loan, the mortgagee can use the property mentioned in the
agreement for the satisfaction of the debt.
c) If the property mentioned in the agreement is not able to satisfy the debt of mortgager the mortgagee
can exercise rights over the other properties of mortgagor.
d) The mortgagee can sell the property in the event mortgagor does not repay the loan after obtaining the
order from the court
2) Mortgage by conditional sale :-
a) When mortgagor takes loan from the mortgagee it is considered that mortgagor has sold his property to
the mortgagee, but the finalization of sale is dependent upon repayment of loan.
b) If the mortgagor repays the loan on time along with interest, the sale of property becomes invalid.
c) If the mortgagor could not repay the loan the sale becomes absolute & binding on the parties.
d) The concept of mortgage by conditional sale is similar to contingent contract under the Contract Act,
1872.
e) In this kind of mortgage the mortgagee can stop the mortgagor from taking the mortgaged property as the
mortgagee will become the owner of the property. This right of mortgagee is known as right of
foreclosure.

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3) Usufractuary Mortgage :
a) In this kind of mortgage, the possession of property is given to the mortgagee.
b) Right to receive Rent & profit out of property mortgaged is also given to the mortgagee.
c) The mortgagor is under no obligation to pay the principle or interest amount on the loan.
d) The repayment of principle & interest is adjusted from rents & profits received from the property.
e) The property will revert back to the mortgagor on the total recovery of principle & interest by the
mortgagee or on completion of the term for which mortgage was creates whichever is earlier.
f) In the case of Panchanan Sharma v. B.P. Jagnani, it was decided that in case of usufractuary mortgage the
mortgagee shall take care of the property in the same manner as a person takes care of his own property
and if the property suffers any loss due to negligence of the mortgagee, the mortgagee will be liable for
such loss.
4) English Mortgage
a) Generally these types of mortgage are followed in united states of America.
b) In this kind of mortgage the ownership of the property transferred to the mortgagee on a condition that
the mortgagee will retransfer the ownership of the property to the mortgagor on the repayment of the
loan.
c) If the mortgagor could not repay the loan the absolute interest in the property comes to the mortgagee.
d) This kind of mortgage creates burden of transferring & retransferring the ownership of the property &
double formalities & due to this reason it is not popular in India.
e) Under this mortgage the mortgagee is not required to approach the Court in order to get the ownership of
the property.

5) Mortgage by Deposit of Title Deeds :-

a) This kind of mortgage is generally created in India.
b) This is also known as equitable mortgage.
c) This mortgage is even valid if written & registered agreement for creating mortgage is not made.
d) Under this mortgage, the mortgager is not required to give possession or ownership of the property to the
mortgagee, only the title deeds (papers) of the property are required to be given to the Mortgagee.
e) In the event of Mortgagor could not repay the loan the mortgagee can sell the property after taking orders
from the Court & if mortgagor repays the loan the title deeds are returned to the mortgagor.
F) The term ‘documents of title’ or title deeds means such documents as will show prima facie or apparent
title to the property of the person who is borrowing money.

It should be noted that this type of mortgage can be created only in certain towns and not everywhere in
India. The facility to create a valid mortgage is available in the following towns in India: Calcutta, Madras,
Bombay, Adoni, Ajmer, Allahabad, Alwar, Bangalore, Bellary, Cochin, Coimbatore, Delhi, Jaipur, Jodhpur,
Kanpur, Rajahmundry, Udaipur, Vellor, Ellora, Pali, Bhilwara, Bikaner, Kakinada, Narayanganj, Mysore,
and Madurai.

6) Anomalous Mortgage :
a) Anomalous mortgage is divided in two categories.
b) A mortgage which is not Usufractuary, Simple, English, mortgage by deposit of title deed, mortgage by
conditional sale is known as Anomalous mortgage.
c) A mortgage which is combination of two or more mortgages is known as Anomalous mortgage.
E.g. : A mortgage is created & title deeds as well as ownership are transferred to the mortgagee. This
mortgage is known as anomalous mortgage.
7) Puisne Mortgage :
If on one single property two mortgages are created the second mortgage is known as puisne mortgage.
E.g.: X had a house whose value was Rs. 25,00,000 for Rs. 12,00,000 the house was mortgaged to HDFC Bank &
for Rs. 13,00,000 the house was mortgaged to ICICI Mortgage in case of ICICI Bank is Puisne Mortgage.
8) Sub-mortgage:
When mortgagee creates a further mortgage on the mortgaged property it amounts to a sub mortgage.

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For example, where A mortgages his house to B for Rs. 10,000 and B mortgage his right to C for Rs. 8,000. B
creates a sub-mortgage.
Kind of Mortgage Right of Transfer of Transfer of Promise to Miscellaneous
Possession Title Deeds Ownership Ownership in
future
Simple Mortgage No No No Yes Only promise is
made to transfer
the ownership.
Usufractuary Yes No No No No need to repay
Mortgage the loan.
Mortgage by No Yes No Yes If the mortgagee
Deposit of Title could not repay the
Deeds loan the mortgagee
may approach
court.
English Mortgage No No Yes No Not popular in
India.
Mortgage by No No Yes No Conditional
Conditional Sale Ownership is
transferred
Puisne Mortgage NA NA NA NA Second Mortgage on
a Property
Anamolous NA NA NA NA It may have feature
Mortgage of more than one
mortgage

RIGHTS OF MORTGAGOR:
1) Right of Redemption :
The mortgagor has a right to take back the property mortgaged, after the repayment of the loan. When
the mortgagor makes a claim for the mortgaged property after the repayment of debts and the mortgagor
refuses to give back the property, the mortgagor has to approach the court within 60 years from the date
of refusal.

2) Right against clog on equity of Redemption :

If any provision is mentioned in the mortgage deed which restricts the mortgagor from taking back the
mortgaged property after repayment of loan, such condition is void-ab-initio. The mortgagor will be
protected from any such condition & he will be entitled to take back his property. In other words, once a
transaction is found to be a mortgage, the Court would not permit any condition in a mortgage deed
which would
prevent or impede redemption or repayment of the loan for which the security was given.

3) Right of partial Redemption :

When two different mortgages are executed in favour of the same mortgagee & a principle & interest for
a single property or a single mortgage has been repaid, the mortgagor gets the right of partial redemption
or taking back the property in respect of which loan has repaid.

Implied contract by mortgagor:

The mortgagor and the mortgagee are free to agree upon the terms of the mortgage, however if nothing is
agreed between the mortgagor and the mortgagee then it is deemed that the mortgagor has agreed to the
following points:
(a) mortgagor is entitled to transfer the interest (covenant for title);
(b) mortgagor will assist the mortgagee to enjoy quiet possession;

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(c) mortgagor will pay public charges in respect of the mortgaged property;
(d) mortgagor covenants as to payment of the rent due on lease where, the mortgaged property is leased;
(e) mortgagor covenants as to payment of interest and principal on prior encumbrances, where the mortgage
is a second or subsequent encumbrance on the property.

4) Rights of Mortgagee :
1) Right of Sale :
The mortgagee can sell the mortgaged property in case loan has not been paid by the mortgagor.
2) Right of Foreclosure :
It means right of the mortgagee to restrict the mortgagor from taking back the property, and the
mortgagee has to institute the suit for foreclosing the mortgage.
It is allowed in the case of mortgage by conditional sale and anamolous mortgage.
3) Right of Possession :
In Usufractuary mortgage the mortgagee acquires right of possession of the property.
4) Right to sue :
The mortgagee can sue the mortgagor for breach of the contract to repay a sale.
5) Right of Private sell :
In case of English Mortgage the mortgagee acquires right of private sell, without intervention of the court
as the mortgagee is already the owner of the property.

PRIORITY:
It is a general rule that subsequent mortgagee is satisfied after the prior mortgagee has been satisfied out of
the mortgaged property.

SUBROGATION:
1) Subrogation means to step into the shoes of some other person or to acquire rights of some other person.
2) When a single property is mortgaged to two or more persons, it is a general rule that the prior mortgagee
will have the first right on the property, but according to the principle of subrogation the subsequent
mortgagee may acquire rights of prior mortgagee after satisfying the debts of prior mortgagee.

DIFFERENCE BETWEEN A MORTGAGE AND CHARGE :

[Link]. Mortgage Charge
1. Mortgage has been defined under Transfer Charge has been defined under Companies Act, 1956.
of Property Act, 1882.
2. In a Mortgage property interest in Only a future right is given by way of an agreement.
immovable property is to be transferred.
3. Mortgage is created on immovable Charge can be created on movable as well as
property. immovable as well as fluctuating properties.
4. Mortgage Registration is Compulsory. In charge Registration is not compulsory in case of
movable property however in case of immoveable
property charge which is mortgage is subject to
registration as per Registration Act, 1908.
5. Mortgage does not include charge. Charge includes mortgage.
6. E.g. : or Types of Mortgages : Anomalous, Charge has two types : Fixed & fluctuating charge.
English, Usufractury etc.

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 CHAPTER: 14
RIGHT TO INFORMATION, 2005

In the year 1973, in the case of State of Rajasthan V/s. Raj Narayan, the Supreme Court decided that, the
government as the agent of people must share it’s information with public and should keep very few secrets.

In the case of RP Ltd. V/s. Indian Express Newspaper, the court decided that Right to Information, is the
part of Right of life and personnel liberty as contained in article 21 of Constitution of India, as liberty involves
the liberty to obtain and receive information.

Right to information is also the part of article – 19 (1) (a) of constitution of India which deals with freedom
of speech or expression. It means a person can express himself in a better manner if he has all the
information.

FEATURES OF RTI ACT, 2005

The Act applies to whole of India. The act applies to public authorities. Under the Act PIO and APIO will be
appointed [Public information officer and assistant public information officer].

Some information are exempt from disclosures. All the citizens of India have a right of to information.

PUBLIC AUTHORITY

An authority created by An authority created by law Authorities created by

constitution passed by parliament or state notifications issued by
legislature. government of India.
ICSI, ICAI, RBI, IRDA, LIC, TRAI. Railways, Coal Ministry.

RECORD

Document Image & its Manuscript Fascimile File Material Microfilm Microfitche
reproduction copy produced

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 by
computer

INFORMATION

Record Contracts Document Reports Data Paper Samples Logbooks Press

of release
materials.
Whether in physical / electronic form.

RIGHT TO INFORMATION

The term right to information includes :

Taking of notes, Obtain Inspection of Inspection of Obtaining

copies, extracts, information work. records and samples of the
certified copies through documents materials.
of the records or electronic device
documents
maintained by
public authority.

THIRD PARTY

When a person other than citizen who asks for information including public authorities, such person is called
as third party. (basically third party is defined because sometimes an information which is to be provided may
relate to a third party and may be considered as confidential by the third party and in case any third party is
involved, the information is to be provided in 40 days. Public Authority is included here as sometimes a public
authority may consider an information to be confidential.

SECTION 4 OBLIGATIONS OF PUBLIC AUTHORITY

Within a period 120 days from the date of enactment of this act, every public authorityshall maintain and
publish following records :-

Functions of the Power and Duties of The budget of such How the subsidy
public authority the employees of public authority programmes of the
the public authority government are
implemented.
What rules the Salaries to the
authority follows for employer of public
discharging the authority.
functions.

Documents that Name and Committees on Decision making The manner in

are held under designation of task forces process of the which the public
the control of public created by public public [Link] in
public authority information authority. framing of
officer policies of public
authority
Que: Section 4 of the Right to Information Act, 2005 has entrusted certain obligations on (b) the public
authorities. Discuss any eight obligations.

PUBLIC INFORMATION OFFICER

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 Each Public Authority shall

In all administrative units [district level] In the sub-divisional or sub-district [Tahsil] level

Designate an officer as
Designate an officer to be known as public
information officer. Assistant public information officer.

SECTION – 5 : NO REASONS FOR OBTAINING INFORMATION

JO OFFICER DETA HAI INFORMATION,

WOHI KAHLATA HAI PIO

The person who makes application for obtaining information under this Act, to the public authority, he is not
required to give the reason for obtaining the information. As receiving information is the right of citizen.

REQUEST FOR OBTAINING INFORMATION

JAB CHAIHIYE INFORMATION, CHALE JAO PIO KE PAAS!

An application for obtaining information shall be made in writing along with the prescribed fees to the public
information officer. The application may also be given in electronic form.

The required information shall be provided by the public information officer within a period of 48 hrs. if such
information relates to personal liberty of any person from the date of making application.

For example, in case an old man wants to obtain information about his provident fund dues to be claimed
from the Government, it may be considered as relating to life and personal liberty.

A Person, in order to get treatment of his son in the Government Hospital wanted to know wheter he was
eligible to get the subsidy reserved for the people of below poverty line, the Court held that the information
was relating to life and personal liberty.

If the information demanded is available with Assistant public information officer then within a period of 5
days from the date of receiving the application, the application to be forwarded to the assistant public
information officer and such officer shall provide the information within 30 days from the date of receiving
the application.

If no communication is made by the public officer, then it shall be deemed that the application has been
rejected by the public information officer.

If any third party is involved in the application then information will be provided in 40 days.

Partial Information

As a general rule the PIO must provide the full and relevant information to the applicant, however if the
below mentioned conditions are satisfied then the PIO may provide partial information:

a) When the case relates to a situation, when only relevant part of the information can be disclosed.

b) The PIO shall disclose the reasons for providing partial information.

c) Name and designation of PIO, providing the partial information shall be disclosed to the applicant.

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d) The details of appellate Authority with whom the decision of PIO may be challenged shall also be disclosed
to the applicant.

e) Fees to be charged for providing partial information shall be disclosed.

DUTIES OF PUBLIC INFORMATION OFFICER

The applications should be made to the public information officer in writing if any party is not able to write
the application then public information officer shall assist such party in writing the application.

If the information is not with public information officer but with some other authority then PIO shall transfer
the application to such authority within 5 days and inform the applicant accordingly.

The PIO shall provide the requested information within 30 days or the PIO may reject the application by
providing reasons in writing.

So if the application is forwarded to some other APIO than the information will be given within 35 days (5 days
+ 30 days).

The PIO may also take the help of the other PIO to provide the required information.

If PIO rejects the application then :

He has to give reasons Within how much time an The details of appellate
appeal can be preferred authority where appeal can be
against the decision of PIO. preferred.
The PIO must provide the information which is full and relevant.

If the PIO provides partial information following conditions must be fulfilled :-

The case must Fees to be PIO shall disclose With who the Name and
relate to a charged must be the reasons for designation of designation of
situation only specified. providing partial PIO can be the officer
when relevant information. challenged should providing the
part of also be informed information has
information can by PIO to the to be provided to
be disclosed. applicant. the applicant.

If any information is supplied by a third party or is treated as confidential by the third party. In this case the
PIO should send a notice to third party within a period of 5 days from the date of receiving the application
and such third party should make its representation within next 10 days

It means if PIO has received any information from third party or if the information received from the third
party is considered as confidential by third party, in this case, if PIO receives a request for providing such
information then PIO will send a notice to third party within 5 days of receiving the application and the third
party can make its representation in next 10 days.

In the case of Central Board of Secondary Education vs. Aditya Bandopadhyay, the Supreme Court decided
that:

1. The Act should not be allowed to be misused or abused, to become a tool to obstruct the national
development, or to destroy the peace, tranquillity and harmony among its citizens.

2. It should not be converted into a tool of oppression or creating fear amongst honest officials trying to do
their duty.

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3. The nation does not want a scenario where 75% of the staff of public authorities spends 75% of their time in
collecting and furnishing information to applicants instead of discharging their regular duties.

4. The fear of penalties under the RTI Act and the pressure of the authorities under the RTI Act should not
lead to employees of a public authorities prioritising ‘information providing’, at the cost of their normal and
regular duties

5. Where the information demanded is not a part of the record of a public authority, and where such
information is not required to be maintained under any law or the rules or regulations of the public authority,
the Act does not put an obligation on the public authority, to collect such non-available information and then
provide it to an applicant.

6. RTI Act provides access to all information that is available and existing.

A public authority is also not required to furnish information which require drawing of inferences and/or
making of assumptions. It is also not required to provide ‘advice’ or ‘opinion’ to an applicant, nor required to
obtain and furnish any ‘opinion’ or ‘advice’ to an applicant.

Que: Discuss the rights available to a person under the Right to Information Act, 2005 who does not receive a
decision within the specified time or is aggrieved by a decision of the PIO.

EXEMPTION FROM DISCLOSURE – Section 8

The following kinds of information are exempt from disclosure under this act and hence they will not be
disclosed :-

Information that affects :

Sovereignty & Integrity Relations with Foreign Information that [in Trade secrets,
of India. State cities] that insights a confidential
person to commit information of any
offence. business copyrights.

Strategic, Scientific or economic interest of the The information which affects life or personal
country. safety of a person.

If the information causes a breach to the Information that is forbidden by the Court.
privilege of parliament or state legislature.
Information received in Information that may
confidence from a foreign affect process of
state. investigation.

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Cabinet papers, records kept by the ministers. Information that affects privacy of a person
cannot be shared unless a larger public interest
However when the ministers have taken a justifies it.
decision, the decision has to be shared with the
public along with reasons for such decision.
Example

In case of a war or invasion, revealing or giving out information about strategically placed troops and related
information, will be treated as information protected under section 8 of the Act. Such disclosure prejudicially
affects the sovereignty and integrity of India.

Example

A, blows a whistle against sand corruption. His identity should be kept a secret since there is an increased risk
to his safety and chances of violence against him increases. Such disclosure endangers his life and physical
safety.

Example

A court while passing an order states that a particular information in that order shall not be disclosed. Such
information shall fall under the disclosure by way of court order and would lead to contempt if not adhered
to.

Kayalvizhi vs. CPio, office of the income Tax officer, In this case, the application was filed since the
Appellant has sought income related details of her brother and her mother in response to averred RTI
Application(s) which impinges on the privacy of the concerned third parties and therefore, the information
has been denied to her under Section 8(1)( j) of RTI Act. Further, the other issue raised by the Appellant in
the instant Appeal pertains to her family dispute which cannot be redressed from the RTI platform.

Que: State the types of information, other than those exempted information in Section 8. a public authority is
not under an obligation to furnish to an applicant under Right to Information Act, 2005.

Section 9 :The information which will infringe copyright of some other person, such information will not be
shared.

SECTION 10 : PARTIAL DISCLOSURE

AAP KO CHAHIYE POORI JANKARI,

PAR HUM AAP KO ADHURI HI DENGE, JANKARI

If any person makes a demand for an information, the part of which is exempt from disclosure and the
remaining part can be disclosed and such remaining can be separated from exempted part.

In this case partial disclosure will made [of information].

Chief information Commissioner vs. high Court of Gujarat and ors. In this case, an appeal was filed with
regards to the right of a third party to apply for certified copies to be obtained from the High Court by

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invoking the provisions of Right to Information Act without resorting to Gujarat High Court Rules prescribed by
the High Court.

The public authorities to which this act does not apply :

Intelligence RAW CID CBI BSF [Border Police C.R.P.F.

bureau Security [State [Central
Force] Government Reserve
Police
force]

Assam Rifles CISF [Central Revenue Narcotics Control ITBP [Ino-

Industrial Intelligence Board. Tibetian Border
Security Force] Department Police]

However the above public authorities are required to disclose the information relating to corruption and
human rights violation.

If the information relates to human rights violation then such information will be given an application of Chief
Information Commissioner or state information commissioner within a period of 45 days from the date of
request.

CENTRAL INFORMATION COMMISSION

This commission is formed by Central Government by issuing a notification in the official gazette.

This commission comprises of :

Chief Information Commissioner [+] Not exceeding 10 central information

commissioners.
Chief Information Commissioner is the head of Central Information Commission and he supervises the
activities of all the central information commissioners.

The Chief Information Commissioner and other Central Information Commissioners are appointed by a
committee which comprises of:

Prime Minister Leader of Opposition Any Cabinet Minister

nominated by Prime
Minister.
Qualifications of Chief Information Commissione & Commissioners

Eminence in Public life Should not hold any Knowledge of law, Not a member of
place of profit. social science Parliament or State
Journalism, Legislature.
Management

Every Information Commissioner shall hold office for such term as may be prescribed by the Central
Government or till he attains the age of sixty-five years whichever is earlier and shall not be eligible for
reappointment however he shall be, on vacating his office be eligible for appointment as the Chief
Information Commissioner.

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If Information Commissioner is appointed as the Chief Information Commissioner, his term of office shall not
be more than five years in aggregate as the Information Commissioner and the Chief Information
Commissioner.

The Chief Information Commissioner or an Information Commissioner shall before joining his office make an
oth in respect of his duties as given in schedule 1, before the President or some other person appointed by
President.

The Chief Information Commissioner or an Information Commissioner may by writing to President, anytime
resign from his office, however he may also be removed under section 14.

Allownances, salary and terms and conditions will be as fixed by Central Government, which may also be
changed but it must not be disadvantageous to the commissioners.

The Central Government will also provide officers to the commissioners who will help the commissioners in
efficient discharge of their functions.

State Information Commission (SIC):

The State Information Commission will be constituted by the State Government through a Gazette
notification.

The State Information Commission consists of one State Chief Information Commissioner (SCIC) and not more
than 10, State Information Commissioners (SIC).

These shall be appointed by the Governor on the recommendations of a committee consisting of the Chief
Minister who is the Chairman of the committee.

Other members include the Leader of the Opposition in the Legislative Assembly and one Cabinet Minister
nominated by the Chief Minister.

The qualifications for appointment as SCIC/SIC shall be the same as that for Central Commissioners. The
salary of the State Chief Information Commissioner will be the same as that of an Election Commissioner.

Every State Information Commissioner shall hold office for such term as may be prescribed by the Central
Government or till he attains the age of sixty-five years, whichever is earlier, and shall not be eligible for
reappointment as such State Information Commissioner.

However every State Information Commissioner shall, on vacating his office will be eligible for appointment as
the State Chief Information Commissioner.

If State Information Commissioner is appointed as the State Chief Information Commissioner, his term of
office shall not be more than five years in aggregate as the Information Commissioner and the State Chief
Information Commissioner.

The State Chief Information Commissioner or a State Information Commissioner shall before joining his office
make an oth in respect of his duties as given in schedule 1, before the Governonr of State or some other
person appointed by Governor.

The State Chief Information Commissioner or a State Information Commissioner may by writing to President,
anytime resign from his office, however he may also be removed under section 17.

The salaries and allowances payable to and other terms and conditions of service of the State Chief
Information Commissioner and the State Information Commissioners shall be such as may be prescribed by the
Central Government.

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Allownances, salary and terms and conditions will be as fixed by Central Government, which may also be
changed but it must not be disadvantageous to the commissioners.

The State Government will also provide officers to the commissioners who will help the commissioners in
efficient discharge of their functions.

N.N. Dhumane vs. Pio, Department of Posts In this case, the appellant was told that her pension for month
of March 2017 was held up for want of Aadhaar linking up along with 55 other pensioners who were former
employees of this public authority; she filed RTI application about ‘linking-up of Aadhaar number to pension
accounts’; that they had no authority to link up the Aadhaar Card to her pension account all of sudden
without any notice and stop payment for that reason.

Que: Rajendra Singh, aged 56, was appointed on 1st July 2018 as Information Commissioner by the Central
Government for a period of 5 years. On 1st July 2020, he was promoted and appointed as Chief Information
Commissioner for 5 years. Discuss the validity of appointment as Chief Information Commissioner under The Right to
Information Act, 2005

Power to make rules by appropriate Government

Section 27 of the Right to Information Act states that the appropriate Government may, by notification in the
Official Gazette, make rules to carry out the provisions of this Act.

In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or
any of the following matters, namely:—

(i) the cost of the medium or print cost price of the materials to be disseminated under section 4(4);

(ii) the fee payable under section 6(1);

(iii) the fee payable under section 7(1) & section 7(5);

(iv) the term of office of the Chief Information Commissioner and Information Commissioners under sub-
sections (1) and (2) of section 13 and the State Chief Information Commissioner and State Information
Commissioners under sub-sections (1) and (2) of section 16;

(v) the salaries, allowances and other terms and conditions of service of the Chief Information Commissioner
and the Information Commissioners under sub-section (5) of section 13 and the State Chief Information
Commissioner and the State Information Commissioners under sub-section (5) of section 16;

(vi) the salaries and allowances payable to and the terms and conditions of service of the officers and other
employees under sub-section (6) of section 13 and sub-section (6) of section 16;

(vii) the procedure to be adopted by the Central Information Commission or State Information Commission, as
the case may be, in deciding the appeals under sub-section (10) of section 19; and

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(viii) any other matter which is required to be, or may be, prescribed.

Powers of Information Commissioner

The Central and State Information Commission have the power as well as duty to receive complaint from any
person:

- Who could not file application, as PIO was not appointed

- Whose application was rejected.
- Who was not supplied the information within specified time.
- Who believes information provided to him is false, misleading or incomplete
- Who believes unreasonable fees is demanded for providing the information.

If the commission is satisfied with the complaint, it will accept the application and start the enquiry, at the
time of making enquiry the commission will have same powers as are vested in the civil court under the code
of civil procedure, 1908.

On such enquiry no document can be with held on any ground.

APPELLATE AUTHORITIES

BHAI AGAR PIO KE FAISLE SE HO NIRASH,

JAO APPELLATE AUTHORITIES KE PAAS

1. If any party is not satisfied with the decision given by PIO or if the PIO does not provide the required
information. Appeal can be preferred to the senior rank officer of the PIO in the same public authority within
a period of 30 days of receiving the decision of PIO or within 30 days of the expiry of 30 days from the date on
which application was made to PIO.

2. The first appeal shall be disposed of within a period of 30 days from the date of accepting the appeal and
15 days extension can be granted 2 times by recording reasons in writing.

3 .If the party is not satisfied with the decision given in the first appeal then within a period of 90 days from
the date of decision or within 90 days from the date within which the decision should have been made, an
appeal can be preferred to the Central / State information commission.

4. During the appeal the burden of proof will be a PIO, that information was not provided on justified
grounds.

5. the first appellate authority (senior rank officer ) and the second appellate authority may condone the
delay.

QUE: Explain the provisions for appeal under the Right to Information Act, 2005.

PENALTIES

As per section 20, If the Public Information Officer:

- Fails to provide the requested information.

- Provides incomplete, false or misleading information.
- Unreasonably rejects the application
- Obstructs the process of providing information
- Destroys the records and information
- Fails to accept the application.

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In all the above cases the PIO will be subject to a penalty of Rs 250 per day and up to Rs 25000/- and the
penalty will be imposed by Central/State Information commission. Disciplinary action may also be taken
against such PIO by CIC/ SIC.

Que: State the acts for which Public Information Officer may be punished under Section 20 of Right to
Information Act, 2005.

JURISDICTION OF THE COURTS

No lower court shall have any jurisdiction on the order that are made under this Act.

ROLE OF STATE GOVERNMENT OR CENTRAL GOVERNMENT UNDER THE ACT

- Develop educational programme for creating awareness about the Act and specially for disadvantageous
class of people.
- Encourage the public authorities to provide the educational programmes.
- Encourage the public Authorities to provide timely information.
- To appoint PIO
- Encourage Public Authorities to maintain records.
- Guide the public about the procedure to obtain information
- Maintain a list of all the PIO’s

HN Malviya vs. CPio, Department of Personnel and Training, The Appellant filed an RTI application dated
27.01.2021 seeking the information related to seniority of employees .

The Chief Information Commission in Second Appeal decided that the Commission based on a perusal of the
facts on record observes that the information sought for in the RTI Application is in the form of mere
conjecture and even futuristic query, neither of which conforms to Section 2(f) of the RTI Act, yet the CPIO &
FAA have tried to facilitate the Appellant adequately in keeping with the spirit of the RTI Act. The Appellant
shall note that outstretching the interpretation of Section 2(f) of the RTI Act to include deductions and
inferences to be drawn by the CPIO is unwarranted as it casts immense pressure on the CPIOs to ensure that
they provide the correct deduction/inference to avoid being subject to penal provisions under the RTI Act

Summarised Notes for Right to Information Act, 2005

In the case of State of Rajasthan VS Raj Narayan, the Supreme court decided that the government servant of
people must share maximum information and must keep very few secrets.

In the case of RP Ltd VS Indian Express ,the Supreme Court decided Right to have information is covered
under article 21 of the act, it is was also decided that Right to information is also the part of article 19(6)(a)
(freedom of speech and expression)

Record means file, document ,facsimile, manuscript, data, whether stored in physical or electronic form.

Information means –Record, document, microfile, microfiche, logbooks, sample of books.

Right to information means a right to take notes, extract, inspect the records to check the sample of work ,to
obtain documents ,whether in physical or electronic form.

Third party means a person who is not citizen of India or any public authority of India.

Authority created by constitution or by any law passed by parliament or by Government Notification.

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Every Public authority at district level shall have a PIO and sub divisional level shall have an APIO

The application to obtain information shall be made in concerned PIO in reserved form along with prescribed
fees .No reasons are to be given for obtaining information .

If the information is not available with PIO he may within 5 days of receiving the application can forward the
application form APIO

The information has to be provided within 30 days of receiving the application and if the information is
available with APIO 5 days can be obtained in the period of 30 days.

If no information is provided within 30 days then it shall be deemed that the application has been rejected.

If the PIO rejects any application he has to inform the reasons of rejection and designation and the authority
to which appeal can be made and same details are to be provided if partial information was given to the
applicant .The information that may affect soverignity and integrity of India friendly relation with foreign
state the information received in foreign state ,the information that insights the person to commit offences
are exempt from being disclosed.

The public authorities like BSF, RAW, CBI, ITBP, Public, police department ,CISF ,CRPF are kept outside the
scope of the act but these authorities have to share the information in relation to corruption of human rights
violation.

If PIO reject the application appeal can be made to the senior rank officer in that public authority if no relief
is received from the senior rank officer or second appeal can be made to CIC or SIC.

The Central Government has formed a Central information commission that comprises of one chief
information commissioner and five other central information commissioner the State Government have to be
formed SIC which will consist of chief information commissioner the state government have to form SIC which
will consist of chief information commissioner and not exceed to state information commissioner.

All the public authorities will be required to maintain all the records within 130 days from the date of
commencement of this act.

The PIO does not provide information, it obstructs the process of providing information /provides false /misc
information he can be subject to punishment or an enquiry by CIC/SIC.

No lower court can exercise jurisdiction on the matters which have been covered in the act .

CHAPTER: 17
INFORMATION TECHNOLOGY ACT, 2000

This law is based on UNCITRAL’S model law on information technology. Consdiering the changes in the IT
Environment of the Country this Act is amended from time to time.

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DENA THA ELECTRONIC DOCUMENTS KO LEGAL RECOGNITION,

ISLIYE YE AA GAYA KANOON IN OUR NATION

OBJECTIVES - Information Technology Act, 2000, was enacted to make, in the main, three kinds of provisions,
as under:

To grant legal recognition to To provide the facility of To amend the provisions of

the transactions that are done online filing of documents with Indian Contract Act, RBI Act,
through electronic data inter- government agencies. Indian Evidence Act, Banker’s
change. Book Evidence Act.

So as to give legal recognition

to electronic records.

• The Documents to which this act does not apply :

Negotiable Power of Trust Deed Will Documents

Instruments Attorney relating to
[other than cash transfer of
and cheque) immoveable
property.
(iska matlab yeh sare documents agar electronic form main hai to unhe valid nai mana jaega) these
documents are given in schedule 1 of IT Act, 2000.

Que: Discuss the types and importance of document or transactions mentioned in the first schedule of
Information Technology Act, 2000

IMPORTANT DEFINITIONS UNDER THE ACT

Access: It means gaining an entry in a computer system or computer network or giving instructions or
communications with the help of logical, arthmetical or memory functions to resources of computer or
computer network or computer resources.

Addressee: the person to whom the origionator wants to receive the electroinc record but does not include
an intermediary.

ASYMMETRIC CRYPTO SYSTEM

It means a system of secured key pair which has a private key attached with the public key, through which
digital signatures are verified.

COMMUNICATION DEVICE

It means cell-phone, personal digital assistance and includes combination of both which is used to
communicate, send or transmit any text, audio, video or image.

“Computer” means any electronic, magnetic, optical or other high-speed data processing device or system
which performs logical, arithmetic, and memory functions, by manipulations of electronic, magnetic or
optical impulses, and includes all input, output, processing, storage, computer software, or communication
facilities which are connected or related to the computer in a computer system or computer network.

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(ek electronic, magnetic, optical ya koi bhi high speed data process karne wala system ya device jo logical ya
arithmetic functions nibhata hai electronic megnatic ya optical impuses main ched chad kar ke aur input
output, computer software ko bhi include karta hai jo computer se related hai ya computer system ya
computer network main hai)

Computer System : It means a device or collection of devices, which can include input and output support
devices but does not include calculator which are not programmable, and such devices are capable of being
used with external files which contain computer programmes, electroninc instructions input and output data
which performs logical, arithmetic data storage, communication and other functions.

(device ya bahut sare devices ka collection jis main input aur ouput support devices ho sakte hai + wo device
external files bhi use kar sakta hai jis main computer programme ya electroinc input ho sakte hai + wo logical
arithmetical aur data storage ke functions nibhata hai)

CYBER CAFE

It is a place that offers an access to interneset in the ordinary course of its business.

COMPUTER NETWORK

It means inter – connection of one or more computers through :-

a) Use of Satelites, microwaves, terrestrial lines or any other communication media.

b) Terminal or complex consisting of two or more computers, whether interconnection is continuously
maintained or not.

DIGITAL SIGNATURE

It means authentication of any electronic record by subscriber by means of electronic signature which is
equivalent to a written signature.

INTERMEDIARY

It means a person or an agency, who on behalf of any other person :

Stores any record Transmits any records Receives records

Or provides any other
service with resepct to the
recorods.
The term intermediary also includes telecom service providers, network service provider, web-hosting service
provider, on line auction sites.

ORIGINATOR

Aperson who sends, generates, transfers, stores, transmits any electronic message or causes any electronic
message to be sent, generated or transferred.

(jo insan khud se message create karta hai, store karta, send karta hai, ya kisi aur se send karwata hai)

“Private Key” mea

ns the key of a key pair, used to create a digital signature. [Section 2(1)(zc)]

“Public key” means the key of a key pair, used to verify a digital signature and listed in the Digital Signature
Certificate.

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Verify: it means to determine, wheter the digital signature which was affixed by use of the private key
matches with the public Key of the subscriber and also making sure that the electronic record on which digital
signatures were affixed is not altered after the affixing of digital signature and its integrity is maintained.

SECURED SYSTEM

It means a hardware or software or any computer which satisfies the below mentioned conditions :-

It is reasonably safe Complies with Provides a reliability Performs intended

from unauthorized security procedures. functions.
access
DIGITAL SIGNATURES AND ELECTRONIC SIGNATURES

SECTION – 3 & SECTION – 3A.

ELECTONICALLY KISI JAGAH PAR AUTHENTCATE KARNA,

DIGITAL SIGNATURE ELECTRONIC SIGNATURE KA HISSA HAI

“Electronic signature” means authentication of any electronic record by a subscriber by means of the
electronic technique specified in the Second Schedule and includes digital signature.[Section 2(1)(ta)]

“Electronic Signature Certificate” means an Electronic Signature Certificate issued under section 35 and
includes Digital Signature Certificate.[Section 2(1)(tb)]

Digital Signature is a method of authentication of electronic record by use of asymmetric crypto system
which transfers an electronic record to another electronic record for the purpose of its verification by a
public key.

Electronic Signature : A person may also authenticate an electronic record by using electronic signatures
which is reliable. The electronic signature will be considered as reliable if the following conditions are
satisfied :-

Signature creation data and Any alteration made to It fulfills the other
signature authentication electronic signature is requirements of the Act.
data are linked to signatory detectable
and the control of such
data is also with the
signatory [the person who
signs electronically]

Central Government may prescribe the procedure for the purpose of ascertaining whether electronic signature
is that of the person by whom it is purported to have been affixed or authenticated.

Electronic Signature Digital Signature

An electronic signature is a digital form of a web link Digital Signature is a secured signature that works
signature that is legally binding and secure. with an electronic signature and relies on public key.
It is used for verifying a document It is used for securing a document.
The validation of electronic signatures is not While the validation of digital signature is performed
performed by any trusted certificate authorities or by trusted certificate authorities or trust service
trust service providers. providers.
It is vulnerable to tampering as there are fewer security While it is highly secure as it comprised of more
features in electronic signatures security features.

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Electronic signatures cannot be verified A digital signature can be verified
Verbal, electronic ticks, or scanned signatures are the Types of digital signatures include Adobe and
common types of e-signatures. Microsoft.
It is simple to use, but it has a lesser level of It is generally preferred because of more
evidential value. authenticity.
Que: What do you mean by Electronic Signature Certificate under the Information Technology Act 2000 ? Discuss the
procedure to obtain Electronic Signature Certificates under the Act.

E-GOVERNANCE

Use of information technology in day to day functions of the government, is referred as E-commerce.

Private transactions

Thus, Section 4 of the Information Technology Act, practically equates electronic record with a manual or
typed or printed record.

Section 5 deals with legal recognition of electronic signatures. It states that where any law provides that
information or any other matter shall be authenticated by affixing the signature or any document shall be
signed or bear the signature of any person, then, in spite of anything contained in such law, such requirement
shall be deemed to have been satisfied, if such information or matter is authenticated by means of electronic
signature affixed in such manner as may be prescribed by the Central Government.

It may be noted that “signed”, with its grammatical variations and cognate expressions, shall, with reference
to a person, mean affixing of his hand written signature or any mark on any document and the expression
“signature” shall be interpreted accordingly.

It may be pointed out that “information”, as defined in Section 2(1) (v) of the Act, includes data, text,
images, sound, voice, codes, computer programmes, software and data-bases or micro-film or computer-
generated “micro-fiche”.

The act also recognizes electronic signatures :

If any law provides :

Filing of any document or Grant of any license or Receipt of money or

form with the government. approval or registration by payment in any manner.
the government. (Section 6)
All the above acts can be done electronically.

As per Section 6A, for providing above services the government may provide a service provider through a
notification in official [Link] service provider may be an individual, firm, body corporate.

Section 7 of the act allows retention of any document in electronic form for any specific period.

Section 7A of the, act states that if any law requires the audit of the documents, record or information then
such provision of audit shall also apply on the documents that are maintained in e-form.

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SUBORDINATE LEGISLATION

Laws relating to subordinate legislation, may also be published in the Official Gazette or the electronic
Gazette, and the date of its first publication in either of the two Gazette shall be deemed to be the date of
publication. (Section 8)

But the provisions summarised above shall not give any right to any person to Compel the Government agency
that the Government Agency shall accept, issue etc. any document in electronic form or effect any monetary
transaction in electronic form. (Section 9)

SECTION 10A : E-CONTRACTS

Invitation to offer, offer, acceptance, revocation of the offer, contracts shall not be unenforceable merely on
the ground that, it was created through electronic means.

The Supreme Court in the 2010 case of Trimex International FZE Ltd. Dubai vs. Vedanta Aluminium Ltd., India.
(“Trimex Case”) provided this clarity with regard to contracts concluded on emails. In the Trimex Case the
Supreme Court, held that inference can be drawn from documents exchanged on telegram, emails etc. (“Tele
communication”) that a valid contract subsists given that intention of the party to be bound by the terms of
such Tele-communications and essential elements of a valid contract are present.

ATTRIBUTION AND DISPATCH OF ELECTRONIC RECORD

In case of electronic records the maker of record remains behind the curtain, so it becomes necessary to
make provisions for attribution. An electronic record is attributed to the originator.

Broadly, the “originator” is the person at whose instance it was sent in the following cases -

Originator himself sends an The electronic record was If the electronic record was
electronic record. sent by any person who sent by an information
was acting on behalf of system programmed by
originator. originator –Section 11.
In all the above cases it will be considered that electronic record is attributable to the originator.

ACKNOWLEDGEMENT BY RECIPIENT

The person to whom an electronic record has been sent may acknowledge it’s receipt by

Making a Communication OR By any conduct through which the sender comes

to know, that recipient has received the
electronic record – Section 12.

DATE AND TIME OF OFFER

After these provisions, there follows a provision which is of considerable significance for the law of contracts.

The date of offer and the date of acceptance are crucial, in determining whether and which contract has
come into existence. The two terminal points - despatch and receipt, are dealt with, in detail.

Subject to agreement between the parties, the dispatch of an electronic record occurs, when it enters a
“computer resource” outside the control of the originator. [Section 13]

“Computer resource”, as defined in Section 2 (k), means a computer, computer system, computer network,
data, computer database or software.
TIME OF RECEIPT - SECTION 13

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 When the addressee [offeree] has designated a When the addressee has not designated any
computer resource. computer resource.

When the electronic record [offer] enters the When the electronic record is retrieved by the
designated computer resource. addressee

However in this case, the receipt is deemed to

be occurred when the electronic record enters
the computer resource of addressee.

SECURED ELECTRONIC RECORD – SECTION 14

The Central Government is required to prescribe the security procedures under this Act, having regard to
commercial circumstances.

When the procedure specified by central government has been applied to an electronic record, then such
record shall be deemed to be a secured electronic record.

A digital signature shall be deemed to be secured if :-

Electronic Signature creation data is under The signature creation data is allowed as
exclusive control of signatory. per the manner given in section -15.

CERTIFYING AUTHORITY – SECTION 17- 34

It is an authority which has been licensed by the government to issue digital signatures.

While issuing digital signature it shall reliably identify the person who is applying for digital signatures and
verify their legal capacity to get the digital signatures.

To control and regulate the certifying authority, the central government has appointed, the controller of
certifying authority.

PROCEDURE TO OBTAIN ELECTRONIC SIGNATURE CERTIFICATE – SECTION 35 - 39

1) Any person may make an application in the form prescribed by central government to certifying authority
for obtaining digital signatures.
2) Along with the application a certificate practice statement should be attached. [CPS means a statement
that certifies a person applying for digital signature is entitled to get a digital signature].
3) After receiving the application the certifying authority will make enquiries and verify the certificate
practice statement, and if Certifying Authority is satisfied it will issue a digital signature certificate.
4) If Certifying Authority, is not satisfied with the application, it will reject the application by recording
reasons in writing and after providing an opportunity of being heard to the applicant.

Suspension of Digital signature Certificate (DsC)

The Certifying Authority which has issued a Digital Signature Certificate may suspend such Digital Signature
Certificate,–

(a) on receipt of a request to that effect from–

(i) the subscriber listed in the Digital Signature Certificate; or

(ii) any person duly authorised to act on behalf of that subscriber;

(b) if it is of opinion that the Digital Signature Certificate should be suspended in public interest.

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A Digital Signature Certificate should not be suspended for a period exceeding fifteen days unless the
subscriber has been given an opportunity of being heard in the matter.

On suspension of a Digital Signature Certificate, the Certifying Authority shall communicate the same to the
subscriber.

Revocation of Digital signature Certificate (DsC)

A Certifying Authority may revoke a Digital Signature Certificate issued by it in the following circumstances:

(a) where the subscriber or any other person authorised by him makes a request to that effect; or

(b) upon the death of the subscriber; or

(c) upon the dissolution of the firm or winding up of the company where the subscriber is a firm or a
company.

Further, a Certifying Authority may revoke a Digital Signature Certificate which has been issued by it at any
time, if it is of opinion that

(a) a material fact represented in the Digital Signature Certificate is false or has been concealed;

(b) a requirement for issuance of the Digital Signature Certificate was not satisfied;

(c) the Certifying Authority’s private key or security system was compromised in a manner materially
affecting the Digital Signature Certificate’s reliability;

(d) the subscriber has been declared insolvent or dead or where a subscriber is a firm or a company,
which has been dissolved, wound-up or otherwise ceased to exist.

However, a Digital Signature Certificate shall not be revoked unless the subscriber has been given an
opportunity of being heard in the matter. On revocation of a Digital Signature Certificate, the Certifying
Authority shall communicate the same to the subscriber.

Control of Private Key

Every subscriber shall exercise reasonable care to retain control of the private key corresponding to the public
key listed in his Digital Signature Certificate and take all steps to prevent its disclosure.

If the private key corresponding to the public key listed in the Digital Signature Certificate has been
compromised, then, the subscriber shall communicate the same without any delay to the Certifying Authority
in such manner as may be specified by the regulations.

The subscriber is liable till he has informed the Certifying Authority that the private key has been
compromised.

PENALTIES AND ADJUDICATION

As per section 43, any person without the permission of the owner of a computer or the person incharge of
the computer or computer system :-

a) Accesses or secures access to a computer.

b) Downloads or copies or extracts, data.
c) Introduces a computer contaminant or virus.
d) Damages the computer.
e) Disrupts the working of a computer system.

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 f) Provides assistance to any person to get an access of computer system.
g) Denies access to the owner of computer system.
h) Takes services of any other to get an access to computer system.
i) Destroys, deletes or alters any information residing in the computer system.
j) Steals, conceals or destroys the information residing in computer system.

Such person shall be liable to pay damages by way of compensation to the owner of computer system.

Howeve if the above acts are done with dishonest intention or fraudulently, then such person shall be
punishable as per section 66, with imprisonment of 3 years or with fine which may extend to Rs 5 lacs or both.

COMPUTER CONTAMINANT

A set of instruction or programme that modifies or destroys the data residing in a computer.

COMPUTER DATABASE

It means :-

Facts Information Stored Text Image Audio Video,

which are
stored in
computer
Which have been prepared in a formalized manner by the computer or have been produced by the computer
or computer newrok with the intention of use by the computer or computer network.
COMPUTER VIRUS

It means a set of computer instruction, information, data or programme, that destroys, degrades, damages or
adversely affects performance any computer resource or attaches itself to another computer resource.

Both virus and contaminant are same but virus has the ability of attaching itself with the other computer
resource.

SECTION 43A :- COMPENSATION FOR FAILURE TO PROTECT THE DATA

When a body corporate that holds or possess any data which is personal or sensitive and such data is in the
control of such body corporate and if such body corporate is negligent in maintaining “reasonable security
procedures” due to which wrongful loss or wrongful gain happens to any person, such body corporate shall be
liable to pay damages to the affected person.

Body Corporate means a firm, sole proprietorship or any association of person, company.

Reasonable security procedure means the procedures or precautions designed to protect the information
when such procedure is required to be followed as per the requirement of any law or agreement.

A person who fails to file a return with central government, as required under this act shall be liable to pay a
fine, not exceeding Rs. 10,000/-

Residuary Penalty (Section 46)

Whoever contravenes any rules or regulations made under Information Technology Act, for the contravention
of which no penalty has been separately provided, shall be liable to pay a compensation not exceeding
twenty- five thousand rupees to the person affected by such contravention or a penalty not exceeding twenty-
five thousand rupees.

ADJUDICATING OFFICER – SECTION 46

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Appointed by Central Government

For passing of decisions

In relation to “whether a person has committed an offence under the act or not or under any rules or
regulations which are made under the Act or any order or Direction given by the Central Government.

Such adjudicating may impose a penalty or award compensation under the provisions of this act.

While passing decisions the adjudicating officer has to consider the following factors :-

The amount of gain or unfair The amount of loss to a party The repetitive nature of
advantage to a party. offence.

Any party who is not satisfied with the decision of adjudicating officer or controller of certifying authority
may prefer an appeal to the appellate tribunal created by Central Government under the provisions of this
act, with a period of 45 days from the date of receiving the order of appellate authority or controller of
certifying authority.

The appellate authority hears both the parties and passes a decision.

If any party is not satisfied with the decision given by the appellate authority within a period of 60 days of
receiving the copy of decision of appellate authority, may appeal to the high court.

OFFENCE UNDER THE ACT

Section 65 - Tempering with computer source Computer related offence :

documents.
If any persons destroys, conceals or alters any a) Dishonestly receiving a computer source
computers source code or destroys or alters any code.
computer system or computer network. [Source b) Device identity theft.
code means, list of programmes, commands design c) Acting by personation.
and layout programme] is, punishable with d) Violation of privacy.
imprisonment upto 3 years or fine upto Rs. 2,00,000 e) Cyber terrorism.
or both f) Publishing or transmitting sexually explicit
Section 66. Hacking with the computer system: [unlawful] act.
Whoever with the intent to cause or causes wrongful g) Misrepresentation.
loss or damage to the public or any person destroys h) Publication for fraudulent purpose.
or deletes or alters any information residing in a Jail upto 3 years or fine upto Rs. 5,00,000 or
computer resource or diminishes its value or utility both.
or affects it injuriously by any means, commits
hacking.

Whoever commits hacking shall be punished with

imprisonment up to three years, or with fine which
may extend up to two lakh rupees, or with both.

Explanation: The section tells about the hacking

activity..
In case of Shreya Singhal Vs Union of India, Supreme Court ordered for repeal of section 66A of the IT Act,
2000 as it violated freedom of speech and expression.

QUE:If any person dishonestly or fraudulently does any act under section 43 of Information Technology Act,
2000 without the permission of the owner or any other person, who is incharge of a computer, computer

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system network, he shall be punished. What is the punishment for this offence ? In brief, discuss the offences
listed in The IT Act relating to computer and computer system network.

LIABILITY OF NETWORK SERVICE PROVIDER

CYBER OFFENCE AGAR HUA TO YEH BOLEGA,

MALA MAHITI NAI HOTA, MUJHE TO PATA HI NAI THA,

MAIN TO SIRF NETWORK DE RAHA THA

Network service provider is an intermediary through which we connect to the internet system.

An intermediary should not be liable under this act, for any third party information or data made available by
it or for contraventions which was done without its knowledge.

If it proves that :-

It took reasonable care and exercised all The contravention was not in its knowledge.
diligence. [+]
Que: Discuss the liability of network service providers in Information Technology Act, 2000.

APPELLATE TRIBUNALS

Section 48-62 deals with the establishment of Appellate Tribunals.

The TelecomDisputes Settlement and Appellate Tribunal established under section 14 of the Telecom
RegulatoryAuthority of India Act, 1997 , shall, be theAppellate Tribunal for the purposes of this Act and the
saidAppellate Tribunal shall exercise the jurisdiction, powers and authority conferred on it by or under this
Act.

The Central Government shall specify, by notification the matters and places in relation to which
theAppellate Tribunal may exercise jurisdiction.

In the same Chapter, there are provisions regarding the compounding of offences and recovery of
penalties.(Sections 63 and 64).

Any person aggrieved by an order of the Controller of Certifying Authorities or of the adjudicator can appealto
the Appellate Tribunal, within 45 days. (Section 57)

Any person aggrieved by “any decision or order” of the Appellate Tribunal may appeal to the High
Court,within 60 days. Jurisdiction of Civil Courts is barred, in respect of any matter which an adjudicating
officer orthe Appellate Tribunal has power to determine.

Acting to Protect Soverginity and Integrity of India – Section 69

Section 69 of the Act, authorises Central Government or State Government or its authorised officers to issue
necessary orders and carry out invstigations and also to issue directions, after recording reasons in writing to
appropriate Agencies for monitoring, intercepting or decrypting any computer source if they are of the
opinion that any person may act against the soverginity or integrity of India or can incite people to commit
offences through the use of information technology.

This act also has extra territorial jurisdiction if any person has committed offence under the act from outside
India but affects the computer resource, computer network or computer system in India – Section – 75.

ExEMPTION FROM LIAbILITY OF INTERMEDIARY IN CERTAIN CASES

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According to section 79(1) of the Act, an intermediary shall not be liable for any third party information,
data, or communication link made available or hosted by him. However, this provision is subject to section 79
(2) & (3) of the Act provided below.

According to section 79(2), the provisions of sub-section (1) shall apply if:

(a) the function of the intermediary is limited to providing access to a communication system over which
information made available by third parties is transmitted or temporarily stored or hosted; or

(b) the intermediary does not:

(i) initiate the transmission,

(ii) select the receiver of the transmission, and

(iii) select or modify the information contained in the transmission.

(c) the intermediary observes due diligence while discharging his duties under this Act and also observes
such other guidelines as the Central Government may prescribe in this behalf.

According to section 79(3) The provisions of sub-section (1) shall not apply if:

(a) the intermediary has conspired or abetted or aided or induced, whether by threats or promise or
otherwise in the commission of the unlawful act;

(b) upon receiving actual knowledge, or on being notified by the appropriate Government or its agency
that any information, data or communication link residing in or connected to a computer resource controlled
by the intermediary is being used to commit the unlawful act, the intermediary fails to expeditiously remove
or disable access to that material on that resource without vitiating the evidence in any manner.

In this section, the expression “third party information” means any information dealt with by an intermediary
in his capacity as an intermediary.

Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or
Information) Rules, 2011

Data privacy and protection in today’s world has become a matter of Individual rights. The right to privacy is
recognized as a fundamental right under Article 21 of the Indian constitution which was held in the historic
verdict by the Supreme Court in the case of Justice KS Puttaswamy v. Union of India. India’s digital
transformation requires the law to transform as well. Information Technology Act, 2000 (‘the IT Act’) and
Information Technology (Reasonable security practices and procedures and sensitive personal data or
information) Rules, 2011, commonly known as SPDI Rules, is one of the key legislations in this area.

Under Section 87(2) read with Section 43 – A of the IT Act, “SPDI Rules” were issued on 13th of April 2011
which govern the Sensitive Personal Data or information and apply to body corporate or any person located in
India.

The rules define sensitive personal data under the Rule 3 that the following types of data or information shall
be considered as personal and sensitive:

o Passwords,

o Bank Account details,

o Credit/debit card details,

o Present and past health records,

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o Sexual orientation,

o Biometric data.

An information provider is a person who provides information to the body corporate and under these rules, he
has certain rights over the sensitive personal information, this information cannot be collected without the
providers’ consent and he or she has the right to abstain from giving consent and can withdraw the consent by
writing to the body corporate.

i. Privacy Policy

Rule 4 requires a body corporate to provide a privacy policy on their website, which is easily accessible,
provides for the type and purpose of personal, sensitive personal information collected and used, and
Reasonable security practices and procedures.

ii. Consent

Rule 5 requires that prior to the collection of sensitive personal data, the body corporate must obtain
consent, either in writing or through fax regarding the purpose of usage before collection of such information.

iii. Collection Limitation

Rule 5 (2) requires that a body corporate should only collect sensitive personal data if it is connected to a
lawful purpose and is considered necessary for that purpose.

iv. Notice

Rule 5(3) requires that while collecting information directly from an individual, the body corporate must
provide the following information:

o The fact that information is being collected

o The purpose for which the information is being collected

o The intended recipients of the information

o The name and address of the agency that is collecting the information

o The name and address of the agency that will retain the information.

v. Retention Limitation

Rule 5(4) requires that body corporate must retain sensitive personal data only for as long as it takes to fulfil
the stated purpose or otherwise required under law.

vi. Purpose Limitation

Rule 5(5) requires that information must be used for the purpose that it was collected for.

vii. Right to Access and Correct:

Rule 5(6) requires a body corporate to provide individuals with the ability to review the information they have
provided and access and correct their personal or sensitive personal information.

viii. Right to ‘Opt Out’ and Withdraw Consent

Rule 5(7) requires that the individual must be provided with the option of ‘opting out’ of providing data or
information sought by the body corporate. Also, they must have the right to withdraw consent at any point of
time.

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ix. Grievance Officer

Rule 5(9) requires that body corporate must designate a grievance officer for redressal of grievances, details
of which must be posted on the body corporate’s website and grievances must be addressed within a month of
receipt.

x. Disclosure with Consent, Prohibition on Publishing and Further Disclosure

Rule 6 requires that body corporate must have consent before disclosing sensitive personal data to any third
person or party, except in the case with Government agencies for the purpose of verification of identity,
prevention, detection, investigation, on receipt of a written request. Also, the body corporate or any person
on its behalf shall not publish the sensitive personal information and the third party receiving the sensitive
personal information from body corporate or any person on its behalf shall not disclose it further.

xi. Requirements for Transfer of Sensitive Personal Data

Rule 7 requires that body corporate may transfer sensitive personal data into another jurisdiction only if the
country ensures the same level of protection and may be allowed only if it is necessary for the performance of
the lawful contract between the body corporate or any person on its behalf and provider of information or
where such person has consented to data transfer.

xii. Security of Information

Rule 8 requires that the body corporate must secure information in accordance with the ISO 27001 standard or
any other best practices notified by Central Government, which must be audited annually or when the body
corporate undertakes a significant up gradation of its process and computer resource.

2. Development & Law of Data Protection

In year 2022, the Central Government has formulated a draft Bill, titled ‘The Digital Personal Data Protection
Bill, 2022’. The purpose of the Bill is to provide for the procedure for processing of personal data. This Bill
will establish the legal framework on protection of personal data. The Bill aims to protect personal data in a
manner that recognizes the right of individuals.

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 CHAPTER – 15
INDIAN CONTRACTS ACT,
1872

Indian Contract Act, 1872

(An Act to amend and define certain parts of law relating contract)

Features of Indian Contract Act, 1872

The act regulates the contracts entered by the parties.

The Indian Contract Act, 1872 was passed by pre-independence

legislature of India & it came into force on 1st September, 1872.

The Indian Contract Act, 1872 extends to whole of India, & is

divided in 2 parts, part I deals with general principles of contracts
and is contained in section 1 to section 75 & the second part deals
with special contracts such as contract of bailment, pledge,
indemnity, guarantee, etc. & this part is present in sections 124-
238 of Indian Contract Act, 1872.

Indian Contract Act, 1872 is a private law & applies on the parties who enter in to a contract.

(Contract act unhi ko lagu hota hai jo contract karte hai)

How Contracts are created

a) The very first step in creation of contract is, offer by a person

to another person, the word offer is defined under section 2(a) of
Indian Contract Act, 1872 as “When one person expresses his
willingness to other person, to do or not to do something, in order
to obtain consent of the other person” in It is referred as offer.

(Expression of willingness + Intention of obtaining the consent =

offer)

Rules relating to offer

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a) The person who gives the offer is called as offeror & if the offer is accepted the offerer becomes promisor.
The person to whom offer is given is offerree and when offer is accepted the offeree becomes promise.

b) Mere (only) expression of will (desire) is not an offer, through offeror the offeror must offer do or not to do
something.

Eg:- I will teach you law for ₹ 5000/- - it is an offer for doing something.

I love teaching → Expression of will

I will not go to Delhi if you pay me ₹ 10,000/- an offer for not to do something.

(offer ke zariye kuch karne ka ya na karne ka offer dena chahiye)

c) Offer must be made with the intention of receiving the consent of the other party.

d) A person can make positive as well as negative offers. It means a person through an offer can ask the other
person to do or not to do something.

Eg:- I will give you ₹ 5000 if you wash my car for 3 months

I will give you ₹ 5000, if you don’t go to Delhi on 01.04.2022.

e) Offer must be capable of creating a legal or business relation: if the offer does not create legal relation as
it is social in nature, such offer creates social agreement & not contracts.

Eg:- Promise to go for a walk , promise to talk at night.

f) Offer must be communicated to the offeree:

An offer can be accepted by the offeree only when the offer has been communicated with the offeree, if any
person accepts the offer when he was not aware of the offer, such an acceptance will not make a contract.

(agar aap ke sath offer communicate nai hua hai to aap offer accept nai kar sakte aur agar aap ne wo offer
accept kar liya hai jo aap ke sath communicate nai hua hai to bhi koi contract nai hoga)

Lalman Shukla VS Gauri Dutt

In this case a person found the missing person, without knowing about the reward, the court decided that
founder can not claim the reward as the offer of award was not communicated to him.

(Agar aap ko offer jankari nahi hain to aap offer accept nahi kar sakte)

g) Offer may be conditional (offer main sharte ho sakti hai)

Eg:- If you shop for ₹ 10,000 you get 50% discount.

h) The offer has to be certain, definite & specific; The offer must be
given in such a way that it does not confuse the offeree, the offer should
not be vague (confusing).

The example: a person says, will you buy my pen for ₹ 20 or 25.

i) The offer may be conditional but the offer should not contain any
condition, the non-compliance (non fulfillment) of which will result in
to acceptance, this means, if the offeree could not fulfil the condition,
than the offeror will assume that offer has been accepted, such
conditions will make the offer invalid.

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 Example: Ram says to shyam, will you sell me your lonavala bungalow for ₹ 2000, after receiving the offer if
you take a bath, I will consider that you have accepted my offer.
(offer main aisi shart mat daliye ki samne wala use agar poora na kare to aap man lenge ki offer accept ho
gaya hai)
j) An offer is different from invitation to offer:
Basically when a person does not want to give offer, but
wants other persons to give an offer, so such person gives
an idea of the price at which offer should be given to him,
in this case we can say that such person has invited other
person to make an offer, through the invitation to offer.
Some of the examples of invitation to offer:
a) Prospectus
issued by the
company.
b) Display of Goods with price tags.
c) Advertisement for Auction sale or tenders
The auction advertisement that discloses about auction at a fixed
date, fixed place and at fixed time regarding sale of an article by
way of auction, is just an invitation to offer, if any person after
reading the advertisement reaches to the place of auction, it will not
result in to a contract as the advertisement of auction was just an
invitation Sto offer.
d) Price list or quotations given on request for prices.
e) Shopping website displaying goods with prices.
f) Newspaper classifieds.

Difference between offer & Invitation to offer

Offer Invitation to offer
a) Acceptance of offer results in contract a) Acceptance to Invitation to offer result in
(assuming other elements of contract are offer.
present)
b) Offer is given with intention of receiving b) Invitation to offer is given to call other
consent party to make an offer.
c) Offer is made after invitation to offer. c) Invitation to offer is prior to offer.

k) Offer is also different from:

(i) Statement of intention or announcement: Some persons express their wishes through some statements or
some announcements are made but these announcements are also kind of wishes and so not show any
certainty, so these announcements do not result in to an offer.
Example: A father said that he wishes to give all his property to elder son.
# Dushyant Sir Announced to give an IPhone 12 Pro Max to student who scores 90% in CA Foundation.

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(ii) Answer to a question: Sometimes buyers of product asks question from the sellers regarding price of the
products, when the seller gives reply to the questions of buyers, the answers of seller do not create an
offer.
In the case of Harvey VS Facie, the buyer asked question from seller, asking the price of product & whether
the seller will sell the product, in reply to the question the seller specified the minimum price at which he
could sell the goods, after receiving the reply the buyer placed orders but the seller refused to sell.
The buyer approached the court & said that reply by the seller amounted to offer, court decided that the
reply by the seller is just a reply to a question & it is not an offer.

(iii) Answer to a question regarding price:

When a person sends price list of his product, it is not an offer (Harvey VS Facie)
Kinds of offer
a) General Offer: An offer that can be accepted by any
person with whom the offer has been communicated + the
one who is capable of accepting such offer is called as
general offer.
Carlil VS Carbolic smoke ball company
In this case a newspaper advertisement was given that any
person who uses smoke balls of carbolic & gets influenzas,
so he will be awarded 100 pounds, Mrs Carlil read the
advertisement, used the smoke balls as per the directions
given in advertisement & got influenzea, the court decided that Mrs Carlil is entitled to claim 100 pounds.
There is a contract between Mrs Carli & Carbolic Company. As the newspaper advertisement was a general
offer which was accepted by Mrs Carlil.

b) Specific Offer: The offer which can be accepted

only by the person to whom it is made.
Example: Ram told Shyam, will you buy my pen for ₹
10, this offer can be accepted only by Shyam.

c) Cross
Offer:
When a
person makes offer to another person & the other person
ignores the offer (original offer) & such other person makes an
identical offer to the original offeror, so the subsequent
offer in the ignorance of original offer is referred as cross offer.

Example: Mr Shyam made offer to Mr Ram for selling his pen at

₹ 10, Mr Ram ignored this offer & gave an offer to Mr Shyam
for buying his pen at ₹ 10, the offer given by Mr Ram is a Cross
offer.

Through Cross offer contracts are not created as the

original offeror who was expecting acceptance for his offer
got another offer (Cross Offer)

d) Counter Offer: When the offeror gives an offer but the

offeree rejects such offer & gives a new offer or when the

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offeree makes alteration in the original offer, it is said that offeree has given a counter offer.
Example: Ram says to Shyam, will you buy my pencil for ₹ 10, Shyam says:
a) I will buy your pencil for ₹ 5, or
b) I will buy your pencil for ₹ 10, if you buy my pen for ₹ 20.
In both the examples above, Mr Shyam has given a counter offer.

e) Standing opening or continuing offer: An offer through which a person agrees to supply specific quantity
of goods at a specific price for a specific period of time, such offer is referred as standing, opening &
continuing offer.
Example: A person offers to supply 10 litres of milk for a period of 30 days @ ₹ 25 per litre.
Mr Shyam offers that for a period of 1 year he will be charging rent of ₹ 7500 per month.
Example: When a person applies for tender for supplying specific quantity at specific price for specific time.
Acceptance → Section 2 (b) of Indian Contract Act, 1872
“When a person to whom offer is given, gives (signifies) his
assent (consent) to the offer, in this case it is said that the
offer is accepted & when offer is accepted it becomes a
promise”
As per Sir William Anson, the offer is like gunpowder, &
acceptance is like ignited matchstick, & if offer is accepted,
it means ignited matchstick has touched the gunpowder,
which will result in to fire, in the same way when offer is
accepted it can not be cancelled once acceptance is made.
So the offer could have been cancelled or revoked before its
acceptance & not afterwards.
(Offer Barood hai aur acceptance machis ki tilli hai, donon ka Milan ho gaya to contract ho gaya)

Rules relating to acceptance

a) Acceptance has to be absolute: It means offer must be accepted in the same manner in which it was
given & no alternations are to be made at the time of acceptance.
Example: If Ram gives an offer to sell his pen for ₹ 10 to Shyam, then Shyam has to accept the whole offer.
If Shyam says that he will buy only the Cap of pen for ₹ 5, this acceptance is not absolute acceptance and
will not result in contract.
b) Acceptance has to be unqualified: It means the acceptance should be made without adding any
condition in the offer.
Example: If Ram offers to sell his pen to Shyam and Shyam says that he will buy the pen only when Ram will
buy his hat for ₹ 25. In this case Shyam has made conditional acceptance.
In both the above cases the offeree is giving counter offer.
c) Acceptance must be given only to the offeror or his
agent
In the case of Boultan VS Jones, a person had purchased
business of some other person (previous owner). In this case
the creditor of previous owner placed an order of Goods with
the previous owner, however the order was delivered by the
new owner. The new owner demanded payment from the
creditor, but the creditor refused to pay on the ground that
he had given the offer to the previous owner, so the offer
could have been accepted by the previous owner only. The
matter reached court & the court decided that there was no contract
between the new owner & the creditor & hence creditor is not liable to pay.

d) Acceptance must be communicated

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The person who accepts the offer has to communicate his acceptance so that the offeror comes to know
that the offer has been accepted. If the acceptance does not come in to the knowledge of offeror, valid
contract can not be created.

In the case Brodgen VS Metropolitan Railway Company, A person sent an agreement to the Manager of the
company, but the manager, out of his negligence kept the copy of agreement in his drawer, in this case the
court decided that there has been no contract, even if the agreement was approved by the manager, still
there will be no contract as approval or acceptance did not reach the other party (offeror).

e) In case the offer prescribes any particular made or method of accepting the offer then the offeree must
accept the offer in the prescribed made only. However, if the offeror does not prescribe or specify any
particular mode of accepting the offer than the offeree may accept the offer in any mode.

Example: If the offer specifies that payment has to be made by cheque only, but the offeree makes the
payment by cash, in this case, in this case there will be no acceptance.

f) If the offer specifies any time limit for acceptance of the offer, in this case it is the duty of the offeree to
accept the offer within the time limit specified in the offer otherwise the offer will be lapsed (expired),
however if the offer does not specify any time limit, then it has to be accepted within a reasonable time.
Reasonable time depends upon facts & circumstances of each case.

Example: A said to B, if you want to get my bike for ₹ 20,000, please send your reply in 4 days. In this case if
B wants to accept the offer he has to reply within 4 days, after 4 days offer will be lapsed.

g) Mere (only) silence on the part of the offeree is not acceptance: If the offeree, after receiving the
offer does not give any reply to the offeror within the prescribed time or within the reasonable time, it will
be considered that the offeree has not accepted the offer.

However if the offeree had specified to the offeror that if he

does not reply within a specific time than the offeror should
treat that offer has been accepted by the offeree, in this case
silence on the part of offeree will be considered as
acceptance.

In the case of Felthouse VS Bindley, a person offered to buy

the horse from the other person @ 30 pound, & he also said
that if he (offeror) does not get a reply then he will consider
that horse has been sold at 30 pound. In this case the offeree
kept aside the said horse for delivery to the offeror but the employee of the offeree sold the horse to some
other person without knowing the previous offer. The original offeror went to the court for getting the
horse, but the court decided that, the communication of acceptance was not made to the offeror & silence
on the part of the offeree can not be treated as acceptance, so there is no contract between the offeror and
the offeree.

h) A person may also accept an offer impliedly (without words) or by a conduct.

Example: (1) When a person boards in to a Bus or Train.
(2) When a person starts eating in a buffet.
(3) When a person after expiry of his internet subscription continues to use the interest subscription.
(4) A girl proposes boy to get married, the boy takes a ‘Barat’ to girl’s home.
(5) When a person sits at barber’s chair for a haircut.
Section 8 of Indian Contract Act, 1872 also specifies that a person can accept the offer by fulfilling the
conditions given in offer.

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 Consideration → It means “quid pro quo” i.e.
something in return.
In the case of Misa VS Currie it was decided that the
consideration is the gain or benefit of one party or it is a
detriment or loss or responsibility of the other party.
(seedhi se baat hai ek party ka nuksan aur dusri party ka
fayda hi consideration hai)
Consideration has been defined in section 2 (d) Indian
Contract Act, 1872 as “When at the desire of the
promisor the promisee or any other person, does
something or abstains from doing something or has done
something or has abstained from doing something or promises to do something or promises to abstain from
doing something, such act or abstinence is called as consideration”.
Features of consideration
1) Consideration should always be at the desire of the promisor: Basically when a person’s offer is
accepted, he becomes a promisor, so as per the law, through an offer a person states his intention of doing
something or not doing something, so the definition of consideration states that, against doing or not doing,
what a person wants in return should be decided by himself (promisor) only. So we can say that the
consideration has to be at the desire of promisor.

In the case of Durga Prasad VS Baldeo, at the request of the collector of district a person (x) constructed
shops at the complex, another person named K promised to pay X a commission on the goods that will be
sold in the complex constructed by X, however k did not pay any commission, so X moved to the court, the
court decided that there is no contract between X & K, as in this case, the shops were constructed by X at
the desire of collector, so X has remedies against the collector & not against K as the shops are not
constructed at the request or desire of K.

In the case of Srinivasa Padyachi VS Parathiammal, it was decided that, if a person contracts to marriage in
consideration of some properly or some settlement, then such promise of marriage will be a valuable
consideration, under section 2(d) of Indian Contract Act, 1872.

2) Consideration can be given by promisee or any other person, so the consideration which is at the desire of
promisor can be given by promisee or any other person on behalf of the promisee. This suggests that there
can be a stranger to consideration.
However, when the contracts involve personal services or personal consideration that consideration must be
given by the promisee only
In the case of Chinnaya VS Ramayya, A lady gifted her house to her daughter & asked her daughter to pay a
fixed amount every month to her uncle (brother of lady). the daughter made an agreement with the uncle
for paying him a fixed amount every month, but she did not pay. The uncle went to the court against the
daughter & the daughter said in the court that there is no contract between her & the uncle as uncle has not
given any consideration. The court decided that the consideration given by the lady (house which was
gifted) was a valid consideration on behalf of uncle so the consideration on behalf of uncle was given by the
lady who was a stranger in the contract of daughter and the uncle.
3) There can also be present or Executed consideration: When the promisor & promisee discharge their
obligation at the time of contract or they give consideration to each other simultaneously, it is called as
present or executed consideration. Both the parties give consideration at the same time.
Example: Cash purchase, A student buying pen drive classes of Expert Academy, student pays the fees &
Expert Academy immediately provides pen drive classes.
4) Consideration may be past or executory consideration also: When the promisor has received
consideration but has not performed his part or has not discharged his obligation, in this case the promisor
has received past consideration.

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Example: Expert classes has received the advance fees but the syllabus is yet to be finished, so the fees
received by Expert classes is past consideration.
Example 2: Ram has received an advance payment for supply of Goods, in this case Ram has got past
consideration.
(matlab aap ko paise mil gaye hai aur aap ne services provide nai kari hai to jo paise aap ko mil chuke hai
wo past consideration hai)
5) Consideration can be future consideration or Executory consideration: When the promisor has
performed his part, but the promisee has not paid the consideration or the promisee has not performed his
part and has promised to perform his part in future, in this case the future performance of promise is future
consideration for the promisor.
Example: Ram has supplied the goods, but he will received payment after 1 month, so in this case the
payment after 1 month is future consideration for Ram. (credit sale)
6) Consideration can be an act (doing something) or an abstinence (not doing something): A promisee in
order to discharge the consideration can do some act or can abstain from doing some act, at the desire of
the promisor.
(aap kuch kar ke bhi ya kuch na kar ke bhi consideration de sakte hai promisor ko uski iccha par)
7) The promisor out of his free consent can fix any amount of consideration, so in the contracts, there can
also be inadequate consideration, if the promisor gave his free consent, the inadequacy of consideration
does not affect validity of contract.
Example: Dushyant Sir sold his IPhone 15 for ₹ 300 to Shruti & Shruti bought it.

8) Consideration can not be something, what a person is already under an obligation to perform under a
contract.
For Example: If a doctor has already charged fees ₹ 50,000 for doing an eye operation, so the doctor is under
an obligation to do the operation for ₹ 50,000, now if the doctor says that if ₹ 30,000 extra is given to him
for the operation then he will do the operation in more effective manner. In this case the demand of ₹
30,000 for more effective operation is not valid consideration as the doctor is already bound to do operation
for Rs. 50000.
(aap us cheez ke liye consideration nai mang sakte jo aap ko already karna hi hai kisi contract ke andar)
9) The inadequacy of consideration does not affect the validity of contract, but the consideration has to be
in some real or tangible or measurable form, it can not being the form of emotions, feelings, love, etc.
a. Ram says to Shyam, if you love me day & night I will give you my car. In this agreement the consideration
is not real.
b. Mohan Says to Rohan, if you give me emotions I will give you Rs 50000.
10) Consideration can not be unlawful, immoral or opposed to public policy. It means the promisor at his
desire can not ask something in return which is illegal, immoral or against the public policy.
Example: Ram says to Seema, if you kill your husband & marry me I will pay you ₹ 10 crore.
Privity of Contract

There can be no stranger to Contract

As a general rule there can be stranger to consideration but there can be no stranger to the contract. It
means, if there is a contract between two parties & one of the parties does not perform his obligations
under the contract, in this case the other party may claim for remedies from the party to the contract only
& not from any other person. The remedy may also be claimed by the party to contract only.
Example: If a person (x) gets a medical treatment for ₹ 50,000 from Kumar Hospital, however the medical
treatment was not good, in this case X only has right of getting remedies & the case in the court can be filed
against Kumar hospital only.
Example: If a person has taken admission from X Academy for his CA course & if X Academy does not finish
its syllabus on time, then case can be filed only against X Academy.
This rule is referred as privity to the contract, however the rule is subject to some exceptions (there can be
some contracts in which stranger are allowed)

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1) In case of trust contracts (deeds) the contract is between the Donor & the trustee for the benefit of
beneficiaries, if the trustee does not discharge his trust obligations, the beneficiaries can go to the court for
claiming remedies against the trustee, though the beneficiaries are stranger to the contract between the
donor & trustee.
Example: Out of trust Mr K gave his house to Mr Z, so that Mr Z uses the house for benefit of orphans for a
period of 20 years, however, Mr Z, after 6 months, converted the house in to hotel, now the orphans who
were beneficiaries of the trust can approach the court against Mr Z. (trustee)
(Key Word – T, Trust)

2) If family settlement or partition is made in writing, the family members who are beneficiary to such
settlement, though not the party to the settlement may sue the parties to the settlement.
Example: Ram & Shyam made a partition of properties through an agreement & in the partition deed
(contracts in writing) they agreed that they will be pay ₹ 20,000 every month to the mother, now if the sum
of ₹ 20,000 is not paid to the mother, the mother can sue Ram & Shyam.
(Key word F – Family Settlememt)
3) In the case of settlement of marriage disputes through Contract or arrangements relating to marriage, the
party who is a beneficiary to the contract may approach the court if benefits are not provided to such party.
Example: X & Y were married, X used to beat his wife everyday, due to this the wife left the home, now the
wife came in to financial distress, so x made a promise to wife’s father that every month he will pay ₹
20,000 to his wife, but he did not pay so in this case, the wife who was a beneficiary to the contract
between her husband & father may approach the court.
(Key Word – M Marriage)

4) In the case of assignment, the assignee may sue the party to the contract, through the assignee is
stranger to the original contract.
Assignment means a contract through which a party transfer its benefits or rights to the other party.
The party who makes assignment is called as assignor & the party to whom assignment is made is called as
assignee.
The contracts which are dependent upon personal skill or person consideration can not be assigned.
(Key word – A, Assignment)
Example: Y took a loan from HDFC Bank of ₹ 20,000, however, by an agreement HDFC Bank transferred
(assigned) loan to the ICICI Bank for ₹ 18,000, in this case, ICICI Bank can recover the loan from Y, though
the contract was between Y & HDFC Bank.

5) Estoppel: It means whatever is stated once can not be denied later on. If a stronger to contract makes a
estoppel relating to the contract then such stranger is bound by the estoppel made by him.

Key word – E, Estoppel

Example: Ram had to recover ₹ 20,000 from Shyam, on the date of payment Shyam gave the money to
Rohan, to give it to Ram, Rohan accepted that he holds money which is to be paid to Ram. In this case if
Ram does not receive money he can sue Rohan as Rohan had made an estoppel saying that he was holding
money.

6) In case seller of land or immoveable property puts any condition (covenant) in relation to the land or
immovable property which is being transferred, in this case the buyer of the property & his successors
(subsequent buyers) are bound by such conditions even if the subsequent buyers were not the party to the
contract which was executed between the original seller (who had put conditions) & the original buyer.
Key word – L, Land
Example: The owner of land, at the time of selling of the land puts a condition that buyer of land should not
contract more than 5 floors on the land, so that the right of seller of getting sunlight & fresh air is not
affected, now this condition will be applicable on the original buyer & all subsequent buyers of such land.
(Rule against partial restraint → TOPA, 1882)

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7) Contracts Entered by Agents
If on behalf of principal, the agent enters in to a contract, the agent enters in to contract within the scope
of his authority, in this case, if the principal does not perform the contract, he can be sued even when the
contract was entered by the agent on behalf of the principal.
Example: If Dushyant Sir paid ₹ 10 Cr to the Manager of Katrina for a live performance, now in this case if
Katrina does not perform, she can be sued, even if contract was entered was entered by her manager.
Key word – P, Principal
8. Hindu Undivided Family – In case of HUF, when settlement or partition is made between the male
members of the family, and in such settlement or partition if there is provision of marriage for females of
HUF, then the females of HUF can sue the parties to the settlement in case the marriage provisions or
reserves are not provided to them.
Keyword - H

All keyword makes a statement – TO FIR MILNE AAO EK LAKE PAR Haskar
Privity of Contract ka exception aise yaad karna! Trust, Family Settlement, Marriage, Assignment, Estoppel,
Land, Principal, HUF!

Section 25: No Consideration No Contract

As per section 25 of Indian Contract Act, 1872, a contract can not be created unless both the parties get
something in return. If parties make promises & if such promises are not supported by consideration then no
legal obligation will be created by the promises & such promises & will remain social agreements & will not
be enforced by law.
However section 25 provides some exceptions, that means there are some cases in which a valid contract
may be created even without consideration.
Such contracts are as follows:
a) Contracts that result out of natural love & affection between the parties who share a nearness in
relation + such contracts are in writing & are also registered under the applicable law.
Nearness in relation suggests a close family relation like husband & wife, father & son, mother & son, etc.
Example: A husband while leaving for USA made a written & signed promise to pay ₹ 50,000 to his beloved
wife, the wife got the promise registered under the law, if the husband does not perform his promise, the
wife can go to the court & can enforce the promise of husband.
Ex: A father by written & registered agreement promised to give a BMW 7 Services on her daughters 18 th
birthday, this is a valid promise.
Key word : N – Natural Love and Affection
b) Promise to compensate a person for past voluntary services: If a person out of his own will (desire),
without the request of other party, provides some services, & the person who has received such
services (promisor) makes a promise to pay wholly or in part for the services which were provided by
the promisee in past, in this case the promisee can enforce such promise made by the promisor (who
received the voluntary services).
For applicability of this provision following conditions are to be fulfilled:
a) Services to be provided voluntarily.
b) Services to be given to the promisor
c) When services were given the promisor must be existing.
d) The promisor should have intention of compensating the promise.
Example: Ram saved life of Shyam as Shyam was drowning in the river, Shyam promised to pay ₹
20,000 to Ram.
→ Enforceable.
Ram saved life of Shyam, Shyam’s father promised to compensate Ram.
→ Not enforceable.
Note: This rule applies only to “services”

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 Key word – P, Past Voluntary Services
c) A written & signed promise to pay time barred creates a valid contract.
A written & signed promise to pay time barred creates a valid contract. The concept of time barred debt
given in Indian Limitation Act, 1963, as per which if a party wants to approach the Court for recovering a
debt, it has to approach the court within a period of 3 years from the time when the debt became due &
was not paid.
Example: Ram took a loan of ₹ 75,000 from Shyam, Ram promised to repay the loan on 1.1.2021, however
Ram did not pay the loan on 1.1.2021, now in this case if shyam wants to approach the court then he must
approach within 3 years, and after the expiry of 3 years, the debt will become time barred debt. Now, if on
1.1.2025 Ram makes a written & signed promise to repay the loan of ₹ 75,000 to Shyam, this promise is valid
& enforceable.
(Keyword – T, Time Barred)
d) The contracts of agency does not require any consideration. (Section 185)
Example: If Dushyant Sir says that Nainesh is his agent & the admission fees can be deposited with Nainesh,
now Nainesh is under an obligation to transfer all the admission fees which he received in the capacity of
agent of Dushyant Sir, even if Dushyant Sir does not give him any consideration.
The agent is under the agency obligations even if there is no provision in the contract regarding payment of
consideration to agent.
(Keyword – A, Agency)
5) Completed Gifts do not require consideration. The concept of gift is given in section 122 of Transfer of
Property Act, 1882 as per which, gift means a voluntary transfer of movable or immovable property without
any consideration by the donor (The one who gives gift) to the donee (the one to whom gift is given) & is
accepted by the donee.
As per section 123 of Transfer of property Act, 1882, the gift of immovable property can be made through
written & registered instrument & gift of movable property can be made through written & registered
instrument or by making delivery of the property to the donor (the delivery can be made as per the made of
delivery given in sales of Goods Act, 1930)
Example: Dushyant Sir gifted a mobile to Rutuja & transferred the mobile, now Dushyant Sir can not ask
Rutuja to return the mobile as the gift was validly made.

(Keyword G, Gift)
6) Bailment → It means transfer of movable property by a person to any other person with consideration or
without consideration on a condition that such person will return the property when the purpose is finished.
When bailor (the one who transfers the possession of goods) transfer goods to the bailee (the person to
whom goods are transferred), the bailee is under the obligation to use the goods as per the instructions &
directions of the bailor even if there was no consideration in the contract (bailee means the person to
whom goods are transferred).
Que: A was going out of station so he kept his goods with 'B', Later on "B without of A mixed his goods with
A's goods and the mixture cannot be sepaated. In the light of above case suggest what is remedy available
for *A"
(Keyword B, Bailment)

7) Promise to give charity if the promisee incurs liability or expenses on the basis of promise of clarity.
The above principle was established in the case of Kedarnath VS Gorie Mohammad.
Example: Dushyant Sir made a promise to donate ₹ 5 Lacs to Mahaveer Jain Trust & on the promise of
Dushyant Sir, Mahaveer trust spent ₹ 5 Lacs for constructioin of boundary wall, in this case the promise of
Dushyant Sir creates a valid contract.
(Keyword C, Charity)
Memory Formula for Exceptions of No Consideration No Contract = N P T A G B C, It will become A B C T G N
P = ABC Teenon Gaye Nahane Pakistan! A Agency, B Bailment, C charity, T Time Barred Debt, G Gift, N
Natural Love and Affection, P Past Voluntary Services!

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 Types of Contracts
On the basis of Enforceability (It mean whether law will enforce these contracts /agreement or not)

1) Valid Contract: An agreement which is enforceable by law. If any party does not perform a valid
contract, the other party can claim remedies (solutions) as given in law.
2) Void Contract: As per section 2(j) of Indian Contract Act, 1872, A contract which ceases to be
enforceable by law become void when it ceases to be enforceable by law.
A contract which was initially supported by law but afterwards law stopped supporting, such contract
becomes void contract when law stops supporting such contract.
3) Voidable Contract: As per section 2(i) of India Contract Act, 1872 “an agreement which is enforceable by
one party to the contract but not by the other party to the contract, such contract is referred as voidable
contract”

Normally the definition is suggesting that these contracts will be enforced only when one party to the
contract wants to enforce it, So in this contract such one party has the option to treat the contract as
invalid, if such party does not want to enforce it. the party who can treat this contract as void is the
aggrieved party of the contract who had not given free consent to the contract.
So basically the concept of voidable contract protects the party who has not given free consent to the
contract.
Example: Ram sold ₹ 10,000 Mobile phone to Shyam for ₹ 100 as Shyam had threatened to kill Ram. This
contract can be cancelled by Ram.

Difference between Void Contract & Voidable Contract

Void Contract Voidable Contract
1. Not enforceable at all 1. Enforceable at the option of aggrieved
2. If laws are changed, subject matter of party.
contract is destroyed, any party dies, or any 2. If free consent was not given by any
situation arises which is beyond the control party, the contract becomes voidable.
of parties the contract will become void. 3. if the voidable contracts are not
3. If a contract becomes void, it can not cancelled within a reasonable time, the
performed. other party can approach the court for
4. When a contract becomes void no remedy enforcing the performance.
is available to the parties. 4. In case of voidable contract the aggrieved
party has a remedy to cancel the contract.
the aggrieved party may also claim damages.
However, the aggrieved party has to cancel
the contract within reasonable time.

4) Void Agreement: As per section 2(g) of Indian Contract Act, an agreement which is not enforceable by
law is called as void agreement. Void agreements are void-ab-initio, it means void agreement are void since
beginning, we all know that when an agreement is enforced by law it becomes a contract, but if any
agreement is not enforceable by law it remains only an agreement & never becomes contract, so these types
of agreements are referred as void-agreements.
Example: Ram promises to show Black Magic to Shyam for ₹ 100, It is void agreement.
5) Illegal agreements: The void agreements which are forbidden (prohibited) & punishable by law such
agreements are referred as illegal agreements.
Every illegal agreement is also a void agreement as it is not enforced by law but every void agreement does
not become illegal agreement as every void agreement is not punishable by law.

Void agreement Illegal agreement

a) Every void agreement is not illegal a) Illegal agreement is always void.
b) Not forbidden + Not punishable by law. b) Forbidden + Punishable by law.

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c) Collateral agreement C)Collateral agreement
collateral agreements to void agreement Collateral agreement means the supporting
may be valid. agreement to the main agreement.
Example: Ram gifted a House to Minor X, & The collateral agreement to illegal
Minor X sold the house to Y. in this case the agreement are always void (may also be
selling of house by minor is void but the gift illegal)
of house to minor by Mr Ram is valid (it is a Example: Ram borrowed ₹ 5000 from Shyam
collateral agreement) for Gambling. Ram lost this money to Shyam
in Gambling.
In this case gambling is illegal agreement &
borrowing of money for gambling by Ram
from Shyam is also Void (collateral
agreement)

6) Unenforceable Contract: A Contract which is good in substance i.e. the contract which fulfills all the
requirements of valid contract but due to some technical defect i.e. not fulfilling the requirement of some
other law and due to this the contract is not capable of being enforced in the Court, such contracts are
referred as unenforceable contracts.
Example: oral promise to sell an immovable property is not enforceable in Court on account of Transfer of
Property Act, 1882.
Example: If a person had to recover debts from other person & if such person (creditor) could not approach
the court within a period of 3 years, then such debt becomes a time based debt & the creditor will not be
able to enforce the contract in court. So the contract which was initially a valid contract, after a period of 3
years, due to Indian Limitation Act, 1963 become an unenforceable contract.
Classification of the contract on the basis of formation of the contracts:

1. Express Contract: The contracts that are made by use of the words & the words may be written or oral
these contracts are referred as express contracts.
As per section 9 of Indian Contract if offer or acceptance is made through words & promise is made, such
promise results in express contract.
2. Implied Contracts: When the proposal or acceptance is made through actions or conducts but not through
words, it results in to promise & such promise is implied & the contract can be considered as implied
contract.
Basically these contracts are made through actions.
For example: When we board in to bus, railway coolies when they lift luggage, haircut, opening the cap of
petrol tank at the petrol pump.
There is one more category of Implied Contract, which is called as technical implied contracts or tacit
contract, & these contracts are also entered through acts of the parties.
Example: Withdrawing cash from ATM or Auction sale in which the bids are accepted through fall of
hammer.
E-contract: The contract through the use of computer network or through any other electronic mode is
referred as E-contract. This contract takes place through Electronic Data Interchange, offer & acceptance
both are made electronically.
For example: Shopping on Amazon, Buying any mobile app (paid version), buying shares book, ordering on
zomato.
3. Classification of Contract on basis of performance
Executed Contract: When both the parties to the contract have performed their contractual obligations, the
contract becomes an executed contract Or
• When the promisor has given consideration & at the desire of promisor the promisee or any other
person has done or has abstained from doing something, such contract becomes executed contract.

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Example: Cash purchase, student has paid the fees & class has finished the syllabus.
Excecutory Contract: When a contract is not performed either by one party to the contact or by both the
parties to the contract.
Promise + Performance = Executory Contract
Promise + Promise = Executory Contract
Excecutory Contract is divided in:
a) Unilateral Contract: When one party has performed the contract & the other party’s performance is due.
Eg. Student has paid the fees, but coaching class has not finished syllabus or credit sale.
b) Bilateral Contract: When the contract is yet to be performed by both the parties (both the parties have
just made promise to perform)
Example: Cash on delivery orders on Amazon or flipkart.
• A person promises to sell his land for Rs. 10,000 but that buyer pays advance of 2,000, & the seller
says that sale deed of land will be registered only when the buyer pays full amount.
Quick Summary
Void Contract: Law stops supporting
Voidable Contract: Enforceable at option one party
Void agreement: Void-ab-initio, never supported by law.
Illegal agreement: Void + Punishable
Unenforceable: Valid + technical defect so not enforceable in courts.
Express: with words
Implied: With acts
Tacit: Technically Implied
Executed: Performed by both parties
Executory: Unperformed contract
Unilateral: Performed only by one party
Bilateral: Not performed or not fully performed by both parties.
E-contract: Offer & acceptance electronically.

Communication of offer & acceptance

Before starting with the concept we must check section 3, 4, & 5.
Section 4 states that, communication of offer is complete when the offer comes in to the knowledge of the
offeree.
In face to face to face or telephonic communication the communication of offer is complete when the
offeree has heard the offer, and if contract is done through post then the communication of offer is
complete when the letter reaches to the offeree and the offeree opens the letter and reads it. For example
if the letter is posted on 5.1.2021 and the offeree receives the letter on 10.1.2021 but opens and reads the
letter on 20.1.2021, in this case the communication of offer completes on 20.1.2021.
Section 3 states: In general these are 2 modes of communication of acceptance namely
a) By an act or
b) By omission, that means by restraining ourselves from doing something, which makes the offeror
understand that the offeree has accepted the offer, but it must be kept in mind, that make silence is no
acceptance.

Communication of acceptance through act means the offeree does something for communicating his
acceptance like the offeree uses written or oral words for communicating his acceptance. Letters, telegram,
fax, e-mail etc. are used for written acceptance & telephone or face to face messages will be used to
communicate oral acceptance. Communication by act will include any conduct (act) or communication
through which the offeror comes to know that offeree has accepted the offer.

When offer is accepted through conduct, one need not to specifically communicate the acceptance as
conduct (act) itself is a communication.

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For example: If a person boards a “bus” it means he has accepted the offer he need not to communicate the
acceptance or when a person starts eating at the buffet, he need to communicate his acceptance, as
conduct in itself is an acceptance.

Communication of Acceptance through omission to do something means the offeree will not do something &
this will result in to communication to the offeror that the offeree has accepted the offer.

For example: if Ramesh says to Kushal, that on 1.1.2021. if you don’t go to Delhi, I will pay Rs. 10,000,
Kushal does not go to Delhi on 1.1.2021, so Ramesh has understood that Kushal has accepted the offer.

In the case of Central Bank Yeotmal VS Vyankatesh, it was decided that if Resolution has been passed by
Bank to sell the land to buyer, but the resolution was not communicated to buyer, there will be no contract.

As per section 4 of Indian Contract, Act, 1872 Communication of acceptance will complete:
a) Against the offeror: When the acceptance is put in to the course of transmission in the manner that the
acceptor (offeree) can not withdraw his acceptance.
b) Against the Acceptor: When the acceptance comes in to the knowledge of the offeror or proposer.

So, if contracts are taking place through exchange of letters section 4 suggests that, the contract for the
offeror & the offeree will be created on different dates.

So, if we talk about the offeror, the offeror will become bound by his offer when the offer has been
accepted by the offeree & the letter of acceptance which is correctly addressed, stamped & properly posted
by the offeree, the moment letter of acceptance is posted the offeror is bound by the offer and can not
cancel his offer & contract is created for the offeror, even if letter is delayed or lost in transit, the offeror
will be bound by the offer.

Now if we look from the point of view of the offeree, for offeree the contract will be created when his
letter of acceptance comes in to the knowledge of the offeror. That means when the letter of acceptance
reaches the offeror.
Most students get confused as to why there are different dates for creation of contract for the offeror &
offeree, this is because, there are different dates for posting of letters & reaching of letter, so law makers
after considering different situations have decided the principle as given in section 4.

So for example, Ramesh on 1.1.2021 offered to sell his horse by a letter to Suresh, the letter reached to
Suresh on 05.1.2021 but Suresh posted his letter of acceptance on 12.1.2021 & his letter of acceptance
reached Ramesh on 19.1.2021, in this case following points can be observed:
a) Communication of offer completed on 5.1.2021
b) For Ramesh Contract is created on 12.1.2021
c) For Suresh contract is created on 19.1.2021

In general the offer can be revoked by the offeree before it is accepted by the offeree. Like in case of
Auction sale if the bidder has made a bid in the auction, before the bid is accepted by the Auctioneer the
bidder can withdraw his bid.
Even if the offeror had promised to keep the offer open for certain period, but the offeror can withdraw his
offer even before expiry of that certain period if the offer was not accepted by the offeree.

For example: X, told Ram that I will sell 50Kg of Rice @ Rs. 70 per Kg till 8 PM in the evening, but at 6 PM
only X sold the rice to Mohan, so in this case X has revoked the offer.

As per section 5 if contracts are entered through letter, then, the proposal can be revoked by the proposer
before communication of acceptance is complete (posting of letter by offeree) & Acceptance can be revoked

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by offeree before communication of acceptance to the offeror (before the letter of acceptance reaches to
the offeror)

So, If we take the above example (Ramesh & Suresh):

a) Ramesh will be able to cancel his offer till 12.1.221 before letter of acceptance is posted.
b) Suresh can cancel his acceptance till 19.1.2021, till the time the acceptance comes in to knowledge of
Ramesh.

When contract are created through post, in England, the offeree is not allowed to cancel or revoke his
acceptance, so if the offeree has posted his acceptance, the contract is created for offeree & offeree by
sending any other letter can not cancel his acceptance.

If the contracts are made through face to face meeting or through telephone then communication of
acceptance is complete as soon as the acceptance comes in to the knowledge of the offeror, however in
case of telephone, if telephone goes dead, during the conversation then offeree should call again to the
offeror and confirm whether offeror has received the communication of acceptance.

Modes of revocation of the offer

a) When the offeror sends a notice to the offeree & informs that he has revoked the offer.
b) When the offer is not accepted within time specified in the offer or within reasonable time, if no time has
been specified in the offer, the offer is lapsed.
c) If the offeree does not fulfill the conditions precedent (condition precedent means the conditions that are
to be fulfilled before accepting the offer), then the offer is revoked.
d) If the offeror dies or becomes insane after making of the offer & the death or insanity comes in to the
knowledge of the offeree.
e) By offeree making a counter offer.
f) By offeree not accepting offer in prescribed mode.
g) If offer becomes illegal, after making of offer.

Communication of Performance
If the offeror has specified that the offeree has to perform the contract & also has to communicate his
performance, then in this case the offeree must perform + also communicate to the offeror that, he has
performed the contract.
In the case of Carlil VS Carbolic Smoke Ball Company, 3 principles were established:
a) The offer must clearly specify that the offeror will be bound by his offer if the conditions of offer are
fulfilled.
b) The offer can be to a specific person or to public at large.
c) If offeror has made a promise against an act of the offeree, the offeror will be bound by his promise even
if offeree has not communicated his performance. (matlab agar offeror ne kaha tha ki offeree ko koi act
karna hai tabhi offeror apna promise perform karega to agar offeree ne apan act kar diya hai bhale hi
communicate nai kiya to bhi offeror ko apna promise peroform karna hoga)

Communication of Special Conditions

If a person accepts the offer then it is treated that the person has accepted all the conditions (which are
reasonable) relating to offer. (such conditions are communicated tacitly & also accepted tacitly – as such
conditions are not specifically communicated)
In the case of Mukul Dutta VS Indian Airlines, it was decided that if a person purchases air ticket then it is
considered that he has accepted all the conditions which are printed at the back of ticket or at any specific
place, even in very light ink.
It should be kept in mind that the offeree will be bound by conditions that are “Reasonable”.

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In the case of Lily white VS Mannu Swamy, the laundry receipt contained that if the launderer looses any
cloth then he will give 15% of market value of the cloth to customer, the court decided, that this condition
is unreasonable & the customer can claim full value of his lost cloths.

Standard form of Contract

In case the form of the contract is such that it suggests that there are special conditions attached to the
contract, then the offeree is bound by such conditions. However if the form of the contract does not suggest
that there are some special conditions relating to contract in this case the offeree will not be bound by such
conditions.
In the case of Raipur Transport Company VS Ghanshyam, a transporter accepted the goods for transport
without any condition but after accepting the goods, the transporter added a condition that if goods are
lost, he will not be liable, it was decided by the court that the owner of the Goods is not bound by such
condition.

When Agreement becomes a contract

for lawful consideration & lawful object. As per section 10 of Indian Contract Act, 1872, if thefollowing
conditions are satisfied, the agreement becomes a contract:
[Link] parties are competent tocontract & give free consent to the contract.
[Link] contract must be made The agreement should not be expressly declared as void.

Competency to enter in a contract: Section II

The person who has completed the age of majority + the person who is of sound mind + not disqualified by law,
from entering in contract as per thelaw which applies to such person, if all these conditions are satisfied then
a person is competent or eligible to enter in to a contract.

Majority A person becomes major when he completes the age of 18 years as per the Indian Majority Act,
1875. This rule applies on a person who is domiciled in India.

Position of Minor’s Agreement

1. An agreement by Minor is void-ab-inito:

The agreement with minor has no legal
effect & such agreement does not create
any legal obligations onthe parties & is void-
ab-initio.

In the case of Mohori Bibi VSDharma Das

Ghose, In this case minor borrowed Rs. 20,000 & mortgaged his house in form of mortgage to the creditor, when
minor become majorhe applied to the court for declaration of mortgage as void, the court accepted the
application & declared the mortgage as void & also said that the minor is not liable to return the money as the
agreements during minority have no legal effect.

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 2. The agreement which minor made during minority can not be ratified (approved) on attaining majority,
so for example if minor had given any promissory note during his minority, on attaining majority the
minor cannot say that he is bound by the promissory note & he ratifies it, due to lack of consideration.
Que: Srajan, a minor fraudulently overstates his age and takes delivery of a motor car after executing a
promissory note in favour of the trader for its price. Give your suggestion to trader for remedy in this
situation.
3. The contracts that provide only benefit to the minor are valid.
For example: A gift in favour of minor is valid, minor can also become beneficiary of partnership firm,
minor can approach the court if any mortgage was executed in his favour & the court will also pass decree
inthe favour of minor relating to mortgage.

4. When the minor has falsely represented his age & has obtained someloan or debt & the other party sues
the minor for recovery of the loan, inthis case the minor can always plead (request the court to consider
his minority) his minority. Rule of estoppel does not apply against minor [Link] minor can deny what he
had stated earlier.

So if a minor by falsely representing his age obtained a debt of Rs. 25,000,& when creditor asks for his money,
the minor refused to pay & said thathe is a minor & lied about his age, in this case when the creditor will
approach the court, the minor can ask the court to consider his minority before passing any decision against
him. However, the court may ask theminor to return any unspent amount that is with minor, if any.

5. If necessaries are supplied to minor or any person to whom minor is bound to support u/s 68 of Indian
contract Act, 1872, then the supplier of necessaries can recover the amount of necessaries from the
assets of theminor, so for necessaries the assets of minor are liable & minor is not personally liable.

If two conditions are satisfied then only the assets or estates of minor willbe liable for necessaries.

a) Necessaries should be required for supporting the life of minor +

b) The minor is not adequately supported with such necessaries.
The supplier of necessaries can recover only the amount of necessaries from assets & not higher amount
(matlab jitney amount ki necessaries supplyki hai utna hi recover kar sakte ho).

Necessaries does not include Luxuries or unnecessary articles, expenses on minor’s education, funeral
ceremonies, sweaters in winter season, etc. canbe considered as necessaries.
For example: If a minor attended class X coaching class without paying fees of Rs. 75,000, in this case the
coaching class can recover fees from selling mobile phone of the minor if the minor was owner of mobile
phone & if mobile phone is sold for Rs. 10,000 & minor does not have anyother asset then the coaching class
can not recover the remainingamount.

6. On behalf of minor his guardian can create a valid contract if 2conditions are satisfied:

a) The contract is for the benefit of minor +

b) The guardian is capable of entering in contract.
If the guardian on behalf of minor sells the property of minor, this agreement is void-ab-initio, as it creates
an obligation on minor to transfer his property.

However if certified guardian is appointed by court for selling of propertyof minor, sells the property of
minor, such contract is valid, & enforceable.

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 7. The minors agreement can not be specifically enforced under specificrelief Act, 1973.
8. Minor can not be declared as insolvent, as he is never personally liablefor his debts.

9. Minor can not become principle but can become agent.

10. Minor can draw, deliver, endorse the negotiable instruments but will not be liable if these instruments are
dishonored. So minor can open bank account & also issue cheques but if cheques are bounced, he will
not beliable.

11. If minor enters in any agreement without the knowledge or authority (express or implied) or consent of
his parent, then parent will not be liablefor agreement entered by minor.
Example: Minor bought iPhone for Rs. 50,000 & told the shopkeeper thathis father will be responsible for
payment, when the dealer asked moneyfrom father the father proved that he had no knowledge of the
purchaseof iPhone, in this case father will not be liable.

12. If major & minor jointly enter in to contract the contract will be enforced against major.
Example: Ram (major) Shyam (minor) together bought a phone for Rs. 90,000 in this case seller can sue Ram
& not Shyam.
13. The person who gives any guarantee for minor will be liable.
Example: Dushyant sir gave guarantee to Sunil that Ram (minor) will paySunil Rs. 10,000, now if Ram does
not pay Dushyant sir will be personallyliable to pay.

14. Minor is not entitled to enter in contract & hence he can not becomeshareholder
of the company. However if under a mistake name of minor is entered inregister of member of the company,
then minor can cancel the transaction & request the company to remove his name from register of member.
However the minor through his guardian can purchase fully paid shares or he can become shareholder through
transmission (transfer of shares of deceased shareholder in the name of minor)

15. Liability of Minor for torts: Tort is a civil wrong for which damages may be claimed. In general, if tort is
not the breach of contract then minor may be held liable by the court, for the torts.

a) When minor hired some instruments or things & then passed instruments to a friend who did not return the
instruments in this case minor was held liable by the court.

b) Minor took a horse on rent for riding & then gave house to his friend, who killed the horse, in this case
minor was held liable for torts.

Agreements by Person of unsound mind

As per section 12 of Indian Contract Act, 1872 a person is said to be of sound mind when at the time of making
contract he is capable of understanding the terms & conditions of contract & is able to form a judgement on
the contract, relating to his interest or rights.

A person may be of unsound mind when he is lunatic or under the influence of Alcohol or under the influence
of some drug or medicine.

A person who normally remains of sound mind, but sometimes acts as a person of unsound mind can not make
contracts, when he acts as a person of unsound mind.

A person who is normally of unsound mind but sometimes acts as a person of sound mind (lucid intervals) can
make contracts, when he acts as a person of sound mind.

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The agreements which are made by a person who is of unsound mind are void-ab-initio.

Example: Ram under influence of Alcohol pays Rs. 20,000 for a watch of Rs. 10. This agreement is void, if Ram
proves that he was under the influence of alcohol, at the time of buying the watch.

Agreement by Disqualified Persons

The agreement by the foreign ambassadors, sovereigns, diplomats, convicts, alien enemy, adjudged insolvents
are void.

FREE CONSENT

As per section 13 of Indian Contract Act, 1872, when two or more parties agree for same thing in same sense,
then they are said to be in free consent.

Same thing in same sense means the parties to contract are fully aware of nature of transaction (whether
the transaction is for buy or sell or lease or otherwise) or about the person with whom contract is made & of
the subject matter (the thing or right for which contract is made) of the contract. So if both the parties are
aware of these elements then we can say that have agreed for something in same sense.

Something in same sense is also referred as “Consensus-ad-idem”

For example: If Ram gave consent to sell while car but Shyam thought that Ram wanted to sell yellow car,
there is no consensus-ad-idem.

As per section 14, the consent is not freely given, when it is given on account of coercion (section 15) undue
influence (section 16) fraud (section 17) misrepresentation (section 18) mistake under section 20, 21 & 22.

Coercion – Section 15

It means committing or threating to commit any act prohibited by law (Indian Penal Code) or detaining or
threating to detain, any properly, which may cause a loss to a person, with the intention of taking consent of
the person for contract.

(kuch karna ya kuch karne ki dhamkik dena jo punishable hai ya kisi ki property cheen lena use majboor karne
ke liye contract main enter karne ke liye)

If the above definition is analysed we can say that the coercion may move from any party & may be used
against any party which means, it is not necessary that coercion must be done by party to contract or must be
done against party to contract.

So if consent of Ram has to be taken for selling the land to Mohan, coercion may be done by Suresh on behalf
of Mohan & Coercion may be done against Sunil who is a brother of Ram.

As per section 19 of Indian Contract Act, 1872, the aggrieved party in coercion may treat the contract as
voidable & cancel it, however the aggrieved party should also return the benefit that it has received from
such contract to the other party & any person to whom money has been paid or anything under coercion has
been delivered (generally the other party) must return it as per section 72.

If Ram says that if Sunil does not sell his iPhone 12 to Ram, Ram will commit suicide, & if Sunil Agrees, then
we can say that consent is taken on account of coercion as, suicide is illegal under Indian Penal Code, 1908.

Ram kept laptop of Sunil & says that laptop will be returned only when Sunil waives a debt of Rs. 1 lac to be
recovered from Ram, it is coercion as Ram has kept a laptop of Sunil.

Ram says to Shyam, if you don’t sell your Lonavala Bungalow to me for Rs. 250 then I shall kill your wife.
Shyam agrees. This is also a contract by coercion.

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Undue Influence – Section – 16

As per section 16 “When relations between the parties are such that one party is in the position to dominant
the will of the other party & the dominating party uses its position to gain unfair advantages on other” then it
is said that the dominating party has done undue influence.

A person can dominate the will of other, if a person has real or apparent (appears to be) authority over the
other or stands in fiduciary (position of trust) relationship with other or on account of some contract with a
person whose mental capacity is affected due to age, illness or physical or mental distress for example an old
illiterate person.

For example: A father asks his son to issue a bond (written promise) of Rs. 10 lac against Rs. 1 lac that father
had given to his son for education.

An old man was convinced by Chartered Accountant to pay Rs. 10 lac for filing income tax return, which is
normally filed for Rs. 800.

The creditor in a village granted loan @ 7% interest per month, in this case that creditor will have to prove
that there was no undue inference.

If any bank at the time of any financial crises specifies that it will grant loan at certain higher rate & the
other party accepts these terms, it was decided by the court that this transaction is in the ordinary course of
business & not on account of undue influence.

Features of undue Influence

a) There has to be a near relation between the parties for exercising undue
influence.

b) The relation between the parties must be in such manner that one party is
in the position to dominate the will of the other party.

For example: in the relation of Father & Son, doctor & patient, student &
teacher, spiritual gurus & their disciples, advocate & his client, creditor & debtor, husband & wife, lover &
beloved etc. person dominates the will of other person on account of real or apparent authority or on account
of fiduciary relationship.

c) The terms of the contract are unconscionable that means unreasonable or unfair, so normally, the court
doubts that a contract is created by undue influence if the contracts are entered between the persons who
stand in near relation & the terms of contract are unreasonable.

In the case of Kirpa Ram VS Sami-ud-din-khan a person was a drunkard & was 18 years old borrowed money
against 2% interest per month on compound basis, the court decided that the rate of interest on this case is
unreasonable & the contract is entered through exercise undue influence.

d) The object of the contract is to get an undue or unfair advantage.

If a teacher asks his student Ram to sell his phone of Rs. 90,000 to him (teacher) for Rs. 75,000, which was
true market value of phone on that date, the contract will be valid as teacher is not taking undue advantage
of his student.

e) If the contracts are challenged on the ground of undue influence in the court, then the dominating party in
the contract has to prove that no undue influence was used in the contract.

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As per section 19A of Indian Contract Act, 1872, the contract by undue influence is voidable at the option of
aggrieved party to the contract.

When the matter reaches the court (normally when the

dominating party does not accept cancellation of contract by
aggrieved party) the court can set aside (cancel) the contract &
may also ask the aggrieved party to return any benefit that it had
received under such contract.

For example: Dushyant Sir told Ram, that if you want to pass in
Law, you have to sell me you your BMW for Rs. 10,000, Ram
under pressure sells the BMW car at Rs. 10,000, when Ram
reaches home, his father asked him to cancel the contract, Ram
went to Dushyant Sir, but Dushyant Sir did not agree & matter reached to court, in this case the court can
cancel the contract & ask Dushyant Sir to return the car & ask Ram to return Rs. 10,000 Dushyant Sir.

Fraud – Section 17

When a person himself or when a person secretly helps

(connivance) other person, or when a person through his
agent, does the following acts (mentioned below) with the
intention to deceive (cheat) any other person & to obtain
the consent of the other person, in this case we can say
that contract has been entered by fraud.

The below mentioned acts are done:

a) The suggestion of fact (providing of information) which

is not true & the person who suggest such facts believes or
knows that fact is not true. (ap ko pata hai ki aap jhooth
bol rahe ho fir bhi aap jhoot bolte ho)

b) Active concedment of fact by the person who has knowledge of fact

(Janboojh kar Jankari Chupana)

c) Promise without intention of performing.

d) Any other act with intention to cheat.

e) Any act or omission which law declares to be fraudulent.

Whether Silence is fraud?

Is Mere Silence a Fraud?

In case a party does not disclose the truth because the party
believes that speaking truth will affect the intention of the
other party to enter in to contract (or buy the goods) in this

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case Doctrine of Caveat emptor will apply (buyer is himself responsible for his choice) & it will not amount to
fraud.

In the case of Word VS Hobbs, A person sold pigs on condition of “all faults basis” so when buyer bought the
pigs he was not informed that some of the pigs are ill. The matter reached the court & the court decided that
there is no fraud as the pigs were sold on all fault basis and the seller was not bound to inform about illness of
pigs.

Similarly a fact (information) which is known to both the parties, if not disclosed, does not amount to fraud.

For example: Latif knows that Dushyant Sir’s watch is not water proof still, he buys the watch & Dushyant Sir,
does not inform regarding, the watch is not water proof, in this case silence by Dushyant Sir is not fraud.

However in the following cases, mere silence will amount to fraud:

a) When it is the duty of the person to speak.

Normally when the circumstances of the case are such that one person must speak about terms & conditions
of the contract with the other person, so in this case if a person remains silent, the silence may amount to
fraud.

1) In the cases of contracts uberrimae fidie (contracts in utmost good faith) it becomes the duty of the person
to speak.

a) When there is fiduciary relationship between the parties. i.e., one party has trust & confidence on the
other party, it becomes duty of the party to disclose material fats relating to contract.

In the case of Ragier VS Campbell Stuart, the stock broker sold shares of the client without informing client,
it was decided that the client is, entitled to avoid the contract as the client has a trust on the broker so
broker must inform the client before selling his shares.

b) In case of insurance contract the insured (the person who takes insurance) is required to disclose all facts.

For example, if a person takes health insurance then he has to disclose all his health issues, to the insurer,
otherwise the insurer can avoid the contact.

c) In the case of Hazi Ahmed VS Abdul Gassi, it was decided that in the contract of marriage every fact must
be disclosed.

d) In the case of family settlements also all material facts must be disclosed.

For example, if a brother does not disclose that he has 5 lac Rs of family cash with him at the time of family
settlement, the other members of family can avoid the settlement.

e) The prospectus issued by the company must disclose full information relating to the company. If the
company does not state full facts, the allotees of shares can avoid the contract.
f) Contracts relating to sale of land.

b) If silence is equivalent to speech then also silence is fraud, for example if Ram says Shyam, if you don’t
deny I will consider that all the pigs are healthy and in this case, if Shyam remains silent, so it will amount
that he has told that all the pigs are healthy & if pigs are not healthy silence will become fraud.

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 However it shall be remembered that in the above
cases also, (fraudulent silence) if a party was in the
position to discover truth with ordinary diligence the
contract will not be voidable.

For example in the contract of health insurance if the

insurer was in the position to know that the insured
is suffering from TB and the insured does not inform
it to the insurer, and the insurer gives health
insurance now in this case the insurer can not avoid
the contract on the ground of silence as he was in the
position to know the truth.

Section – 19

Misrepresentation

The following acts are included in

misrepresentation:

a) A statement by a person who does not have

exact knowledge of the information, which is
not true, but believes the information to be
true.

b) A person whether himself or through other

person (agent) breaches his duty without
intention to deceive or cheat & also misleads
the other person & gains advantage on the
other person & also cause loss (prejudice) to other person.

c) Innocently, causes the other party to make a mistake with regard to subject matter of the contract.

Example: I sell a watch which is not waterproof, believing it to be a waterproof watch to Mohan, Mohan
bought the watch on basis of my statement. In this case I have done a misrepresentation.

Example: Shyam wants to buy a sport shoes, Ram seller believed that Bata shoes are sports shoes & sold it to
Shyam, later it was found that the Bata shoes were not sports shoes, in this case Ram had done
misrepresentation.

Coercion Undue Influence Fraud Misrepresentation

Involves threat or Mental pressure is Intention to cheat No intention to cheat
action punishable by applied
IPC.
No criminal action
Criminal action is No criminal action No criminal action
present. takes place
Voidable + damages
Voidable + damages Voidable + damages Voidable + damages can not be claimed
can be claimed can be claimed can be claimed

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In case of Misrepresentation the aggrieved party can cancel the contract but can not claim damages, as the
intention was not to cheat.

In case of misrepresentation also if the aggrieved party could discover the truth with ordinary diligence
(mamooli chanbeen), the aggrieved party will not be able to cancel the contract.

For example, if Ram is selling a factory and states that production is 500 tonnes per year and also gives all the
statement of accounts to the buyer, in this case the buyer after checking the accounts buys the factory now
afterwards the buyer can not avoid the contract on the ground that misrepresentation was done with him as
the buyer had the opportunity to discover the truth with ordinary diligence.

Section 19: Legal Effect of the Agreements without free consent

In the cases of fraud, misrepresentation, undue influence coercion the agreements become contract but such
contracts are voidable at the option of aggrieved party.

In cases of fraud or misrepresentation, the aggrieved party may insist (request) that it should be kept in the
same position, in which he would have been if the representation would have been true.

(iska matlab aggrieved party yah kah sakti hai ki muje jaisa promise kiya gaya tha vaisa he chahiye)

Example: By doing fraud Ramesh sold ill pigs to Shyam, now Shyam can cancel the contract or ask Ramesh to
sell healthy pigs to Shyam (make the representation true).

If a party commits fraud or misrepresentation but if the other party is not misled by such misrepresentation,
in this case the aggrieved party can not cancel the contract

If Ram hides the defect in a Shirt & sells the Shirt to Suresh, Suresh at the time of buying shirt does not even
inspect the shirt in this case Suresh can not cancel the contract as, Ram’s act did not misled Suresh.

If a person sells a watch which is not waterproof to Ram & also says Ram to have the watch on trial basis for 3
days after the trial Ram purchases the watch & 5 days after purchase, Ram wants to cancel the contract as
the watch is not water proof. In this case Ram will not be allowed to cancel the contact as he had the
opportunity to disclose truth with ordinary diligence.

Mistake

Mistake is an innocent or erroneous (galti) belief, due to which a

party does not understand the other party or the terms of contract
and gives consent.

These are two types of mistakes

a) Mistake of fact: When the parties to contract misunderstand each

other & are at cross purposes (the intention of booth the parties is
different), there is a mistake of fact. Hence both the parties do a mistake with regard to a fact which is
essential element of the contract.

Mistake of fact is divided in unilateral mistake & bilateral mistake.

In unilateral mistake there is a mistake of only one party to the contract & under unilateral mistake the
contract is generally valid.

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In bilateral mistake both the parties make a mistake & the agreement is void ab initio, Section 20 of Indian
Contract Act expressly declares the agreements void ab initio if they are entered under bilateral mistake of
fact.

Example: Ram wanted to buy iPhone 13, Ram under a mistake, bought iPhone 12 and Shyam under a mistake
sold iPhone 12, both the parties believed iPhone 12 as iPhone is, this agreement is void.

Basically section 20 applies when both the parties to the agreement makes a mistake relating to a fact which
is essential element of the agreement.

b) Mistake of law: Sometimes we are not aware of the law & we do mistakes.

There are two mistakes of law:

Mistake of Indian Law: For example Ram agrees to sing at

Shyam’s theatre for 3 months, for Rs. 10,000, when Ram
made a contract he was not aware that if he does not
perform the contract he can be sued in the court on
account of Contract Act, So if Ram does not perform the
contract, still the contract will be valid & Ram can not say
that he was not aware of Contract Act, 1872 and he can
also be sued.

If mistake of law happened due to convincing of one party

by the other party then contract may be avoided.

(matlab ek party ne jabarjasti doosri party ko convince kiya ki contract main enter kar law kuch nai karega to
is case main doosri party conract avoid kar sakti hai agar use law pata nai tha)

It must be remembered that, ignorance of law is no excuse.

c) Mistake of foreign law: As no party is aware of foreign laws, contracts on account of foreign laws may be
avoided & it is treated as mistake of fact (bilateral).

Legality of object & consideration

Section 23 of Indian Contract Act, 1872 specifies which considerations & objects which are lawful & which are
not.

Basically lawful consideration means each party should receive something in return, something which is
legally allowed, & the object of contract will be lawful only when the object is allowed by law.

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If consideration or object of an agreement is prohibited by law or the nature of agreement is such that it may
defeat the provisions of law or is fraudulent in nature or if the agreement gives injury to a person or to
property of any person or if the court considers the agreement to be immoral or the agreement is opposed to
public policy, in this case we can say that agreement is with unlawful consideration & unlawful object.

Now let’s discuss section 23 in detail:

a) When the consideration or object is prohibited (forbidden) by law: this includes the consideration which
are in the form of an act which is declared illegal by law or regulations (means rules made by the body to
whom power of making rule is given by law like SEBI, RBI, CCI, etc.) or by anybody created by law.

Example: If a father makes a contract of marriage of 17 year old boy & takes dowry for same in this case
object & consideration both are forbidden by law as minimum age of marriage of boy is 21 years.

Example: A Ltd has been assigned contract to build national highway for Rs. 200 crores, one of the conditions
of license/contract is that A Ltd, can not transfer the project to any third party, however this restriction is
nowhere found in National Highways Act, 1956, so if A Ltd makes a contract to transfer to the Highway
project, such contract will be valid as, it is not prohibited by National Highways Act.

b) When the nature of agreement defeats the provisions of law: defecting the provisions of law means, the
agreements that can be against the intention of law makers or any particular law. It might happen that a
particular agreement is valid as per contract act, but it affects the other laws.

For example: if an insolvent person agrees to sell his property during the insolvency resolution process, this
agreement affects the Insolvency law.

Giving son or daughter in adoption against money consideration affects hidden laws.

Example: If a person takes a loan from Bank & says that provision of Limitation Act will not apply to such
loan, so this agreement will defect the provision of Limitation Act, 1963.

c) Agreements that are made to promote fraud are void: So basically these agreements are created to
encourage people to commit fraud for example if A says to B, to do a fraud with C, in this case the agreement
between A and B is to promote fraud and void ab initio, now if B does a fraud with C as per section 17 of
Indian Contract Act, the such contract can be a voidable contract.

d) When consideration defeats any rule which exists in India: For example, properties can not be
transferred to defraud the creditors as per the rules relating to insolvency.

e) When consideration involves injury to person or property of other person: injury means a criminal or
wrongful harm. So if a party offers to give something in return, which causes injury to person or property of a
person then object or consideration of contract may be unlawful. (property includes movable, immovable &
intellectual property also like patents, trademarks)

Example: Ram says to Shyam, if you print & sell Dushyant Sir’s CA foundation law book (without Dushyant Sir’s
permission) this agreement will be void as it will gives injury to Dushyant Sir)

Example: Ramesh took loan of Rs. 10,000 from Raj, in order to repay the loan Ramesh agrees to work for 18
hours a day as a labour for 1 Year. This agreement is void as it results in slavery & also gives injury to Ramesh.

f) When consideration is immoral: Immoral means a behaviour which is considered against good character, so
if something given in return is against good behaviour or against good character it may amount immoral.

So if Rohan says to Rohini that if Rohini takes divorce from her husband & marries Rohan, he will pay Rohini
Rs. 5 lac. This is void agreement.

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g) When consideration is opposed to public policy: Basically public policy means “ensuring benefits to
public” or it may also mean ensuring fundamental rights to the citizens, so if consideration is against public
policy the agreements will be considered as void. As we can not allow people to go against public policy by
entering in to contracts.

Some of the agreements which are declared by court against public policy in different cases laws are:

a) Trading with enemy: Basically when a person shows loyalty (allegiance) to the Government of any Country
which has declared war with India or is in situation like war with India, such person becomes enemy & any
agreement with such person without the permission of government will be a void agreement.

For example on account of public policy, when there was war like situation between India & China, the
government, banned many Chinese apps. The contracts that already took place before arise of war like
situation, may be suspended or dissolved.

KEYWORD : T, T - Trading

b) Stifling Prosecution: The agreements that stops a party from approaching the court or if any case has
already stated in court then agreements to discontinue such case are void (this applies in criminal offences)
as felony (crime) can not be traded.

However the code of criminal procedure, 1973 prescribes the list of compoundable offences (offence in which
compromise can be made outside the court) in respect of such offences as those offences are not opposed to
public policy. For example Ram and Mohan have some defamation case pending in the Court in this case they
may settle their dispute outside the Court as this crime is not against public.

KEYWORD : S - Stifling

3) Agreements of Maintenance & champerty:

Through the maintenance agreement a person promises the other person to support him in a suit in which he
has no interest (jis suit main aap ki koi dilchaspi nai hai waha aap help kar rahe hai kisi ki case file karne
main).

For example: I ask you to file a case against Suresh & offer you Rs. 10,000 for the same, now in this case I
don’t have any interest, but if you annoy Suresh I will feel happy & the case between you & Suresh could have
been mutually settled. So this agreement is maintenance agreement.

Through Champerty agreement one party promises to help the other party in a suit on a condition that if the
other party wins the case it will share the benefit with the first party.

So if I ask a person to file a case against a farmer, in which the person can receive 10 acres of land from the
farmer & if the person wins the case, he will give me 5 acres of land.

This is champerty agreement & it is like gambling or betting, that’s the reason these agreements are against
public policy.

However if a party genuinely wants to help other person in a suit in a manner it is not unreasonable or
unjustified to the other party & it is not made with malicious intention (wrong) or with intention of annoying
or harassing the other party, in these cases the agreements of champerty & maintenance may be valid.

KEYWORD : M – Maintenance

4) Trafficking relating to public offices & titles: Public offices basically means the government jobs, so if any
person trades in these jobs, the agreements will be invalid, for example, the chairperson of UPSC promises

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Dushyant Sir, that he will be made IAS officer if he pays Rs. 1 crore to the chairperson UPSC or if ram asks
Mohan who is police inspector to retire from his job for Rs. 1 crore. So that son of Ram may be appointed as
inspector of police.

Public titles means the titles or status given by the government such as Padma Bhushan, Dronacharya Award,
etc. so if any person assures that these awards can be given against money, then such agreements will be
invalid agreements.

These agreements stop most deserving person from getting the job or titles so these agreements are against
public policy.

KEYWORD : P Public offices

5) The agreements that create monopoly & affect competition are also against public policy & void
(generally these agreements are regulated by competition act) as these agreement affect public policy and
free competition.

If Ram & Shyam were only the manufacturer of Ramdesiever in India & they both made an agreement that
they will be limiting the production of Remedisiver during covid period such agreement will be void.

KEYWORD : M, Monopoly

6) Marriage Brokerage Agreements: Basically people decide to get married when their heart meets or when
they like each other but if some person gives surety to arrange a good groom or bride against money, then
such agreements are invalid.

For example: Raju Assures Shyam that if Shyam pays Rs. 2 lacs to Raju, Raju will convince Disha Patni to
marry Shyam.

The matrimonial website just provides information and not guarantee of arranging bride or groom.

KEYWORD : M

7) Agreement that interfere with the course of Justice, the agreements that impact legal proceedings in
the court are also void-ab-intio, as these agreements affect the party who has a right to get Justice.

For example: If Shyam asks a judge that if judge passes a decision in his favour he will be awarded Rs. 10 Cr.

Example: If Mahesh promises to pay Rs. 1 lac to witness, if witness does not appear in the court on the day of
hearing.

KEYWORD : I, Interference

8) Interest against obligation: If any agreement creates a duty on a person to work against the interest
(benefit) of his employer or his duties, then such agreements will be void, as these agreements are against
public policy.

Example: If the dealer (agent) of Hero Honda agrees to take commission from TVS for selling TVS Bikes in the
showroom of Hero Honda, without the consent of Hero Honda (principal) this agreement is invalid as the
agent is acting against principal.

Example: A teacher at X Academy agrees to transfer 500 students to Y Academy, f Y Academy pays the
teacher Rs. 1 crore privately.

KEYWORD : O, Obligation

Meomory Technique:

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TO Sach Maim India Main “C” Pade Milenge

T: Trading with Enemy

O: Interest Agaist Obligation

S: Stifling Prosecution

M: Marriage

I: Interference with Justice

M: Monopoly

C: Champerty

P: Public Office

9) Agreements which involve unlawful consideration in part: if the nature of agreement is such that it
involves one consideration for 2 or more acts & out of 2 or more acts one act is lawful & other act is unlawful
& both the acts cannot be separated as there is single consideration for both the acts in this case entire
agreement is invalid.

For example: If Ramesh agrees to pay Rs. 10,000 to Suresh for selling books in day & selling brown sugar at
night, the entire agreement is void-ab-intio as consideration for lawful part & unlawful part can not be
separated.

However if nature of agreement is such that consideration for lawful & unlawful part can be separated, in this
case lawful part will be valid & unlawful part will be void.

Example: Ramesh agrees to pay Suresh Rs. 5000 for selling books (educational) & Rs. 5000 for selling brown
sugar at night now in this case the part relating to selling of book involves lawful consideration & can be
separated from the other part of selling brown sugar so the first part will be valid.

This agreement that are expressly declared void by law

a) Agreements made by Incompetent Parties – section 11

b) Agreements under bilateral mistake of fact – section 20

c) Agreements the consideration or object of which is unlawful - section 23

d) Agreement in restraint of marriage (section 26)

e) Agreements in restraint of legal proceedings (section 28)

f) Agreements in restraint of trade (section 27)

g) Agreement consideration of which is unlawful in part (section 24)

h) Agreements made without consideration (section 23)

i) Agreements meaning of which is uncertain (section 29)

j) Wagering Agreements (section 30)

l) Agreements to be impossible Acts (section 56)

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1) Agreements in restraint of marriage: As per the constitution of India every person has a freedom of life &
personal liberty, so every person who has at attained the age of marriage (21 years for boys and 18 years for
girls) has a right to get married & it can be said as a fundamental right of life & liberty, so if any agreement
stops a person from getting married such agreements are void.

Example: Not marrying at all, marrying to specific girl only, marrying after a specific period of time, marrying
on satisfaction of some conditions, these agreements are void-ab-initio.

2) Agreements in restraint of trade: As per article 19(1)(g) of constitution of India every person has a right
to carry on business or trade or profession of his choice, so if any person is stopped from doing any business or
profession, by an agreement then such agreement is also void-ab-initio.

However this rule is subject to the following exceptions, means in the below mentioned cases the agreements
will restrict persons from doing business or profession but still these agreements will be valid.

(1) If the buyer of goodwill restricts the seller of Goodwill on reasonable grounds from doing any competitive
or similar business, then such restriction may be valid.

For example: Ramesh has bought Parle-G Brand for Rs. 1000 crore, now Ramesh can restrict the sellers of
Parle-G Brand, to use Parle-G brand or to carry the business of biscuits on reasonable terms.

(2) In the partnership firm the retiring partners can be restricted from carrying on competitive business with
the firm for reasonable period as per section 36 of partnership Act.

(3) By partnership agreement the partners of the firm may be restricted from carrying competitive business or
any other business, during the continuance of partnership – under section 11.

(4) The employee may be restricted to do any other business or activity during continuance of his
employment.

(5) The sellers may form an association & decide the manner of trade. For example the Ricksha owners can
form an association and may state that they will not accept any passenger below Rs 30 Per km fair.

(6) By making agreements the buyer & seller can fix the term of their trade.

For example: The seller can agree that he will sell his entire production to a particular buyer & not to anyone
else.

(3) Agreement in restraint of Legal Proceedings: As per the constitution of India every person has a right to
approach the court in order to get a justice, so if any agreement restricts any party from approching the
court or from approaching the court for a reasonable period of time, such agreements will be void-ab-initio.

For example: When Shyam takes admission in coaching class the coaching class adds a condition that, Shyam
can not approach the court against coaching class for a period of 5 year from the date of agreement
(admission), this condition is void-ab-initio.

However, the parties by making an agreement can decide that dispute (civil nature) between them will be
decided by arbitration (out of court settlement as per Arbitration & Conciliation Act, 1996) & the decision of
arbitrator (the person who passes decision under arbitrattion) will be final & binding (obligatiory) between
the parties, such agreement is valid.

(4) The agreement meaning of which is uncertain: If the meaning of agreement is uncertain & causes
confusion, then suuch agreement is invalid.

(5) Wagering Agreement (Section 30):

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An agreement through which a party promises to pay money or money’s worth on happening or on non
happening of future uncertain event, such agreements are wagering agreements & are void-ab-initio.

For example: A promises to pay Rs 10000, to B if in 2024 Modi again becomes prime minister.

Characteristics of wagering Agreements

a) Promise to pay money or money’s worth.

b) Performance of Promise is dependent upon happening or non happening of future unceratin event.

c) there are two parties and each party has a chance to win or loose.

d) There is an intention to “bet”

e) No party has an interest in the event apart from wining or loosing.

Transactions which are similar to wagering agreement:

Lottery Transactions: Lottery is a game of luck & not skill & the main motive of lottery transaction is
gambeling & it amounts to wager, even if lottery is permited by the government it will be a wager but the
only difference is that the person who purchases the lottery will not be punished under IPC, 1860. Lotteries
are illegal & even the colletral transaction to lottery are illegal. (As per Contract Act wagering agreements
are void, but as per IPC, 1860, lotteries are illegal)

For example: Ram gives Rs. 10,000 to Shyam to play lottery & Shyam looses this amount in lottery, now the
main transaction of lottery, is illegal as per IPC, 1860 but the collatral transaction of borrowing money from
Ram is also iillegal.

Crossword puzzels & competition: The crossword puzzels in which price depends upon communication of
participant’s solution & matching the solution with previously prepared solution available with editor of
newspaper is lottery & a wagering transaction.

In the case of State of Bombay VS R.M.D Chamarbangwala a crossword puzzle was given in magazine & it was
stated that if the solution of crossword puzzle matched with the solution kept with the editor, the court
decided that it is a wager.

(baccho confuse mat hona, aapko bina dimak lagaye sirf kuch bharkar bhejna hai, aur agar aap ne jo bheja hai
luck ke chalte agar wo match hoga editor ke solution to aapko inam milega, yeh wager hai)

However if the puzzle game involves mind & skills, then such games will not be wager as per Prize
Competition Act, 1955.

Speculative Transaction

An agreement where the parties agree & settle difference between the contrtact price & market price of
certain goods or share on specified day is gambeling & void.

However these agreements relating to speculation shares is done in the stock exchange as per Securities
Contract Regulation Act, 1956 are vallid.

Horse Race Transactions: In case of Horse race transaction where price payable to bet winner is less than 500
is wagering agreement.

In the agreememnts where Rs. 500 or above is to be payable in form of plate, prize or cash award such
agreements are valid.

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 A & B agree that if “chetak” horse wins A will pay Rs. 10,000 to B, this agreement is not wager & as the
amount is more than Rs. 499.

The transactions that are similar with wagering agreement but are not void:

Chit funds: Basically in chit fund people deposit their money towards a fund & then chit is taken out & the
person whose name is gven in chit, is paid certain sum of money, chit funs are not wager.

Commercial or share market tranaction: The transactions in which the delivry of goods or shares is intended
to be given or taken does not amoount to wager.

Games of skill & athletic competition: Games of skill where mind, skill & knowledge, intelligence, are
applied & the price money does not exceed Rs. 1000, is not wager under Price Competition Act, 1955.

Contract of Insurance:

Contract of Insurance is contingent contract & valid.

Contract of Insurance Wagering Agreement

1. It protects a person from loss. The person 1. Intention is win or loss.
who provides insurance is called insurer and 2. There is no actual consideration, it’s just
the one who takes inurance is called insured. gambeling.
2. There is consideration, one party pays 3. No interest in the contract
premium & the other party provides 4. Fixed amount has to be paid, depending
protection. upon the amount.
3. Insurable interest in contract of the 5. It is void as initio
insured. 6. Not beneficial for society
4. Except life insurance, the contract of 7. The amount of betting is fixed as per the
indemnity protects a person against loss. desire of parties.
5. it is valid.
6. Beneficial to society.
7. Calculation of premium on specific acturial
techniques.
Obligation of the parties to Contract – Section 37

It is the duty of the parties to contract to:

a) Perform the contract (their promises) or,

b) Make an offer of performance of the promise.

However the parties will not be required to perform, if their performance is excused or prmoise is not
required to be performed under the provisions of contract Act or under the provisions of some other laws.

If the promisor dies before the performance of the Contract then legal representative of the promisor is under
an obligation to perform, unless something else was agreed in the contract. However this rule does not apply
when the contracts are dependent upon personal skill & personal consideration of the parties.

For example: If Ram had promised to deliver 5 Kg of potatos to Shyam on 5.8.2021 & in this case if Ram died
on 3.8.2021, then legal representative of Ram is bound to deliver the potatos & recover the money from
Shyam on 5.8.2021, however if Ram would have promised to paint a picture for Shyam on 5.8.2021 & if Ram
would have died before 5.8.2021 then the legal representative will not be liable as the contract was
dependent upon the personal skill.

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Parties get discharge (free from obligation) from the contract, when they acually perform the contract.

The general rule of performance of the contract is that the party must exactly perform what it has promised
to perform. The party who wants to enforce the promise has to either perform its part or offer to perform its
part & only after that such party can ask the other party to perform its (other party’s) part

(Kul milakar, aap jab apna part perform karenge ya aap apni performance offer karte hai tabhi ap doosri
party ko perform karne ke liye kah sakte hai)

So Basically under section 37, these are two modes of performance of the contract.

a) Actual performance: The party actually performs what it had promised.

Example: I had promised to finish syllabus of law on 15th october 2021, for Rs. 10,000 & I finish syllabus on
15th october, 2021.

b) Offer of Performance: Sometimes it may happen that the promisor is ready to perform & offers
performance but the promisee refuses to accept the performance.

Example: I had promised to finish law syllabus on 15th october, 2021, but whenever I come to teach the
students did not let me teach & do not let me come inside the class room, in this case if I could not finish the
syllabus on 15th october, 2021, I will get excuse.

Effect of refusal to accept offer of performance

If the promisor offers to perform his obligation to the promisee & such offer of performance was:

a) Unconditional (without any additional conditions except those agreed in the contract)

b) The offer of performance was made at proper time & proper place (as agreed between the parties or at
same reasonable time & place if nothing was agreed) + a reasonable opportunity was given to the other party
(promisee) to ascertain that the promisor is willing to perform & is performing as per the terms agreed
between the promisor & the promisee.

c) If the promise relates to delivery of something, then the promisee must be given a reasonable oportunity to
check that the goods delivered matches with the goods promised.

If all the above conditions are satisfied & the contract is not dependent on personal skill, and the promisee
refuses to accept the offer of performance in this case, the promisor will be free from the contract, but will
not loose his rights under the contract.

For example: Ram had agreed to deliver 500 Kgs of Rice to Shyam on 5th Jan, 2021 at 5 PM & if on that date &
time Ram delivers 500 Kgs of Rice & also provides suitable time to Shyam to check the goods but Shyam
refuses to accept the delivery of goods in this case, Ram had made a valid offer of performance.

Section 39: Effect of Refusal of one party to perform its part wholly:

If any party to the contract has refused to perform it’s part or has totally disabled itself from performing its
part (promise) the other party (promisee) may put an end to the contract, however if the promisee through
his words or conduct has ratified or has extended the time of performance, then the promisee will not be able
to put an end to the contract.

It also suggests that if promisee is ready to accept the delayed performance then he will not be able to cancel
the contract but he will be able to claim damanges for the delay in performance.

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Example: If Dushyant Sir promised to finish law class on 15th october, 2021 but he was absent willfully for
entire month of september & 90% Syllabus was remaining in this case the students can put an end to the
consent.

Section 40, 4 & 42 – By whom the contract should be performed.

Section 40: The person by whom promise is to be performed.

If the terms of the contract suggests that the contract has to be personally performed by the promisor then
the contract must be personally performed by the promisor, & in other cases the contract may either be
perfomed by the promisor or the promisor may appoint some competant person to perform the contract, & if
promisor dies then his representative may perform or may appoint some competent person to perform the
contract.

Lets discuss in detail:

The contract can be performed by:

a) The promisor himself: If the terms of the contract suggest that the contract has to be personally informed
by the promisor then in this case the contract has to be performed by the promisor only. This happens when
the contract is dependednt upon the personal skill or personal consideration of the parties.

Example: Virat Kohali promises to do an advertisement for Zomato for Rs. 2 crores. This contract has to be
performed by Virat Kohli only.

b) Agent: If the personal consideration or personal skill is not the essential requirement of the contract, then
the contract can be performed by competant agent to be appointed by promisor his representative.

Example: Ramesh promises to deliver 5 Kgs of Rice to Sureesh, now this contract of delivering 5 Kgs of Rice
can be performed by Mahesh who is an agent of Ramesh.

c) Legal Representative: If the contracts are dependent upon personal skill of the promisor, & the promisor
dies before the performance then the contract comes to an end. But if the contracts are not dependent upon
personal skill of the parties then the legal representable of the promisor is bound to perform the contract
(unless something else was not agreed in contract) but it has to be remembered that the liability of legal
representative is limited to the extent of assets inherited by him.

Example: if Ram had promised to do an advertisement for Shyam on 25.4.2021 & if before advertisement Ram
dies the contract will come to an end & will become a void contract & neither legal representative of Ram nor
Shyam can enforce the contract & if Ram had taken some advance for advertisement then legal
representative of Ram must return it.

Example: If Ram had promised to deliver 5 mangos to Shyam on 25.4.2021 & if before delievry of mangoes,
Ram dies and legal representative of Ram has inherited only 3 mangoes from Ram, then the liability of legal
representative will be limited to 3 mangoes only.

d) Performance by Third Parties: section 41

If the contract (promise) is performed by stranger & if such performance is accepted by the promisee then
such promisor will get a discharge from performance even when the promisor was neighter aware of
performanc, nor ratified the performance by the stranger (third party)

Example: Jay takes admission in Expert classes for Rs. 5000 but after admission he states that he won’t be
able to pay Rs. 45000 & paid only Rs. 5000, but after 2 days, Jaya who was very very close friend of Jay paid
Rs. 45000 to expert clases & expert classes accepted the fees, Jay was not aware of it, but still Jay will get a
valid discharge.

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 e) Performance by Joint Promisors: section 42

When more than one person’s promises to perform the contract they are referred as joint promisors & in case
of Joint promisors all the joint promisors must together perform the contract (if something else was not
agreed in the contract) if any of the joint promisor dies then legal representative of such joint promisor
must perform with the surviving joint promisros & if all the joint promisor dies then legal representative of all
joint promisors must perform the contract.

Example: If Ram Shyam & Mohan had promised to pay Rs. 10,000 to Suresh then all must jontly pay the money
to Suresh & if any one of them dies then the legal representative of deceased joint promisor will pay along
with surviving joint promisors.

If any of the joint promisor performs the entire promise then he can recover the contribution from the other
joint promisor.

Succession & Assignment

Succession Assignment
Upon death of a party the assets & liabilities When a party transfers it’s rights or benefits
of the party are transferred to the legal heir, to some other party with consideration or as a
however the liability of legal heir can not gift, it is called as assignment. The person
exceed the assets inherited by him, this is who transfers the benefit is called assignor &
succession & mostly regulated by Hindu the person to whom benefits are transferred
succession Act. is called as assignee.

Normally the creditor assigns his right of

collecting debt to some third party. However
burden or liability can not be assigned.

Benefit & liabilities together can not be

assigned for example a person can not assign
shares on which call money is pending or
when any right is attached wih personal
consideration, such right can also not be
assigned, for example virat kohli has a right to
recover 1Cr Rs. From HDFC Bank, after doing
an advertisment for HFC Bank, This contract
can not be assigned by Virat Kohli.

Liability of Joint Promisor

When 2 or more persons have made a joint promise then all the joint promisors must perform jointly (unless
something else was not agreed in the contract) & if any joint promisor dies then the legal representatitive of
decreased joint promisor will perform with surviving joint promisor & if all joint promisor dies then legal
representative of all the joint promisors will perform the contract.

As per section 43, if Joint promisors out of their own will do not perform the contract then the promisee may
compel any one or more of joint promisors to perform the contract wholly (unless something else or contrary
was agreed in contract)

If any one of the joint promisors has performed whole of the contract then he may compel the other joint
promisors to give their contributions. (unless something else or contrary was agreed in contract)

If any joint promisor commits default then other joint promisors will bear (suffer) the default in equal share.

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Example: A.B,C promises to pay D Rs. 9 lacs, C makes a defaults, A pays the entire amount of Rs. 9 lacs, Now
A can recover Rs. 4.5 lacs from B.

Example: A,B,C jointly promised to pay Rs. 6000 to D, A has become insolvent but B has paid the whole
amount & after selling the assets of A, Rs. 1000 is recovered now in this case B can recover 2000 from C & in
this case Rs. 1000 default has been done by A, now this default will be born equally by B & C (rs 500 each).
However if there was an agreement between B & C that all the losses on account of default will be borne by
B, then in this case B will be able to recover only Rs. 2000 from C.

As per section 44 if the promisee releases one of the joint promisors than the other joint promisors will be
liable towards the promisee & in this case such released joint promisor will be liable towards the other joint
promisors but not towards the promisee as promisee has released the joint promisor.

Example: A,B & C promised to pay 3000 to D, D released A, So in this case B & C will be liable to pay Rs. 3000
to D, & B & C can recover the contribution from ‘A’.

Explanation to section 43

The Surety can recover from the principal debtor if principal debtors money (debt) has been paid by the
surety. However if principal debtor pays money (debt) himself to the creditor the principal debtor can not
claim anything from the surety (Normally this principal applies in case of contracts of Guarantee)

Rights of Joint Promisees

Section 45 deals with Devolution (exercise)of Joint Rights:

If a promisor makes promise with 2 or more persons then such persons (promisees) can claim the performance
jointly & if any of the joint promisees dies, the legal representatitive of deceased joint promisee with
surviving joint promisees can claim the performance.

Example: Ram promised to pay Rs. 10,000 to Mohan & Shyam, on 25.12.2021 so on 25.12.2021, Mohan &
Shyam can jointly recover money from Ram, if Mohan dies before 25.12.2021 then legal representative of
Mohan with Shyam can recover money from Ram.

Time & Place of performancce of the Promise

Section 46 to 50 of Indian Contract Act deals with the concept of time & place of performance of the
contract:

Let’s Discuss

a) In case where the promisor has to perform his promise without the applicataon (request) of the promisee to
perform & time for performance is also not fixed, in this case, the promisor has to perform his promise
without aplplication of the promisee & the promise has to be performed within reasonable time & reasonable
time depends upon facts & circumstances of each case.

Example: Ram agreed to deliver 5Kg ooof Rice to Shyam for Rs. 50, in this case Ram has to deliver the rice
even when Shyam does not demand & rice should be delivered within reasonable time.

b) If the contract specifies that promise has to be performed on a specific day (time of performance is
specified) without the application (request) of the promisee in this case, it is the duty of the promisor to
perform the contract on such specific day during the usual or reasonable hours of business at a place where
the contract should have been performed.

For example: Ram agreed to delivers 5Kg of Rice to Shyam on 5.1.2021, so in this case Ram should deliver
5Kgs of Rice on 5.1.2021 even if Shyam does not request to Ram for delivery of rice & delievery must be made
during business hours at agreed place.

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c) If it was agreed in the contract, that contract will be performed on a certain day, however the promisor
has specified in the contract that he will not perform unless the promisee applies for performance, so in this
case it is the duty of the promisee to apply for the performance at the proper place & within the usual hours
of business.

Example: Ram agreed to deliver 5Kgs of Rice on 25th July but Ram also said that he will deliver when Shyam
gives a call to Ram & specifies proper place of delivery.

d) In case it is agreed that the promise will be performed without the application of the promisee & no place
has also been fixed for performance of the promise, so in this case it is the duty of the promisor to ask the
promisee for reasonable place of performance & the promisor has to perform at such place.

e) If the promisee specifies any particular mode of performance and the time of performance, then it is the
duty of the promisor to perform in suuch particular manner & in such time.

Performance of Reciprocal Promise

Section 51 to 58 of Indian Contract Act deals with performance of reciprocal promises.

When a person makes promise to the other person & in consideration of such promise the other person also
makes a promise, such promise results in reciprocal promise.

Ruules regarding reciprocal promises

a) If Reciprcal promises are made, than the promisor is not requred to perform till the time the
reciprocal promise is performed. It means the performance of one party is dependent upon the performance
of the other party & both the parties have to perform simultaneously.

For example: Ram promises to deliver 5Kgs of rice only when Shyam pays Rs. 10,000, so now, unless Shyam is
ready to pay Rs. 10,000, Ram is not bound to perform.

If Ram is ready to deliver rice but Shyam does not want to pay Rs. 10,000, Ram can put on end to contract.

Example: It can also be seen in the cases of cash on delievery contracts that when we pay cash then only the
delivery boys gives the parcel.

b) If both the parties have fixed the order of performance then the promises must be performed in that
order & if no order of performance is fixed then the contract should be performed as per the nature of
transaction.

For example: If it was agreed that first coaching class will finish the syllabus then student will pay the fees
then first coaching class will have to finish the syllabus & then student will pay fees.

If A & B made a cotract in which A agreed to Build a house for B for Rs. 10 lacs & if in this contract odrer of
perforance was not fixed then as per the usual practice first A shoul build the house & then only he can
demand the payment.

c) If there was reciprocal promises between the parties & one of the parties prevents the other party from
performance, then in this case the contract will become voidable at the option of the party who was
prevented, & such party (who was prvented) can also claim compesation from one other party if it suffered
any loss, if it cancels the contract.

Example: Ram promised to pay Dushyant Sir Rs. 10,000, on completion of syllabus of law, but when Dushyant
Sir was about to finish syllabus, Ram started bunking the classes, due to which dushyant sir was prevented
from finishing the syllabus in this case Dushyant sir has a choice to treat the contract as voidable & dushyant
sir can claim compensation of all the loss that be suffered due to non performance if Dushyantt Sir cancels
the contract.

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d) In case of reciprocal promises, if it was agreed between the parties that upon the performance of one
party the other party will be liable to perform & in this case if the first party made a default in perfromance
then it can not claim performance from the other party. The other party can claim compensation from the
first party (defaulting party) on account of loss that it suffered due to non performance.

Example: If Dushyant Sir said that he will provide sugar, wheat & bread to madhuri & madhuri will prepare
pancakes for Dushyant Sir & Dushyant Sir will pay Rs. 10,000 to madhuri for preparation of pancakes, Now
Madhuri comes to prepare pancakes but Dushyant Sir is not ready with materials in this case Dushyant Sir, can
not ask madhuri to prepare pancakes & madhuri can claim compensation from Dushyant Sir.

e) Effect of failure to perform when time for performance is fixed in the contract & time is essential
condition of the contract:

In case, the parties have agreed that time for performance is the essential condition of the contract & one
party had promised to perform the contract within a particular time & if such party fails to perform the
contract within such fixed time then the whole contract or the part of the contract which has not been
performed becomes voidable at the option of other party (promisee).

Example: Dushyant Sir promised to finish law syllabus on 15th October, 2021, but on 15th october only 50%
syllabus was finished, in this case the student can cancel 50% of the contract (contract is voidable to the
extent of 50% as 50% syllabus is remaining) if the time was essentiial element of the contract.

f) If the time was not the essential element of the contract, then the contract does not become voidable at
the option of other party, if the contract is not performed within specific time, however the other party can
claim compensation for loss suffered by it.

Example: Dushyant Sir could not finish syllabus on 15th October, 2021, time was not essential element of
contract, student can claim compensatition but can not cancel the contract.

In case the contract was voidable by promisee as the other party (promisor) did not perform the contract on
time (time was essential element of the contract), but the promisor did not perform the contract on time, but
the promisee did not cancel the contract rather extended the time for performance of the contract, now in
this case if the promisor performs the contract within extended time, the promisee can not claim any
compensation unless the promisee at the time of extending time had specified that he will claim
compensation.

For example: Dushyant Sir could not perform the contract on 15th October so student instead of cancelling the
contract (time was essential condition) extended the time by one month & Dushyant Sir completed the
syllabus in extended period then student will not be able to claim any compensation.

g) Agreements to do impossible acts.

As per section 56 of Indian contract act, 1872 “an agreement to do impossible act is void- ab-initio.

The impossibilities are of 2 types:

(a) Impossibility existing at the date of contract: It means when the agreement was entered both the
partners knew that agreement was impossible to perform, such agreement is void-ab-initio.

For example: Ram pays ₹500 to Shyam to walk on water, Ram and Shyam both knows that it is impossible so
the agreement is void-ab-initio. This is further dividend in:

(i) Impossibility known to both the parties: same example as above.

(ii) Impossibility unknown to both the parties: Both the parties were not aware that, it is impossible to
perform the contract. This results in void agreement.

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For example, Ramesh agreed to sell a horse for ₹10,000, at the time of selling the horse Ramesh & Suresh
were not aware that the horse is already dead, so this will be void agreement, it can also be treated as
bilateral mistake of fact.

(iii) Impossibility known only to one party of the contract: In this case only one party knows about the
impossibility & the other party does not know about the impossibility, the agreement will be void-
ab-initio but if the other party suffers any loss then the party who knew about the impossibility or
should have known about the impossibility by applying ordinary diligence, will be liable to pay
compensation.

For example: Amar who is already married to Asmita, promises to Julie to marry her, now this is impossible
under Hindu Marriage Act but Julie does not know about marriage of Amar, in this case the promise of Amar is
void-ab-initio, but if Julie suffers any emotional or other loss she can claim compensation from Amar.

(b) Subsequent Impossibility or Supervening impossibility:

This impossibility arises after the entering of the contract, on the date of contract, the contract was fully
capable of being performed, but after the date of contract, it became impossible to perform. In this case
the contract will became a void contract & parties will get a valid discharge.

For example, A promised to marry B on 25.04.2021 but on the day before marriage A goes mad.

Example 2: I gave a house on rent for 10 years but after 3 years the house was destroyed in earthquake,
the contract is void.

h) In case of reciprocal promises if there are 2 or more promises in which some promises are legal
and others are illegal, the legal promises will create valid contract & illegal promises will
create a void agreement.

Example: I promise to pay Ram ₹ 25,000 for selling educational books during day & ₹50000 for selling
illegal drugs at night & Ram also promises to do both the things, now in this case the first promise is valid.

i) In case there are alternative promises & one promise is legal & in other promise (alternate
promise) is illegal, then legal branch will remain valid.

Example: Ram agrees to give Shyam ₹10,000 if shyam teaches law to Ram or if Shyam provides illegal durgs to
Ram, In this case law teaching option is valid & enforceable.

Appropriation of Payments: Section 59 to 61

When the debtor has to pay several debts to the Creditor & makes payment which does not satisfy all the
debts, in this case how the payment should be used for satisfying the debts is referred as appropriation of
payments & is discussed in section 59-61 of Contract Act.

a) If the debtor at the time of making payment specifies to the creditor that out of many debts this
payment (which the debtor is paying) should be applied to specific debt then the creditor must apply
the payment to such specific debt only.

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 Example: if Ram had taken loans for Rs 25000, Rs 30000, Rs 450000 on different dates from Shyam and
at the time of making the payment of Rs 25000 Ram specified that the payment shall be applied to the
debt of Rs 25000, then in this case Shyam shall apply the payment to the debt of Rs 25000 only.
b) In case where the debtor makes payment but does not specify that towards which debt the payment
shall be applied, neither there are circumstances that suggests, that payment shall be applied to
particular debt, in this case the creditor may apply the payment of debtor towards any debt at his
discretion, But:
(i) Creditor cannot apply the debt to time barred debts,
(ii) Creditor can also not apply the payment to disputed debts
c) If neither creditor nor debtor applies the payment to any debt (matlab donon ne payment kaha use
karna hai yeh fix nai kiya hai) then the payment by debtor will be applied in order of time (that means
the FIFO method, the debt which was oldest will be satisfied first)
If debts are of equal standing then proportionately, payment will be applied.

For example on 25.01.2021, Ram took 3 different loans of Rs 10000, Rs 15000, Rs 25000 for different
purposes from Shyam and makes a payment of Rs 9000 for satisfying the debts but does not specify that
for which debt the payment should be applied for and neither shyam makes appropriation, in this case the
payment of 9000 will be applied for satisfying all the debts which are of equal standing (10000, 150000,
25000) in the ratio of [Link].

Contracts which need not be performed

a) Novation, Rescission & Alteration
Novation Rescission Alteration
In this case, the old contract is In rescission the old contract is In Novation the existing contract
cancelled, & in order to discharge cancelled & discharged but no & parties are changed but in
the consideration or obligation of new contract is made & it is done alteration only some terms of the
the old contract new contract is mutually. contract are altered & parties are
made between the same parties Example: Student cancels his also not changed but if we check
or different parties. The old Bcom admission from BMCC as per law, even when some
contract is not required to be College and takes refund of his terms of the contract are
performed. The obligation of the fees. charged, we have to make new
old contract will be performed in contract. So there are very
the new contract. nominal differences between
novation and alteration, in
It is done mutually. alternation only few terms are
Example: A Student takes changed. It is also done mutually.
admission in BCOM from BMCC Example: A Student takes
College, cancels his Bcom admission in Bcom and withdraws
admission and takes admission in hostel facility and takes refund
BBA course from BMCC College or for hostel facility and continues
some other college which has a BCOM without hostel facility.
tie up with BMCC.
b) Promisee may remit performance:
Sometimes the promisee shows a big heart & remits the performance of the promisor, it means the
promisee waives whole or part of the performance or may extend the time of performance or may accept
any other consideration in place of the consideration which was promised.
Example: Ram had promised to pay Rs. 200000 to Shyam on 25.1.2021, on 25.1.2021, Ram did not pay so
Shyam asked Ram, not to pay anything & discharged him.
c) Restoration of benefit under voidable contract: In case of voidable contracts, when the aggrieved party
cancels the voidable contract, two things are to be noted:
a) The aggrieved party has to return all the benefit that it received after reducing the expenses incurred by
it in relation to such contract.
Example: When a person took insurance policy he did not disclose all the facts to insurance company, so

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insurance company can cancel the contract, now the insurance company at the time of cancelling the
contract must repay the premium collected from the person after reducing any expense, that insurance
company incurred in relation to such policy.
b) The aggrieved party is not required to perform any promise under the voidable contract.
d) Obligation of person who received benefits under void agreement or void contract:
(i) In case of void agreements
If any party receives any benefit under void agreement, then it should return such benefit to the other
party or pay compensation to the other party so that the other party is not at loss.
Example Ram paid Rs. 10,000 to purchase a horse to Shyam, however Ram & Shyam were not aware that the
horse was already dead at the time of agreement, So this agreement is void ab initio & Shyam must return
Rs. 10,000 to Ram.
However this rule will not apply when something is paid to minor under void agreement or in case of
agreements that are prohibited by law.
(ii) In case of void contracts
If the contracts become void later on, then also benefit must be returned.
For example: Ram takes a house on rent for 10 years & also pays advance rent for 10 years, however after 5
years the house is destroyed by earthquake, in this case Shyam must return 5 years rent to Ram.
But it should also be kept in mind that there are some contracts where a party is punished for not fulfilling
its obligations & in these cases the benefits are not to be returned.
For example: I took advance of Rs. 10,000 from Sunil against selling a land, & also said that Sunil must pay
remaining 10 lacs within 3 month otherwise the contract of selling land will become void & Rs. 10000
advance will not be returned, now in this case if Sunil does not pay remaining money in 3 months, I will not
be liable to return Rs. 10000, through the contract become void.
Question for Practice!
Question: Snehal gave her one piece dress to laundry man for dry cleaning, the laundry men gave a
receipt which contained a special condition that “if laundry losses any cloth it will give 15% of market
value of cloth to customer”. Eventually Sneha’s are piece dress was lost by laundry, & 15% of market
value was offered to Sneha, but Sneha refused to accept it on the ground that it is unreasonable and
suit was started in the Court. Decide?
Ans: When a person accepts the offer it is considered that he has also accepted all the special conditions
which are reasonable, & attached with offer.
In terms of special conditions, only these conditions will be valid which are reasonable.
In the given question, the laundry man states that he will give only 15% of market value of cloth is
unreasonable & hence this special condition is not valid & not applicable on customer. So the laundry man
must give full value of the Cloth to customer.
This decision was also given in the case of Lily white VS Mannu Swami.
e) In case of voidable contract if the party wants to cancel the contract it will have to communicate the
cancellation in the same manner as offer is communicated under section 4 of contract Act, 1872 (it means
cancellation must come in to the knowledge of the other party as under section 4, the communication of
offer completes when offer comes in the knowledge of other party)
f) If the promisor is ready to perform but the promisee neglects the performance or refuses to give
reasonable facilities to the promisor which are required for performance, the promisor will get an excuse.
Example: If teacher is ready to teach but student is not ready to learn, teacher can not be held liable.
Example: Ram promised to stich shirt for Shyam for Rs. 500, Shyam did not provide cloth to Ram for
stitching, in this case Rram can not be held liable for not stitching.
Discharge of Contract
Normally a contract is discharged when both the parties to the contract discharges their obligations.
However As per the rules that we discussed above the contract can be discharged in the following manner:
a) Discharge by performance of the contract:
When both the parties perform their obligations the contract is discharged. These are two types of
performance.
(i) Actual performance

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When both the parties actually perform.
Example: Students pays full fees and the coaching class finishes full syllabus.
(ii) Attempted Performance
It was same as we discussed in “Offer of performance”, where the offer of performance was made but was
not accepted by the promisee.
b) Discharge by Mutual Agreement: In case of Novation, Rescission, alteration & remission the contract is
mutually discharged between the parties.
c) Discharge by impossibility: Basically when impossibility exists on the date of performance the
agreement is void ab initio, but if the impossibility arises after the contract the contract becomes void & is
not required to be performed. It is also known as discharge by frustration.
Impossibility is always beyond the control of the parties. It may include, sudden changes in law, destruction
of subject matter of contract, non happening of event which was essential to perform the contract,
declaration of war, etc, however commercial impossibility is no impossibility such as strike by the workers
or increase in the prices of raw materials etc and contract will not become void by these impossibilities.
d) Discharge by lapse of time: In case of breach of contracts, if the aggrieved party does not approach the
courts within limitation period, the defaulting party is discharged from the contract, after the expiry of
limitation period.
e) Discharge by operation of law: Death or insolvency of the promisor (but normally in case of death legal
representative is liable, however deceased person is discharged)
f) Discharge by breach of contract: When contract is breached the defaulting party can get a discharge
from performance however it will be liable to compensate the other party as per the law. There are two
types of breach, actual & anticipatory breach which we will discuss in next part of lesson.
g) If promisee does not provide suitable facilities to the promisor for performance of the contract, due to
which the promisor could not perform the contract, in this case also the promisor is discharged.
h) When 1 or more rights merge then also a party can get discharge from performance.
Example: I promised Mr. K to pay rent for 10 years for a house but after 2 years I purchased the house, so
now I am not required to pay rent for remaining 8 years.
Breach of the contract
It means not performing the contractual obligations or defaulting in contractual obligations.
There are two types of breaches:
a) Actual Breach of the Contract:
When a party to contract refuses to fulfill its contractual obligation on the scheduled day of performance of
obligation, this results in the actual breach of the contract. In this case the other party can take action
against the party which has made the breach of the contract.
Actual breach of contract takes place:
a) On the exact day of performance of the contract, for example I promised you to deliver Sugar on
1.2.2021 & on the same day I tell you that I won’t deliver the sugar this result in to actual breach of
contract.
b) During the performance of the contract, for example I had promised to finish law class as 15th Oct, 2021,
& on 10th October by an express act (by words), I said that I am not going to teach further and contract
comes to an end. During the performance even by implied act contract can be breached.
b) Anticipatory Breach of the contract:
When the promisor before the day of performance expresses his unwillingness to perform the contract, it
is referred as anticipatory breach of contract.
Anticipatory breach of contract can take place through:
a) By words: I promise to supply you sugar on 31st Dec, 2021 but on 15th Dec, 2021, I tell you that I will not
be able to supply sugar, it results in anticipatory breach of contract.
b) By Implied Act: A party acts in such a manner that other party anticipates that the contract has been
breached, for example Kumari promised to marry Suresh on 15th July, 2021 but on 10th July, 2021, Kumar
married her driver now Kumari has done anticipatory breach of contract.
So as per section 39 of the Contract Act, 1872 in the case of anticipatory breach of the contract, a party
refuses to perform or disables itself from performing whole of the contract & in this case the promisee may

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put an end to the contract, unless the promisee has expressly or impliedly allowed the continuance of the
contract.
The promisee may:
a) Rescind or cancel the contract on the day of breach without waiting for actual day of performance & can
claim damages from the other party.
Or
b) The promisee may also keep the contract alive & give time to promisor to perform the contract till the
date of performance & cancel the contract, if the contract is not performed till the date actual date of
performance. However in this case the promisor can get the benefit of supervening impossibility.
For example: Ram had promised to deliver sugar on 25.06.2021, but on 15.06.2021 he refused to deliver
sugar, now Suresh on 15.06.2021 can cancel the contract or can keep the contract alive till 25.06.2021 & if
Suresh keeps the contract alive & if the govt. on 18.06.2021, puts a ban on selling sugar then Ram will get
advantage of supervening impossibility & contract will be discharged.
Remedies Available to aggrieved party in case of breach of contract:
Remedies Available to the aggrieved party
a) Compensation: The aggrieved party can claim compensation for the loss that it suffered due to non
performance or breach or it may also claim the compensation which was agreed between the parties at the
time of making of the contract.
However no compensation can be asked for remote or indirect loss.
For example: If Ram failed to supply sugar, in this case Shyam can claim normal compensation or any
specific compensation which was agreed between Ram & Shyam. Now Shyam can not say that if Shyam
would have supplied the sugar, he would have made chocolates & by selling such chocolates he would have
made profit of 10 lacs, so he needs Rs. 10 lacs as compensation, this is remote or indirect loss, & for this
loss compensation can not be claimed.
b) Compensation for failure to discharge obligation relating to contracts: If a person, whose duty was to
discharge an obligation related to contract, fails to discharge obligation then in this case the party who
suffered on account of the failure, may ask the defaulting party (who made failure) to put him in same
position in which he would have come if the contract would have been performed.
Example: Ram sold me goods & gave me warranty, I sold the same goods to Shyam & gave him the warranty
which was given to me by Ram, but the goods turned out to be defective so I had to pay Rs. 200 to Shyam
for breach of warranty now in this case I can claim Rs. 200 compensation from Ram.
Explanation to section 73
The party who suffers from the breach of the contract should take all the steps to mitigate or reduce the
loss caused to it by the breach of the contract, in order to claim compensation.
For example, Sunil promised to sell me sugar at Rs 10 per kg, on 25.06.2021 but on the day of delivery he
refused to sell, so I have a right to claim compensation on account of loss that I suffered from non
performance of Sunil. Now beside my house Ram was selling sugar for Rs 11 per Kg, but Anil was selling
sugar at Rs 30 per Kg so I bought sugar from Anil and claimed compensation of 20 Rs from Sunil, in this case
the Court wont allow the compensation of Rs 20 as sugar was also available for Rs 11 and the promissee
should have tried to mitigate or reduce the loss on account of non performance.
Kinds of damages:
a) Ordinary Damages:
When a contract has been broken, the aggrieved party has a right to get compensation for loss from the
party who breached the contract. These case the natural damages that party suffers due to non
performance sold compensation is not to be given for any remote or indirect loss.
In the case of Hadley VS Baxandale, the crankshaft of a flour mill was broken so it was given to a
transporter who promised to deliver it to the foundry where the crankshaft was to be repaired. The
transporter delayed in delivery of crankshaft to the foundry & due to this the mill remained closed for 5
days. The mill owner received the crankshaft after 7 days from the time when he was to receive it. So the
mill owner sued the transporter for the delay as well as for the profits for the period for which the mill
remained closed. The court decided that the mill owner will just get the ordinary damages & not the loss of
profits, as the transporter was just informed about the repair & not about the loss of profit.

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Ordinary damages are generally the difference of contract price minus the market price.
For example: If I promised to deliver Ram sugar at Rs. 500 per Kg on 1.1.2021 & on 1.1.2021 I refused to
deliver the sugar so Ram bought it from Shyam for Rs. 550 per Kg, in this case the ordinary damage will be
Rs. 50
2) Special damages: When at the time of contract only, the parties specify the circumstances on happening
or on non happening of which a party may suffer special loss so for such special loss special damages can be
claimed.
For example: A gave a machine to a B, a transporter, & said that this machine has to be delivered at his
(A’s) factory at Mumbai, A also informed that his factory is closed due to non availability of this machinery,
B promised to deliver the machine in 7 days, but he delivered in after 14 days, without any reasonable
cause. A’s factory was closed & A also lost a Government contract due to closure of factory, now in this
case, A can claim special damages i.e., profits of 7 days delay, but not the loss from government contract
as it was not informed to “B”. government contract is indirect or remote loss.
3) Vindictive or Exemplary damage: These damages are awarded when the loss is more than in terms of
money, if a person’s feelings or emotions or reputation is hurt, these kind of damages can be claimed.
These damages are claimed in following cases:
a) Breach of Promise to get married – to compensate the emotional loss.
b) Wrongful dishonor of client’s Cheques by bank, as it causes loss of reputation.
In this case of Gibbons VS West Minister Bank it was decided that, if due to wrongful dishonor of Cheques
by bank, a person does not suffer any kind of loss, he can not claim exemplary damages.
4) Nominal damages: When the aggrieved party has not suffered any real damages but wants to prove in
the court that he is right & want the decree (order) of the court in his favor, he claims nominal damages.
These damages are so nominal that their amount may even be Rs. 1 or 10 paise.
5) Damages for deterioration caused by delay:
If the goods are destroyed or deteriorated due to delay made by carrier or transporter in this case the
owner of the goods can claim compensation from the transporter even without notice & the damages can
not only be claimed for destruction or deterioration but also for loss of special opportunity of sale (even
without notice).
6) Pre-fixed damages: Some times in the contract only the parties fix the amount of damages or penalty
(liquidated damages) which a party will have to pay in case of failure to perform the contract. The
maximum reasonable compensation by the aggrieved party can not exceed the agreed amount.
Here the word maximum reasonable compensation is used, so it must be kept in mind that if loss to the
aggrieved party is less then the agreed amount of penalty then only actual loss will be claimed.
For example: It was agreed that in case of default of performance Rs. 10 lacs will be claimed by aggrieved
party as penalty, but the aggrieved party suffered a loss of Rs. 5 lacs then it can claim compensation of Rs.
5 lacs & even if aggrieved party would have suffered a loss of Rs. 25 lacs, the compensation would have
been for Rs. 10 lacs.
Penalty & Liquidated Damages
In case the parties fix the amount of compensation at the time of contract only, the question arises
whether the court will consider it, a valid compensation.
As per English law, the amount so fixed by the parties may be interpreted as liquidated damage or penalty.
If the amount agreed in the contract genuinely represented pre-estimate of loss which will result from the
breach of the contract & can compensate the parties for breach, such clause in the contract is enforceable,
it will be the damages.
If the amount mentioned in the contract is unreasonable & compels the other party to perform the
contract, it is penalty & in this case the court can disregard that amount & the aggrieved party can not
recover more than the actual los.
As per the Indian law, there is no difference between penalty & liquidated damages. The Indian Court
enforces reasonable amount not exceeding the amount mentioned in contract. As per section 74 of Indian
contract act, 1872, the court never allows the damages more than the amount mentioned in contract but
the court can allow less damages, section 74 allows the aggrieved party to get reasonable compensation &
not anything that exceeds by way of penalty.

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 If any person gives any bond (written promise) to Central or State Govt. for the performance of any public
duty & if such bond is breached then such defaulting person has to pay the whole amount as mentioned in
the bond.

Liquidated Damages Penalty

If the amount of damage is pre-estimate amount of If the amount of damage is more than the loss
loss, it is damage. suffered, it is a penalty.
The amount which compels the other party If a payment was to be made on fixed date but such
(terroem) for performance of the contract, it will be payment could not be made & due to this extra
penalty. amount is to be paid such extra amount is penalty as
In English law difference is made between the delay in payment generally does not cause damage.
damage & penalty but in Indian law, no clear cut The term used by the parties in the agreement is not
difference is shown, In India the court calculates the final the court after considering the facts of the
actual loss & award damage or penalty but such case will decide whether its penalty or liquidated
amount does not exceed the amount mentioned in damage.
contract. If the amount is exorbitant or extravagant (Jaroorat
Example: If you do not supply the goods on time you se jyada) court will treat it as penalty through the
will have to compensate me for the profits. agreement uses the word liquidated damage.
Example: If you do not pay your bank installment by
1.1.2021 you will be liable for Rs. 20000 as penalty.

Apart from claiming damages, the aggrieved party may also claim following remedies:
a) Rescission of the contract: The aggrieved party may put on end to the contract & in this case the
aggrieved party is free from all the obligations relating to the contract & may also claim damage for the
loss suffered by it.
b) Quantum Meriut: It means “as much as earned”, as per the principal of quantum meriut, if the
aggrieved party could not perform the full contract and before full performance the other party cancels it,
the aggrieved party can claim for the work which has been performed till the date of cancellation.
Two conditions are to be fulfilled for the application of principal of quantum merit:
a) The original contract must have been discharged.
b) The claim must be brought by the party not in default.
The object of quantum merit is to pay the party for the work which has been completed.
Damages provide compensation but quantum merit provides restitution (the payment for work which is
completed). It can be said that it is a reasonable compensation or remuneration for the work that is done.
If a person had ordered for 2 bottles of whiskey but was delivered with 2 bottles of beer & if he accepts the
beer he must pay the price of 2 beers.
In the following cases claim may be made on account of quantum merit.
a) When the agreement is discovered to be void (void agreement)
For example if, on the basis of promise which was void the other party incurs some expenses then such
expenses can be recovered.
b) When contract becomes void.
Example: if the contract becomes void but some benefit is with the other party then such party
must return the benefit.
c) When contract is made to provide services but remuneration is not agreed.
Example: I started teaching you law but fees was not decided, after completion of syllabus I am
entitled to a reasonable fees.
d) When one party refuses to perform the contract.
Example: I promised to paint 4 walls for Rs 10000, but I could complete only 2 walls and the other
party refused to pay so I can leave the painting and can demand Rs 5000 for 2 walls.
e) When the contract is divisible & the party who is not at default has received the benefit of part
performance.
Example: I promised to construct 2 houses for you for Rs. 50,000 each, now I have constructed one

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 house and you are enjoying that one house in this case you have to pay for one house even if I could
not construct the other house due so some reason.
f) When the contract is indivisible (inseparable) & full contract has been performed but part of the
contract is performed in bad manner then amount for bad performance can be deducted.
Example: I promised to construct a house for Rs 50000, however my construction was of poor quality
so you can make deduction in the payment.
c) Suit for specific performance: If the court believes that monitory damages do not grant adequate relief
to the aggrieved party, the court can ask the defaulting party to specifically perform the contract as per
the provisions of specific relief act.
d) Suit for injunction: If a party to contract does something what he is under obligation not to do in this
case the court can pass an injunction (stay order) for restraining or stopping such party from continuing the
negative act.
In case I agreed to teach at X academy for 5 year & no where else, so if I start teaching the other academies
during the period of 5 years I can be stopped by injunction.
Section 75 – Party Rescinding the contract Entitled for compensation
A party who rescinds or cancels the contract in correct manner has a right to get compensation for the
damages that are resulted from non performance.

Practice Question
Question: A minor took a loan of Rs. 20,000 by mortgaging his house, in favor of the creditor. However
at the time of repayment of the loan the minor refused to repay the loan. What are the remedies
available to the creditor? Also provide a reference to any decided case law.
Answer: As per the provisions of India contract Act, 1872, the agreements that are created by minor are
void-ab-initio. That mean any agreement that puts any kind of liability on minor is void. The Indian contract
act protects the minor.
So in the given question, if the minor does not return the loan of Rs. 20000 to the creditor, the creditor has
no legal remedies, as the agreement with minor was void-ab-initio.
The decision was also given in the case of Mohiri Biwi VS Dharma Das Ghosh.
Example: Ram agree that if he takes any other employment with any other employer, he will pay Rs. 20000
as compensation to his present employer.
Contingent Contract (section 31)
The contract may be absolute or contingent. The absolute contract is one in which a party promises to
perform the contract without conditions. The contingent contract means a contract to do or not to do
something, if some event collateral (supporting) to such contract happens or does not happen.
The contract of insurance, guarantee, indemnity fall under the definition of contingent contract.
For example: I will sell you perfume if the ship by which perfume is coming reaches safely to Mumbai port.
Example: I will buy your house, for Rs 5 lacs, if I get a Bank Loan.
Collateral event means: An event which is neither a performance which is directly promised in the contract,
nor it is full consideration for a promise, obtained from other party.
Example: I will pay you Rs. 10 lacs, if your house is burnt by fire (fire insurance)
Here collateral event is the burning of house, which is neither a performance promised (as promise is to pay
Rs. 10 lacs) neither it is a consideration which is obtained from you.
[Collateral event Na Hi promise Hai Aur Na Hi Consideration]
Essential elements of contingent contract
a) The performance of contingent contract is collateral happen some event which may not happen & each
party has an interest in such collateral event.
b) The event is not the part of contract as it is neither the performance nor the consideration of contract.
So the event must not be directly related to the contract.
For example: I will pay you Rs. 5,000, if you build a house for me, it is not a contingent contract as the
house is consideration for the contract.
I promise to pay Rs. 1 Lac to B if he marries C, it is also not contingent contract as payment is to be made

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on the happening of the marriage so marriage is not collateral. (however in some case where the promisor
is interested in the marriage of the promisee then it can also be considered as contingent contract)
c) The contingent event must not be “mere will” of promisor.
Example: I promise to pay you Rs. 1 Lac, if I wish, it is not a contingent contract.
Example: I promise to pay you Rs. 1 lac, if it rains on 25.01.2021 (parties have an interest in rain, might be
a rain insurance contract) & I leave for Delhi on 25.01.2002, this is a contingent contract as paying Rs. 1 lac
is not only dependent on my will but also on the event of “rain”
d) The event must be uncertain: If the collateral event is a certain event or is bound to happen, such
contract is not contingent contract.
Example: Ram promises to sell his land to Shyam for Rs. 10,000 after getting a license from collector, &
collector easily grants license on fulfillment of conditions, it was decided that the contract was not a
contingent contract as collector’s grant of license was certain.
Example: I promise to pay you Rs. 10,000 if sun raises tomorrow. This is not a contingent contract as rising
of sun is a certain event.
Rules Relating to enforcement of contingent contract
a) The contingent contract that are collateral upon happening of event will become enforceable only
when such event happens or takes place: If the happening of event becomes impossible, then the
contingent contract becomes void as per section 32 of Indian Contract Acct, 1872.
Example: I promise to pay you Rs. 25,000, if you become a chartered accountant, now you can demand Rs.
25,000 from me only when you become a chartered accountant If you could not become a CA my promise
will become void.
b) If the contingent contracts are collateral upon non happening of any event then such contracts can be
enforced only when such event becomes impossible as per section 33 of Indian Contract Act, 1872.
Example: If I had promised you to pay Rs. 20,000, if your truck does not return to Pune safely, now if your
truck meets with a serious accident, so now it is impossible for truck to return safe, so my promise to pay
Rs. 20,000 has become enforceable.
c) If the contingent contract was collateral upon future behavior of a person, however such contingent
contract will become void, if such person does something due to which such future behavior or performance
becomes impossible.
Example: I promised to pay Sunil Rs. 25,000 if he becomes a Charted Accountant (future behavior), if Sunil
after his CA inter, leaves CA & starts UPSC preparation, So becoming CA has become impossible &
contingent contract becomes void, even if Sunil after leaving UPSC, starts CA again, it won’t affect the
situation & contract will remain a void contract only.
In the case of Frost VS Knight, a boy promised to marry a girl upon death of his father, while the father
was alive the boy married another girl, it was decided by the court now it is impossible for boy to marry the
girl with whom first promise was made, & it was breach of contract by the boy.
d) If the contingent contract was collateral upon happening of an event within a fixed time & if such
event does not take place within fixed time or become impossible within fixed time, then the contract will
become void & if such event happens within fixed time contract will be enforceable.
Example: I promise Sunil to pay Rs. 5 lacs, if Sunil becomes a charted accountant within the period of 3
years from the date of promise. So if Sunil does not become chartered accountant with 3 years from the
date of promise, the contract will become void.
e) If the contingent contract or a promise was collateral or non-happening of an event within specific
period of time, in this case, the contract will be enforced only when such event does not happen within the
specified time or becomes impossible within a specified time, otherwise the contract will become void.
Example: I promise to pay Rs. 25,000 to Sunil if the ship by which goods are coming does not return to
Mumbai within 1 month, it was found that ship was sunk in sea within 15 days of promise, the contract will
become enforceable.
There contracts may be enforced even before expiry of found time if is sure that event will not happen.
f) The promises that are contingent on impossible event are void-ab-intio, whether the parties were
aware of impossibility or not at the time of the contract.
Example: I promise to pay you Rs. 10,000 if 2 parallel lines join each other. This is void agreement.

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Contingent Contract Wagering Contract
Promise to do or not to do something if Promise to pay money or money’s worth on
collateral event happens or does not happen happening or on non-happening of future
uncertain event.
It may not contain reciprocal promises It contains reciprocal promises
The event is collateral. The contract is depend upon event
It is not wagering It is like contingent
Parties have an interest in the collateral event Parties have no interest in the event
Here loss or gain is not important Everything is loss or gain
It is valid It is void

QUASI CONTRACTS:-

The word quasi means half, so quasi contracts are the half contracts, Normally the contracts are created
when offer, acceptance, consideration & enforceability by law, these elements are present, but in case of
quasi contract, these elements may not be present but still a valid contract may be created.

These contracts are based on the principle of equity, justice & good conscience.

These contracts are based on the principle of “unjus enrichment” that means “no man must grow rich out
other person’s loss”

So when a party receives benefit of any non gratuitous act (An act for which money was to be paid but has
been received for free) In this case, the law puts some obligations on such party through quasi contracts.

FEATURES OF QUASI CONTRACT:-

a) These contracts relate to money but not only to money.

b) There is no agreement between the parties.
c) It creates a right against a specific person only, as it is just like contract.

In the following cases quasi contract arises (i.e. law puts an obligations on the party who receives the benefit
of under non gratuitous act)

a) Necessaries: In case necessaries are supplied to any person who is incapable of contracting (minor or
lunatic) or to any person to who such incapable person is legally bond to support, the cost of
necessaries can be recovered from the assets of such incapable person if:
(i) Necessaries were required to support the life +
(ii) Incapable person was inadequately supplied with the necessaries at the time when necessaries
were supplied.
b) Payment by Interested Person: A person who has an interest in the payment that other person is
bound to pay, & has made the payment on behalf of the person who is liable or bound to pay, can
recover such payment.

Example: The House of Mr. X was advertised for an auction, as property tax for last 10 years was not paid so,
Y, Lessee made the payment on the ground that, if house is auctioned his lease will be cancelled, how Y can
recover the amount from X.

c) Obligation of the person enjoying the benefit of non gratuitous act: If a person does something or
delivers something for the other person with the intention of receiving payment (non gratuitously) &

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 the other person enjoys the benefit of such act which has been performed or thing which has been
delivered, the other person is Liable to pay compensation or restore the benefit to the person who
provided that benefit.

If the matter reaches the court, the aggrieved party must prove:

a) Act was done or something was delivered legally +

b) The act was done or thing was delivered non gratuitously.
c) The person who received it, got its benefit

In the case of Shyam Lal VS State of HP, A Government employee was terminated from his employment
& he filed an appeal against termination & the Court ordered the Government to reinstate (take back)
the employee, so the employee was kept again but was but was given no work but was paid full salary,
the Government filed further appeal against the order of lower court & in further appeal against the
order of lower court the Superior Court justified termination & asked the Government employee to
repay the salary received during reinstatement, as money was paid to the employee without any work.

d) Responsibility of the finder of Goods: The person who finds lost goods is referred as finder of goods and
he has to take care of the goods as baileee, so the finder of goods has following responsibilities:
(i) To take care of the goods in the same manner as a man of ordinary intelligence takes care of his own
goods.
(ii) He should not appropriate or use the goods or more the goods with his own goods
(iii) To restore the goods when the owner if found.
In the case of Hollins VS Howler, H was in the shop of F, So H found a diamond in the shop of F So H
returned the Diamond to F & said to return it to be the true owner diamond, F took all the efforts but
could not find the time owner so H asked F to return the diamond & H also offered to pay all expenses to F
which F incurred in finding the time owner ,but F refused to relation & the matter reached the court & the
court decided that the diamond shall be returned to F, the insider of goods, till the time the force owner is
found.
Example: A customer left his watch in a shop & it was found by son who was an assistant in Raju’s shop,
where the watch was left, son kept the watch in the drawer & on Monday it was found that watch was
missing, the court decided that Roja is responsible for loss.
e) Money paid by mistake or under coercion: A person to whom anything is paid under a mistake or under
a coercion, in this case such person must to return the benefit or money received under a mistake or
coercion.
In the case of Shiv Prasad VS Sirish Chandra it was decided that if any money was paid or thing was
delivered under mistake, can be recovered.
In the case of Seth Khanjelak VS National Bank of India, it was decided that, coercion includes oppression,
extortion or other means that pressurizes a person.
In the case of Trikam Das VS Bombay Municipal corporation, it was decided that, if municipal corporation
recovers penalty under “threat” it will amount to extortion & the party who paid penalty can recover it.
Basically if any party is compelled to pay something under coercion or under pressure, the aggrieved party
can recover it. For example, if Train Tickit Cheker asks a person who was travelling without tikit to pay Rs.
1000, or else he will be sent to jail, so the aggrieved person paid Rs. 1000 as bribe the court decided that it
was the money paid under coercion & can be recovered.
Quasi Contract Contract
An essentials of valid contract are not present. Essential of valid contract are present.
It is created by the law. Obligations are given to the Created by consent of the parties.
party who has receives benefit of non gratuitous
Act.

MULTILATERAL AGREEMENTS DEFINED

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A multilateral agreement is defined as a binding agreement between three or more parties concerning the
terms of a specific circumstance. Multilateral agreements can occur between three individuals or agencies;
however, the most common use of the term refers to multilateral agreements between several countries.
Multilateral agreements are often the result of a recognition of common ground between the various parties
involved concerning the issue at hand.
E – CONTRACTS
A Contract created with the use of information technology is called as an e contract.
As a result of e commerce we but the goods through the use of internet , all the commercial transactions
taking place through internet will be referred as e contracts.
There will be offer, acceptance, consideration & also a lawful purpose in the e contract.
The Information Technology Act recognizes these contracts.
SPECIAL CONTRACTS
▪ Contract of indemnity
‘Indemnity’ – Meaning • To make good the loss incurred by another person
• To compensate the party who has suffered some loss
• The protect a party from incurring a loss
‘Contract of A contract is called as a ‘contract of indemnity’ if –
indemnity – Definition
One party promises to save the other from loss caused to him by the conduct of
the promisor himself, or by the conduct of any other person.

Rights of indemnity holder (Sec. 125)

Right to recover The indemnity holder has the right to recover all the damages which he is
damages compelled to pay in any suit in respect of any matter covered by the contract of
indemnity.
Right to recover costs The indemnity holder has the right to recover all the costs which he is compelled
of suit to pay in bringing or defending such suit.
Condition :
(a) The indemnifier authorized him to bring or defend the suit; or
(b) The indemnity holder did not contravene the orders of the indemnifier;
and absence of any contract of indemnity.
Right to recover sums The indemnity holder has the right to recover all the sums which he has paid
paid as a under the terms of a compromise of such suit.
▪ Contract of Guarantee
Meaning of certain terms (sec. 126)
Meaning of ‘contract A ‘contract of guarantee’ is a contract to –
of guarantee’ • Perform the promise; or
• Discharge the liability,
Of a third person in case of his default.
Meaning of ‘surety’ The person who gives the guarantee is called as ‘surety’.

Meaning of ‘principal The person in respect of whose default the guarantee is given is called as
debtor’ ‘principal debtor’.
Meaning of ‘creditor; The person to whom the guarantee is given is called as ‘creditor’/

Essentials and legal rules for a valid contract of guarantee (Sec. 126 and 127)
Must have all the • All the essentials of a valid contract must be present in the contract of
essentials of a valid guarantee.
contract • Exceptions :
a) Consideration received by the principal debtor is a sufficient consideration to
the surety for giving the guarantee.

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 b) Even if principal debtor is incompetent to contract, the guarantee is valid.
But, if surety is incompetent to contract, the guarantee is void.
Nature and extent of surety’s liability (sec. 128)
Surety’s liability is General rule • Surety is liable for all the debts payable by the principal debtor
coextensive with to the creditor.
liability of principal • Accordingly, interest, damages, costs etc. may also be
debtor recovered from the surety.

Exception The contract of guarantee may provide otherwise.

Commencement of • The liability of surety arises immediately on default by the principal debtor.
surety’s liability .
Surety’s liability The surety may fix a limit on his liability upto which the guarantee shall remain
may be limited effective.
Surety’s liability • The surety may agree to become liable for a series of transactions of
may be continuous continuous nature.
• However, the surety may fix –
− A limit on his liability upto which the guarantee shall remain effective;
− A time period during which the guarantee shall remain effective.
Surety’s liability The surety may impose certain conditions in the contract of guarantee. Unit those
may be conditional conditions are met, the surety shall not be liable.
Continuing guarantee (Sec. 130 and 131)
Meaning A guarantee which extends to a series of transactions is called as continuing
guarantee.
Revocation (Sec. Continuing guarantee may be revoked, at anytime, by the surety by giving a notice
130) to the creditor. However, revocation shall be effective only in respect of future
transactions (i.e., the liability of the surety with regard to previous transactions
remains unaffected).
Death of Surety Death of the surety operates as a revocation of a continuing guarantee as to future
(Sec.131) transactions.
▪ Bailment
Meaning of contract of bailment (sec. 148)
A ‘bailment’ is the delivery of goods by one person to another for some purpose, upon a contact that they
shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of
the person delivering them.
Essentials of a valid contract of bailment (Sec. 148)
Contract • There must be a contract.
• The contract may be expressed or implied.
Goods Bailment can be made of goods only.

Delivery There must be delivery of goods by one person to another person.

Purpose of delivery • The goods must be delivered for some purpose.

• The purpose may be expressed or implied.
Return or disposal of • The delivery of goods must be conditional.
goods • The condition shall be that the goods shall be –
- Returned (either in original form or in any altered form); or
- Disposed of according to the directions of the bailor, when the purpose is
accomplished.

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Modes of delivery (Sec. 149)
Actual delivery Transfer of physical possession of goods from one person to another.

Symbolic delivery • Physical possession of goods is not actually transferred.

• A person does some act resulting in transfer of possession to any other
person.
Examples :
(a) Delivery of keys of a car to a friend.
(b) Delivery of a railway receipt.
Constructive delivery It means doing of any act which has the effect of putting the goods in the
possession of a person who agrees to hold them as a bailee for some other person,
although transfer of possession of goods does not actually take place.

Classification of bailment
Gratuitous bailment Bailment without any charges or reward, i.e. –
• No hire charges are paid by bailee; and
• No custody charges are paid by bailor.
Non-gratuitous Bailment for some charges or reward, i.e., -
bailment • Hire charges are paid by bailee; or
• Custody charges are paid by bailor.

Duties of a bailer (Sec. 150, 158,159 and 164)

1. Duty to disclose faults in the goods
2. Pay expenses in respect of the goods
3. Indemnify the bailee for defective title
4. Indemnify the bailee for pre-mature termination
5. Receive back the goods

Duties of a bailer (Sec. 151 to 157)

Take reasonable • The bailee must take such care of goods as a man of ordinary prudence
care would take care of his own goods.
• The bailee shall not be liable for any loss or destruction of goods, if –
a) He is not negligent; or
b) The loss was caused due to an act of God or other unavoidable reasons.
Not to make • The bailee must not make any unauthorized use of the goods.
unauthorized use of • If the bailee makes any unauthorized use of goods, then –
goods a) The bailment becomes voidable at the option of the bailer; and
b) The bailee shall be liable for any loss or damage even if such loss is
caused due to an act of God or other unavoidable reasons.

Rights of a bailer (Sec. 153,159,163,180,181)

Terminate the If - the bailee does any act inconsistent with the terms and conditions of the
bailment contract of bailment,
Then - the bailment becomes voidable at the option of the bailer.
Demand back the If - the bailment is gratuitous; and
goods - For a specific period.
Then - a) the bailer may compel the bailee to return the goods before expiry
of the period of bailment; but
b)The bailer shall indemnify the bailee for any loss incurred by the bailee
File suit against The bailer has the right to sue –

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wrongdoer • A third party who does any damages to the goods; or
• A third party who deprives the bailee from using the goods.
Sue the bailee The bailer may sue the bailee to enforce his duties.

Distinction between bailee’s particular and general lien

Basis of distinction Bailee’s particular lien Bailee’s general lien
1. Nature of right Particular lien gives right to retain only General lien gives right to retain any
such goods in respect of which charges goods belonging to another person for
due remain unpaid. any amount due from him.
[Link] for Particular lien can be exercised only General lien may be exercised even
exercising lien when some labour or skill has been though no labour or skill has been
expended on the goods, resulting in an expended on the goods.
increase in value of goods.
[Link] to whom? Every bailee is entitled to particular General lien can be exercised by only
lien. such persons as are specified u/s. 171,
e.g., bankers, factors, whar fingers,
Attorneys of High Court, policy brokers.
Any other bailee may exercise general
lien if there is an agreement to this
effect.

▪ Pledge
Meaning of ‘pledge’, ‘pawnor’, ‘pawnee’ (Sec. 172)
‘Pledge’ The bailment of goods as security for payment of a debt or performance of a
promise is called ‘pledge’.
‘Pawnor’ The bailor in case of a pledge is called as ‘pawnor’.

‘Pawnee’ The bailee in case of pledge is called as ‘pawnee’

Essentials of a valid contract of pledge (Sec. 172)

Contract • There must be a contract.
• The contract may be expressed or implied.
Goods Pledge can be made of goods only.
Delivery There must be delivery of goods by one person to another person.
Purpose of • The goods must be delivered for some purpose.
delivery • The purpose must be to deliver the goods as security for-
a) Payment of a debt; or
b) Performance of a promise.
Return of goods • The delivery of goods must be conditional.
• The condition shall be that the goods shall be –
- Returned; or
- Disposed of according to the directions of the pawnor when the purpose is
accomplished.

▪ Agency
Introduction to contract of agency (Sec.182)
Meaning of ‘agent’ An ‘agent’ is a person employed to –
• Do any act for another; or
• Represent another in dealings with third persons.

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Meaning of ‘principal’ ‘Principal’ is the person –
• For whom an act is done by the agent; or
• Who is represented by the agent in respect of dealing with third persons.
Test of agency Where a person has the capacity to –
• Create contractual relations between the principal and a third party;
• Bind the principal by his own acts, there exists a relationship of agency.

Salient features of agency (Sec. 183, 184, 185 and 226)

What tests can be applied in determining whether a person is an agent of another?
Principal is liable for • The principal is liable for all the acts of an agent which are lawful and
the acts of agent within the scope of agent’s authority.
• The contracts entered into by the agent on behalf of the principal have
the same legal consequences as if these contracts were made by the
principal himself.
Who may employ an Any person may employ an agent if –
agent? • He is of the age of majority; and
• He is of sound mind.
Who can be an agent? • Any person may become an agent.
• Even a minor or a person of unsound mind can become an agent.
Liability of agent • Generally, an agent is liable to the principal.
• An agent is not liable to the principal if he is a minor or is of unsound
mind.
Requirement of No consideration is necessary for creating an agency.
consideration

Modes of creation of agency (Sec.187, 189,196,214 and 237)

[Link] * A person may employ another person as his agent by entering into an express
agreement agreement with him.
* The agreement may be either oral or written.
[Link] Agency by If - a person makes a representation to a third person that a
agreement Estoppels certain person is his agent; and
- The third party, believing such representation to be true,
enters into a contract with the pretended agent.

Then - the person making the representation is prevented

From denying the truth of agency. He may be held
liable
As a principal by such third party.
[Link] by a) Thee was an actual and definite necessity for acting on behalf of the principal.
necessity – b) The agent was not in a position to communicate with the principal.
Conditions c) The act was done for the purpose of protecting the interest of his principal.
d) The agent has exercised such reasonable care as a man of ordinary prudence
would have exercised in his own case.
e) The act was done bonafide.
[Link] by Agency by operation of law arises where the law treats one person as an agent of
operation of law another.

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[Link] by Meaning If - a person (viz., pretended agent) acts on behalf of another
ratification Person (viz., the alleged principal)
- The pretended agent acts without the knowledge or consent
of the alleged principal; and
- Afterwards, the alleged principal accepts such an act.
Then – agency by ratification comes into existence.
Simply speaking. ‘ratification’ means approving a previous act or
transaction.

Effects of • The principal is bound by the acts ratified by him as if such

Ratification acts had been performed by his authority.
• Ratification relates back to the actual date of the act that is
ratified, and not from the date when the act was ratified.

Kinds of agents
Special agent • An agent who is appointed to perform a particular act.
• Special agent has limited authority.
• He cannot bind the principal in any matter other than that for which he is
employed.
• The authority of the special agent comes to an end as soon as the act for
which he is appointed is completed.
General agent • An agent who is employed to do all acts connected with a particular
business of the principal.
• A general agent has the authority to bind his principal with all the acts
connected with the business for which he is employed.
• The authority of the general agent continues until it is put to an end.
Universal agent An agent who is authorized to do all the acts which the principal can lawfully do
and delegate.
Mercantile or ‘Mercantile agent’ means an agent having the authority to –
commercial agent • Sell the goods;
• Consign the goods for the purposes of sale;
• Buy the goods;
• Raise money on the security of the goods
Acting as mercantile agent in the ordinary course of business.
Non-mercantile agent An agent who does not deal in mercantile transactions. These include attorneys,
solicitors, guardian, promoters, wife etc.
Del credre agent • He is a mercantile agent, who in consideration of an extra commission
guarantees his principal that person with whom he enters into contract
on behalf of the principal, shall perform his obligation.
• He occupies the position of a guarantor as well as an agent.
Pretended agent A person who untruly represents himself to be authorized agent of another, and
thereby induces a third party to deal with him is called as pretended agent.
Sub agent A sub-agent is a person employed by and acting under the control of the original
agent.
Substituted agent • Where an agent, holding an express or implied authority to name another
person to act for the principal in the business of the agency, has named
another person accordingly; such person is not a sub-agent, but an agent
of the principal for such part of the business as is entrusted to him.
• In selecting such substituted agent, an agent is bound to exercise the
same amount of discretion as a man of ordinary prudence would exercise

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 in his own case and if he does this, he is not responsible to the principal
for the acts or negligence of the agent so selected.
Duties of an agent (Sec. 209 to 218)
1. To conduct the business in accordance with the directions given by the principal.
2. To work with reasonable diligence, care and skill.
3. To render proper accounts to the principal on demand.
4. To communicate with his principal in case of difficulty and seek his instructions.
5. Not to deal on his own account unless all the material facts have been disclosed to the principal and
consent of the principal has been obtained.
If the agent, without the knowledge of the principal, deals in the business of agency on his own account,
the principal has the following rights :
a) He may repudiate the transaction, if the agent dishonestly conceals any material facts or the dealings
of the agent prove to be disadvantageous to him.
b) He may claim from the agent the benefits derived by the agent.
6. Not to make any secret profit out of the agency business other than the agreed remuneration.
7. To remit to the principal all the sums received in the principal’s accounts in accordance with the terms
and conditions of contract of agency.
8. Not to delegate authority or appoint sub-agent.
9. To protect and preserve the interest on behalf of the principal’s representative in case of his death or
insolvency of the principal.
10. Not to use information obtained in the course of the agency against the principal.

Rights of an agent (Sec. 217 to 225)

1. To retain money out of the sums received in agency business for advances made or expenses incurred and
remuneration due to him.
2. To receive the agreed remuneration. If the remuneration is not fixed, then he has the right to recover
such remuneration as is usual and customary in such business.
3. Right of lien on principal’s goods, papers and other property until the remuneration due to him is paid.
4. An agent has the right to be indemnified by the principal against the consequences of all lawful acts done
in exercise of the authority conferred on him.
5. An agent has the right to be indemnified by the principal against consequences of acts done in good faith
that caused an injury to third person.
6. To claim compensation for injury caused because of principal’s neglect or want of skill.

When an agent is personally liable?(Sec. 230 and 231)

General rule • Only the principal can enforce and can be held liable on a contract entered
into by the agent.
• The agent is not personally liable on a contract entered into by him on
behalf of the principal.
Exceptions b) When agent acts for sale or purchase of goods for a principal resident
abroad, i.e., foreign principal.
c) Where it is expressly provided in the contract that the agent shall be
personally liable.
d) Where agent does not disclose the name (identity) of his principal.
e) Where the principal is disclosed but cannot be sued, e.g., foreign
sovereigns, ambassadors etc.
f) When the principal is not in existence at the time when the act was done,
i.e., the agent acted for a non-existent principal.
g) When the agent exceeds his authority or commits a breach of warranty of
authority.
h) When he acts as a pretended agent (i.e., where he falsely represents that
he has the authority to act on behalf of the principal, and the alleged

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 principal does not ratify his acts).
i) When he receives or pays money by mistake or fraud.
j) Where an agent signs a negotiable instrument without mentioning that he is
signing as an agent.
k) Where the usage of trade or custom makes an agent personally liable.

Agency coupled with interest (Sec. 202)

− When agency is created for securing some benefit to the agent over and above his remuneration as an
agent, it is called as agency coupled with interest.
− The interest should exist at the time of creation of agency. If the interest arises after the creation of
agency then it would not be called as agency coupled with interest.
− Agency coupled with interest cannot be terminated to the prejudice of such interest.
− Agency coupled with interest does not terminate even on the death or insanity of the principal.
− Thus, such agency is irrevocable to the extent of such interest.

Irrevocable agency (Sec. 202 and 204)

Agency coupled Such agency cannot be terminated to the extent of such interest.
with interest
Part exercise of Where the agent has partly exercised the authority, the principal cannot revoke the
authority by the authority, so far as regards such acts and obligations as arise from acts already done
agent in the agency.
Personal liability Where the agent has incurred personal liability, the agency is irrevocable.
incurred by agent

Delegation of authority (Sec. 190)

General rule The general rule is that an agent cannot lawfully employ another to perform acts,
which he has expressly or impliedly undertaken to perform personally.
Exceptions (a) There is a custom or usage of trade to that effect.
(b) Where power of the agent to delegate can be inferred from the conduct of both
the principal and the agent.
(c) Where the principal is aware of the intention of the agent to appoint sub agent but
he does not object to it.
(d) When principal permits appointment of a sub-agent.
(e) If the nature of the agency is such that the sub-agent is necessary.
(f) Where the acts to be done is purely ministerial not involving confidence or use of
discretion.
(g) Where unforeseen emergencies arise rendering appointment of a sub-agent
necessary

Termination of agency (Sec. 201 to 210)

A. By the acts of parties:
1. By agreement The principal and the agent may mutually agree to terminate the agency, at
anytime.
2. By revocation * When the agency is coupled with interest, the principal cannot revoke the
Agency to the prejudice of such interest.
• The principal can revoke the authority at anytime before the authority has
been exercised so as to bind the principal.
• The principal cannot revoke the authority given to his agent after the
authority has been partly exercised.
• When agency if for fixed period, the principal must make compensation to
the agent, for premature revocation of agency without sufficient cause.

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 • Revocation may be expressed or implied from the conduct of the
principal.
[Link] the agent * Renunciation may be expressed or implied from the conduct of the agent.
renouncing the * When agency is for fixed period, the agent must make compensation to the
business of agency * Principal, for premature renunciation of agency without sufficient cause.

B. By operation of law:
1. Completion of business of agency
2. Death or insanity of the principal or agent.
3. Where the principal or the agent, being a company, is dissolved.
4. Destruction of subject matter of agency
5. Principal becoming insolvent.
6. Expiration of period where agency was for a fixed period.

IMPORTANT CASE LAWS

▪ Balfour Vs Balfour:
The husband had agreed to pay allowance to his wife who was living separately, when the husband came
to know that wife was unfaithful, He stopped the allowance, the wife approached the court for the
Allowance. The court decided that only a promise to pay the allowance does not create a legal relation
and hence there was no contract between the husband and wife.

▪ Kanhaiya Lal VS Dineshwar Chandra:

When the acceptance was repeated over the telephone and the offerer heard the acceptance, contract is
complete.

▪ Dunlop Pnumetic Tyres Ltd Vs Selfrige:

In this case it was decided that, the stranger to the contract cannot sue that means if there is a contact
between two parties then anybody who is not involved in the contract cannot sue.

▪ Ponoo Bisi Vs Fayaj Baksh:

If a husband agrees in writing to pay Rs.10,000 per month to his wife and such agreement was registered,
it will create a valid contract as there is natural love and affection between husband and wife so the
contract is valid even without consideration.

▪ Rajlucky Deb Vs Bhootnath:

If there is a quarrel between husband and wife and out of such quarrel if husband agrees to pay a certain
sum of money to wife, it will not be a valid contract, as there is no love and affection. If there is no love
and affection then contract can not be made without consideration.

▪ Kedar Nath Vs Gaurie Mohan:

A contract to make a contact in future is uncertain and not a valid contract. If a person agrees to work at
salary to be decided in future, this is not a valid contract as salary is uncertain.

▪ Jugal Kishor Vs Cheddu:

If the contract is for the benefit of person of unsound mind or minor, such contract is valid.

▪ Nihar Chandra Vs Dilawar Khan:

In England advocates cannot sue for their clients for the professional fees but in India there is no such
disability and advocates can see his client for professional fees.

▪ Raffels Vs Wichlhons:

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 If the offer is uncertain, the contract is void. A person agreed to buy goods which was sent through ship
“Peerless”, however there were two ships with the name Peerless, the contract is void.
▪ Hankel Vs Pape:
A person enquired for purchasing Rifles, on receiving of the reply of Inquiry he asked for samples, however
due to mistake of postal department, the message was sent to the seller, send 3 rifles, as a result seller
sent three rifles for sale, the court decided that contract is void.

▪ Hochester Vs De La Tour:
A person employed another person in April and employment was to be commenced from June, however
such person cancelled the employment in May. The other person sues the employer in the court. The
employer said that he cannot be sued before June as the employment will begin in June, the court
decided that, immediately on cancellation of the employment the employee had the right to sue.

▪ Avery Vs Bowden:
If a person has a right to sue the other person on the ground of breach of contract but delays such suing
and if the right to sue you later becomes impossible due to limitation laws or other grounds then such
person will not have any remedy.

E-CONTRACT
Electronic contracts are not paper based but rather in electronic form are born out of the need for speed,
convenience and efficiency. In the electronic age, the whole transaction can be completed in seconds,
with both parties simply affixing their digital signatures to an electronic copy of the contract. There was
initially an apprehension amongst the legislatures to recognize this modern technology, but now many
countries have enacted laws to recognize electronic contracts. The conventional law relating to contracts
is not sufficient to address all the issues that arise in electronic contracts. The Information Technology
Act, 2000 solves some of the peculiar issues that arise in the formation and authentication of electronic
contracts
As in every other contract, an electronic contract also requires the following necessary ingredients:
An offer needs to be made
The offer needs to be accepted
There has to be lawful consideration
There has to be an intention to create legal relations
The parties must be competent to contract
There must be free and genuine consent
The object of the contract must be lawful
There must be certainty and possibility of performance.

basic Type of e-contracts

1. Shrink wrap agreements: In these type of agreements the product is wrapped.
Terms and Conditions are placed with the product itself. These are End user Licence Agreements.
Example: purchase of Anti Virus.
2. Clickwrap Agreements: These agreements requires the users to accept the
proposal by clicking the “I agree”. User agree by clicking on the agree button. Example: Creation of email
id.
3. browse Wrap Agreements: These agreements are entered by continued use of
the website. By using the website, the user is deemed to have accepted the conditions. Example: Sale and
Purchase on online platforms.
4. Scroll Wrap Agreements: In these agreements, Where users are required to
scroll to the complete terms and conditions of the documents and give their implied consent. Example:
Few mobile applications requires the user to scroll down.
5. Sign-In Wrap Agreements: In these agreements, user agree by signing in to a
particular website or mobile application. User agree with the terms and conditions by Signing in.

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 E-contracts are binding only if they have all the essentials required under Indian Contract Act. If any term
or condition are not in accordance with the law than the agreements are valid.

CHAPTER – 22
SALE OF GOODS ACT,
1930

SALES OF GOODS ACT, 1930

(An Act to amend & define the law relating to sale of Goods)

The Act came into force on July 1, 1930, the act deals with sale of goods. i.e., movable property & it does not
deal with sale or transfer of immovable properties like land, house, shop, etc. we have a separate law,
transfer of property act, 1822, which deals with transfer of immovable properties.

If there is conflict between the provisions of Indian Contract Act & Sales of Goods Act then the provisions of
Indian Contract also applies to sales of Goods Act, 1930

The words that are not specially defined in sales of Goods Act, 1930, can be understood through their
meaning as given in Indian Contract Act, 1872.

When the goods are being sold under sales of Goods Act, 1930, the local customs & usage will also create
obligations on the parties if local customs & usages are known to both the parties.

Definitions:

Buyer: The person who buys or agrees to buy the Goods is a buyer – Section 2(1).

So if you don’t buy but you have agreed to buy the Goods you become a buyer.

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Seller: The person who sells or agrees to sell the Goods is a seller – Section 2(13)

So if you don’t sell but you have agreed to sell you before a seller.

Example: a) Ramesh buys 2 Kg of Potato, he is a buyer.

b) Ramesh agrees that on 5th December, he will sell books at Rs. 50, he is a seller.

c) Ramesh sell books at Rs. 50, he is a seller

d) Ramesh agrees to sell “land”, he is not a seller under sales of Goods Act, 1930, as seller or buyer can be
the person who buys or sells or agrees to buy or sell “Goods”.

Goods: Goods means every kind of movable Property other than (except) actionable claim and money, but
includes shares, growing crops, grass or things which are the part of land or attached to land, but they have
been agreed to be severed (separated) from the land before their sale or contract of sale.

Actionable claim is defined under Transfer of Property Act, 1882, and it is the right to take action in the court
of law (file a suit) to recover an unsecured debt or any arrear, for example, if your tenant does not pay rent
for 6 months, you have the right of actionable claim against your tenant.

If the debt is secured by immovable property then also, it will be an immovable property. Money or currency
is not goods.

Fixed deposit receipts are considered as “Goods” under section 176 of Indian Contract Act, 1872.

Goods means tangible as well as intangible goods like goodwill, patents, copyrights, trademark, etc.

Stock, shares, electricity, water, decrease (decision) of Court are also goods.

Kinds of Goods:

1) Existing Goods: As per section 6 of sales of Goods Act, 1930 the Goods that are existing or owned or
possessed or acquired by the seller at the time of contract of sale are called as Existing Goods.

Example: Ram went to a shop to buy a Cadbury, the seller was having Cadbury at the time of sale, so Cadbury
is existing goods.

Types of Existing goods:

a) Specific Goods: As per section 2(14) the goods that are identified & agreed upon (by the buyer & seller) at
the time of contract of sale, such goods are called as specific goods.

Example: The Buyer has decided to buy Apple iPhone 13 & seller has also agreed to sell iPhone 13, so iPhone
13 is specific goods.

(Jis goods ko buyer ne khareedne ka faisla kar liya hai aur seller ne bechne ka)

b) Ascertained Goods: The term ascertained goods is not defined in sales of Goods Act, but it has been used in
many case laws, so the goods that are identified & kept aside by the seller, after the contract of sale, such
goods are referred as ascertained goods.

Mostly the term specific goods and ascertained goods are used interchangeably.

For Example: When the buyer specified that he wants to buy iPhone 13 & seller has also agreed to sell, then
the seller keeps iPhone 13 separately from the other phones so that it could be handed over to the buyer. So
when iPhone 13 is kept separately from other phones it becomes ascertained goods.

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c) Unascertained Goods: The Goods that are not specifically identified nor ascertained at the time of making
contract, these goods are neither specified nor identified but are defined by description or sample, such
goods are called as unascertained goods.

Example: Ramesh enters in a mobile phone shop & has to buy one phone with good camera, but has not
decided to buy which phone.

Example: Ram has agreed to sell one horse to Shyam out 100 horses, so that one horse is unascertained goods.

d) Future Goods: As per section 2(6) of sales of Goods Act, 1930, means the goods to be manufactured or
produced or acquired by the seller after making of contract of sale, but it must be remembered that the
contract of sale of future goods is always an agreement to sell as the goods are to be delivered in future &
the goods are not existing with the seller at the time of sale. The ownership also does not pass to the buyer.

Example: Ram pays Rs. 100 to Shyam & Shyam promises to sell him perfume which will arrive by ship, next
week.

Example: D promises to sell all his production of cotton from his factory to K.

e) Contingent Goods: As per section 6(2), the Goods acquisition of which by the seller depends upon an
uncertain event.

In case of contingent goods also, there will be an agreement to sell as the goods do not exist with the seller at
the time of sale & the ownership will also be transferred in future.

Example: Ram agrees to sell a BMW 7 series car to Shyam for Rs. 10 Lacs, if Ram could get a custom clearance
for import of the car.

Delivery: As per section 2(2) of sales of Goods Act, 1930, delivery means voluntary transfer of possession of
Goods from one person (seller) to the other person (buyer). In other words we can say delivery is an act
through which the possession of goods comes to the buyer or his agent.

There are 3 types of deliveries:

a) Actual delivery: In this delivery goods are actually delivered to the buyer or his agent, or goods more from
the place of the seller to the place of buyer. Goods are physically delivered to the buyer.

Example: You order 10 Kg of Rice on Amazon & Amazon gets it delivered to your house.

b) Constructive delivery: When the place of goods does not change but still the buyer gets possession of goods
or when delivery takes place through acknowledgement, we call it constructive delivery.

Example: Ram buys a fully furnished flat from shyam, all the furniture of flat is constructively delivered to
Ram.

Example: Ram has sold BMW to Shyam, but Shyam has not received the delivery & Ram says that till the time
Shyam receives the delivery, he (Ram) will hold the BMW on behalf of Shyam. In this case we can assume that
the BMW has been constructively delivered to Shyam, when Ram accepts that he is holding the BMW on behalf
of Shyam.

c) Symbolic Delivery: When the goods are not actually delivered but some symbols relating to goods are
transferred & through such symbols delivery of goods also takes place, it is called as symbolic delivery.

Example: The delivery of car is done through its keys.

Example: Through the ‘Railway Receipts’ the goods in custody of railways can be sold.

Deliverable State

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As per section 2(3) of sales of Goods Act, 1930, the goods are to be said in deliverable state when the buyer
as per the terms & conditions of contract, will be under an obligation to take delivery of the goods.

Example: If the buyer has specified that he will take delivery only when the packing box is sealed, so the
goods will be in deliverable state when the box is sealed.

Document of title to Goods

As per section 2(4) of sales of Goods Act, 1930, or document becomes document of title of goods if such
document is proof of possession or proof of control or authorises its holder (the person has received document
of title by delivery or endorsement) to receive or transfer the goods that are contained in it.

Example: Railway Receipt, Bill of lading (When goods are transported by ship, the shipping authorities issue
bill of lading) Dock warrant, wharfingers certificate, Railway Receipt, multi modal transport receipt, warrant
or order of delivery etc.

Mates receipt is not document of title, it is just a proof that goods have been received by shipping
authorities.

Document of title Document showing title

The holder of document of title can freely The document that shows the title
receive or transfer the goods. (ownership) of a person but such person can
not freely transfer the goods.
Example: Railway receipt. Example: Share certificate. i.e., the person
The person who has railway receipt can get whose name is mentioned in share certificate
the goods without any condition or can can not freely transfer share as transfer of
transfer such goods to any person through the share has to be approved by Board of Director
transfer of such railway receipt. of the company.
(shares in physical form)

Mercantile Agent: As per section 2(9) of sales of Goods Act, 1930, an agent who has the authority to sell or
consign or purchase or raise money on security (pledge) of goods, on behalf of his principal is called as
mercantile agent.

Property: There are two types of properties under sale of goods act, 1930.

a) General Property: It means the ownership in the goods & all the rights relating to ownership.

b) Special Property: It means the right of possession in goods.

Normally the person who has general also has special property in goods but in some cases like in bailment if
the owner of mobile phone gives the mobile phone to any other person for 3 days then in this case the owner
will have general property for 3 days but the special property will be with the bailee, i.e., the person to
whom mobile is given for 3 days.

Insolvent: Under Contract Act, insolvent was the person who was declared insolvent by the court, but under
sales of Goods Act, 1930, as per section 2(8) insolvent means the person who discontinues to pay his debts or
can not pay the debts when the debts become due is an insolvent person.

Price: Section 2(10) – Monitory consideration for sale of goods, it is value of goods expressed in monitory
terms. It is essential for contract of sale.

Quality of Goods: Section 2(12): State or condition of Goods.

DISTINGUISH

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▪ Contract of sale and agreement to sale
[Link]. Contract of Sale Agreement to Sell
1. Immediate transfer of ownership Ownership is transferred in future.
2. Agreement + immediate transfer of ownership Agreement to Sale + future transfer of
= contract of sale. ownership = Agreement to Sale.
3. Contract of sale can be executed or executory Agreement to Sale is always an executory
contract. contract.
4. If the buyer does not make payment seller can In case the buyer does not pay price to the
sue the buyer. seller. The seller cannot sue the buyer but
can only claim the damages.
5. The buyer will bear the risk in case the goods In this case the seller will bear the risk as the
are destroyed. ownership has not been transferred to the
buyer.
6. In case seller makes breach of contract of sale If the seller makes a breach of the contract
the buyer has got 2 remedies. : the buyer has only remedy. He can only claim
i) Sue the seller for damages. the damages.
ii) Recover the goods from the person
with whom goods are lying
[proprietary rights]
7. Existing goods Future or contingent goods
8. It creates Jus in rem i.e. right against the It creates jus in personam, i.e. right against
world, as once you buy the goods no person specific person only, so when the a person
can take back the goods from you. makes agreement to sell and If that agreement
is not performed, right can be exercised only
against the person with whom agreement was
made.

▪ Sale and hire purchase

[Link]. Sale Hire Purchase
1. Immediate transfer of ownership. Ownership is transferred on the payment of last
instalment.
2. The position of buyer in case of sale is like The position of hirer is like bailee of the goods.
owner of the goods.
3. The buyer cannot cancel the contract of The hirer may terminate (cancel) the contract
sale if the ownership has been transferred by returning the goods without paying any
to him. remaining instalment.
4. If the ownership is transferred to the buyer If the hirer does not pay the instalments the
and the buyer does not pay the price. The vendor can take back the goods and treat the
seller will bear the loss. instalments paid by the buyer as rent.
5. The buyer can transfer the ownership in the The hirer cannot transfer the ownership in
goods to any person. goods even to a bonafide buyer [The buyer who
acts in good faith, honest buyer).

▪ Sale and bailment

[Link]. Sale Bailment
1. Transfer of ownership takes place. Bailment means transfer of possession in the
goods for a specific purpose on the condition
that the goods shall be returned when the
purpose is fulfilled.
2. The buyer is under no obligation to return the There is an obligation on bailee to the bailer

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 goods to the seller. after fulfilment of the purpose.
3. There are 2 parties in contract of sale i.e. There are 2 parties in bailment i.e. bailer and
buyer and seller. bailee. The person who transfers possession
is known as bailer and the person to whom
possession is transferred is known as bailee.
4. The contract of sale is always for Bailment may be gratuitous and non-
consideration. gratuitous.

▪ Sale and contract of (work and labour) services

[Link]. Sale Contract of [work and labour] services.
1. Transfer of ownership of goods. In the contracts of work and labour only the services
of a person are transferred.
2. Ownership passes There is no transfer of ownership of goods but only
services are transferred.
SALE & AGREEMENT TO SELL- SECTION 04

A contract of sale is a contract in which the seller transfers or agrees to transfer the property (ownership) in
the goods to the buyer for a price. There may be contract of sale between one part owner & the other (one
point owner may transfer his share to the other joint owner)

A contract of sale may be absolute (without conditions) or conditional (with conditions)

If the ownership in goods is immediately transferred to buyer it is referred as contract to sale but if ownership
is to be transferred in future or the transfer of ownership, is subject to fulfillment of some conditions, it is
referred as an agreement to sell.

For example: I sell a pen to Ramesh for ₹10, it is contract to sale, but if I promise that I will sell my pen to
Ramesh after 4 days for ₹20, it is agreement to sell or, if I promise to sell pen to Ramesh, if Ramesh gets a
Bank loan, it is also an agreement to Sell.

The agreement to sell becomes contract to sale on fulfillment of the conditions specified in the agreement of
sale or when time expires as mentioned in the agreement of sale.

As per section 4, In order to make a valid contract of sale, the following elements must be present:

a) Two parties i.e. buyer and seller

b) The subject matter of contract must be goods either existing or future or contingent
c) Price in terms of money, however the consideration can be partly in money or partly in kind
d) Transfer of ownership from seller to buyer
e) Contract of sale may be absolute or conditional
f) All other essential elements of valid contract are to be present.

Note: Contract of Sale also includes agreement to sell

Section 5 – Contract of Sale How Made

Contract of Sale is made by an offer to buy or sell at a specific price & acceptance of such offer by the other
party. The contract of sale may provide for:

a) Immediate delivery of goods or

b) Immediate payment of price or
c) Immediate delivery of goods & immediate payment of price, or
d) Delivery or payment in installments or
e) Delivery or payment or both shall be postponed (in future)

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The contract of sale may be in writing or by words of month or partly in writing or partly by words of month
or may also be implied (I open my mouth and panwala puts a pan in my mouth)

Section 6 – Subject Matter of Contract of Sale

The subject matter (contract ki wajah) of contract of sale may be existing goods that are owned or acquired
or possessed by seller at the time of sale or it may be future goods or it may be the goods acquisition of which
depends upon contingency which may or may not happen.

For example I will sell you 5 bottles of whisky if the ship by which bottles are coming reaches Mumbai Port
safely.

In the contract of sale if the seller makes a present sale of future goods then such contract will be treated as
agreement to sell.

Section 7 – Goods Perishing Before Making Contract of Sale

If there was a contract of sale of specific goods & the goods for which contract was made have perished or
damaged without the knowledge of seller, at the time of contract of sale, in this case there will be a “void
agreement” (though we have used the word contract)

Example: I agree sell 50 eggs to Mr. K, at the time of agreement neither I nor the buyer was aware that eggs
were converted in to chicks the agreement is void-ab-initio

Section 8 – Goods Perishing Before Sale But After Agreement to Sell:

In case the goods are perished or destroyed after agreement to sell & before actual sale (before transferring
ownership), it will be considered as supervising impossibility & the contract will be a void contract.

For example, I agreed to sell 5 bottles of whisky when ship carrying whisky returns to Mumbai port now the
ship has sunk in the sea, so in this case contract will be a void contract.

Section 9 & 10 – Ascertainment of price of goods:

The price of the goods which are sold may be fixed in the contract or may be fixed in the manner as provided
in the contract or may be decided in the course of dealings.

Ex. I am selling 100 kgs of sugar every month, for 12 months to Sunil, the price can be fixed:

a) ₹100 per kg (In the contract)

b) Price will be same as charged by fair Price Shop’s run by Government (in the manner as mentioned in
contract)
c) For the first month price will be ₹100 per kg but after first month, for each month price will be
mutually decided by both the parties after considering market conditions (In the course of dealings)

2) If the price could not be decided as per above provision the buyer shall pay reasonable price to the seller &
reasonable price depends upon facts & Circumstances of each case.

Price to be fixed by third party – Section 10

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3) If in the contract it was agreed that goods will be sold at the price fixed by the third party (valuer) & if
the third party does not make or could not make valuation then the contract become void, however if already
some goods have been delivered the Seller can recover reasonable price.

4) If third party is prevented from making valuation due to fault of the seller or buyer, the party who is not at
default can claim damages from other party.

STIPULATION OF THE TIME - Section 11

if parties have not agreed anything else, Stipulation of time for payment of price is never an essential
element of the contract and whether any other stipulation (term – shart) as to time is essential element of
the contract or not depends upon the intention of the parties. But in many cases the Courts have decided
that delivery of the goods must be made without delay, so stipulation as to delivery of goods may be
considered as essential element of contract of sale.
CONDITION & WARRANTIES

At the time of selling the goods, seller makes many statements in order to convince the buyer to purchase the
goods, regarding the nature & quality of goods, some representations or statements which are not the part of
contract of sale are not relevant & do not the part of contract of sale are not relevant & do not have any
legal effect, out of these statements, the statements that are part of contract of sale & buyer relies on them,
they create legal effect on contract of sale.

The statement of seller which is the part of contract of sale & affects the contract is called as stipulation, for
example, “if the seller says that the mobile phone has best quality camera & buyer relies on it” it becomes a
stipulation.

The important stipulations which are the main part or main purpose of the contract of sale & if these
stipulations are breached the buyer has a right to repudiate the contract, these stipulations, are referred as
conditions as per section 12 of Sales of Goods Act, 1930.

The stipulations related to contract of sale may either be condition or warranty.

Example: I go to buy a mobile phone which has the 20MP camera, but after purchase it was found that the
phone has 18 MP camera, it is a breach of condition & I can treat the contract as void.

Warranty is a stipulation which is collateral to the main purpose of the contract & if warranty is breached the
buyer has a right to claim damages but not a right to treat the contract as repudiated (void) & reject the
goods.

Whether any stipulation is condition or warranty depends upon the interpretation of the words used in
contract. It has happened in many case laws before the court, that the contract used the word “warranty”
but the court treated it as “condition”.

For example: If I say to a shopkeeper I want a mobile phone which should have HD video recording facility,
the shopkeeper gives me a mobile phone which did not have HD video recording facility, it will be considered
as breach of condition as I used the words “should have HD video recording” I can cancel the contract & take
my money back”

Example: I buy a car with a guarantee on manufacturing defects within one year from the date of purchase of
car, now after 3 months the horn of car is not working & I will be able to claim damages. It will be treated as
breach of warranty

Condition Warranty
a) Stipulations that are main purpose of a) Stipulations that are collateral to main
contract purpose of contract.

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 b) The aggrieved party has a choice to b) Only damages can be claimed in case of
cancel contract or claim damages or breach of warranty.
both
c) Breach of condition may result in c) Breach of warranty cannot be considered as
breach of warranty if contract is breach of condition.
cancelled.

Section 13: When condition is to be treated as warranty

a) If there is any condition in the contract, the buyer for his own benefit may
waive the condition or choose to treat the breach of condition as breach of warranty
& not cancelling the contract on the ground of breach of condition.
b) If the contract is not severable, & the buyer has accepted the whole of goods
or part of the goods, in this case the breach of condition will be treated as breach of
warranty & in this case also contract cannot be cancelled, however if there was any
term in the contract which allowed the buyer to cancel the contract even after
accepting the whole or part of goods, then buyer could have cancelled the contract.
c) If fulfillment of any condition is excused by law, or by impossibility then buyer will have to accept the
goods & will not be able to cancel the contract.

There are two types of waiver

of conditions

Voluntry waiver
1. Waiver of performance of Compulsory waiver
contract 1. Accept whole or part goods
2. Elect to treat breach of 2. Fulfillment of condition
condition as breach of excused by law.
warranty.

ECTION 14-17: EXPRESS TO IMPLIED CONDITIONS

The conditions & warranties which the parties expressly agree in the contract of sale are express conditions &
warranties.

The conditions & warranties that are always present in the contract of sale, without even being specifically
expressed, these conditions & warranties are present to protect the buyer of the goods & these conditions &
warranties are provided by law in the contract of sale & known as implied conditions & warranties. However,
by an express agreement, implied conditions and warranties can be removed from contract of sale.

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Implied conditions:

a. Condition as to title (Section 14):-

Here title means ownership or right to sell available with seller, so it is a first condition that the seller
must have right to sell the goods at the time of contract of sale & in case of agreement to sell he will
have a right to sell when the ownership has to be transferred. If the title of the seller is found to be
defective, then the buyer has a right to return the goods to seller & ask for refund of price paid to seller.
The buyer can also claim damage, if he has suffered any loss due to defect in the title of seller.

Example:- Ramesh sold a pen to Suresh, when Ramesh did not have the title over the pen, when Suresh
was using the pen the true owner of pen Mahesh saw it & took it from Suresh (Mahesh has a right take his
pen), now in this case Suresh can recover price from Ramesh.

Example:- Raju sold “Nike” T-shirt to Ram, by infringing the trademark of “Nike” for ₹2000. In this case as
Raju has sold duplicate Nike T-shirt for original price by infringing the trademark, we can say that Raju
did not have the right to sell as he did not have title “Nike”, now in this case Ram can either remove
“Nike” Trademark from T-shirt & claim refund for reduced value of T-shirt OR
can cancel the entire contract & claim refund.

b. Sale by depreciation:-

Sometimes, the buyer or seller provides description of goods & the goods are
sold as per description.

For example: The buyer may specify that he wants “Japanese watch” or seller may state that he is going
to provide a car with “German engine” etc. So in this case it is the duty of the seller to sell the goods that
match with the description, if the goods do not match with the description the buyer has a right to cancel
the contract.

The sales of Goods act does not specifically define description but, it can be the class or the kind of Goods
for example “organic rice” & it can also be related to characteristics of goods such as “5% Copper Mix
Steel” or “Low fat Milk” etc.

Description of goods can be known from the statements used in the contract & whether description is
essential condition or stipulation of the contract or not, it can be known from the words used in the
Contract. Description can also relate to origin or mode of packing, for example: I want “Aagra ke Pethe”
Ex: I ordered for Amul low fat milk but I was provided with Amul regular Milk, I can reject the goods as
goods do not match as the description, if I have used Amul regular Milk as I could not return it, So I will be
able to claim damages but I wont be able to cancel the contract.

c. Sale by Sample:

Sometimes it may happen that buyer or the seller shows the sample of the Goods & in case if the buyer
agrees to buy as per sample or the seller agrees to sell as per sample then:

i.) The bulk of goods that are being sold must match with sample.
ii.) The buyer should be given a reasonable opportunity to check whether the bulk of goods that are
supplied matches with sample or not.
iii.) The goods shall not have any defeat which makes them un-merchantable even if, such defects
could not be judged (pata lagaya ja sake) on reasonable examination. So this condition applies
when the goods have latent defects i.e. the defects that are discovered after the purchase of
goods.

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Example: If a give a sample watch to seller & ask him to supply 100 watches which matches with sample, it
will be an Implied Condition that all 100 watches must with sample & if any of the watches stops working
after 3 days, I can cancel the contract as it is a latent defect.

Latent defect means a defect that is discovered after the purchase of goods & could not be discovered at the
time of purchase of goods.

d. Sale by Sample as well as description (Section 15):-

In case a sample is given & also a description is given than it is the duty of the seller to sell the goods which
match with sample as well as description. If the goods match with sample but not match with description or if
the goods match with description & not with sample, the buyer can repudiate or cancel the contract.

For example: If I promise to sell 100 watches same as sample & all the watches will be made in Japan, so in
this case it will be my duty to Supply all watches which are same as sample + they should be made in Japan.

e. Condition as to quality or fitness:-

As a general rule the goods will be fit for the purpose for which they are made but they will not be fit for any
particular purpose of buyer.

So for buyer, if a person purchases washing machine for making “Lassi”, he can cancel the contract, if the
washing machine does not wash the cloths properly, but the buyer can not cancel the contract, if the washing
machine does not make good lassi.

However if the below mentioned 3 conditions are satisfied then it becomes an implied condition that the
goods must also remain fit for any particular purpose of the buyer:

i.) The buyer should have made known to the seller the particular purpose for which he is buying the
goods.
ii.) The buyer must rely & trust the skill & judgement of the seller.
iii.) The seller must be dealing in the goods which are described by the buyer, the seller may be a
manufacturer or not.
iv.) The goods must not have been sold under a brand name or patent.

In case of any goods can be used only for one specific purpose the buyer is not required to tell his
purpose, for example, if I go to buy a pen I am not required to say that I need a pen to write.

Example: If I want to buy a washing machine to make lassi and if the washing machine does not make lassi, I
can cancel the contract if:

i.) At the time of buying I had told to the seller that I want washing machine to make Lassi.
ii.) I should buy the machine which the seller suggests & if I say to the seller that I want “LG” brand
washing machine only then, it may restrict the skill & judgement of seller and I will not be able to
cancel the contract.
iii.) The seller must be dealing in washing machines only.

If all the above condition are satisfied & if the washing machine suggested by seller does not make lassi, I can
cancel the contract.

f. Condition as to merchantability:-

When the goods a bought by description from the seller (Whether he is a manufacturer or not) there is an
implied condition that the goods should be of merchantable quality. Merchantable quality means the goods

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are able to satisfy the purpose for which they are made and the good quality of the goods which are
described. The word is merchantability is not specifically defined. This condition applies when:-

a) Goods are bought by description

b) The seller should be a dealer in goods of those description.

In this case the buyer has examined the goods & ignores the defects that could have been found on ordinary
diligence in this case these will be no implied condition for such defects.

Ex: I purchased a T-shirt from the shop, from inside the T-shirt was torn. I can cancel the contract, but if this
defect could have been found on ordinary examination T-shirt, I wont be able to cancel the contract.

g. Cndition as to wholesomeness: This condition applies in case of eatables. In addition to be

merchantable the goods shall be wholesome, healthy & hygienic.

For example: I purchased milk which had corona virus due to which my family was affected. I am entitled to
cancel the contract & claim damages.

Implied Warranties:-

These are stipulations which are already present in every contract of sale & these stipulations are made
present by sales of Goods Act, 1930. However by an express agreement the parties may exclude implied
warranties from the contract.

Implied warranties are discussed below:

1) Warranty as to undistributed possession: The buyer who has purchased the goods must enjoy the
goods without any disturbance in his possession & must not be distributed while using the goods. If
the buyer’s possession while using the goods, he can claim damages.

Example: Ravi sold me a mobile phone which belonged to Suresh, So when I

was using the mobile phone Suresh snatched it from me, so my possession
has been distributed by Suresh, in this case I can claim back the price that I
paid & can also claim any money that I spent on mobile.

2. Warranty as to existence of encumbrances:

Encumbrance mean any liability or burden, when the goods are sold, it is an
implied warranty that the goods will be free from any liability or burden in
favor of third party, which was not known to the buyer at the time of
contract of sale.

Example: I had taken a loan of ₹25,000 from Ram & had promised that if I could not repay the loan I will
transfer him my car, prior of payment of loan, I sold the car Mahesh without informing about the
encumbrance on the car, I also made a default in repayment of loan to Ram. So now in this case Mahesh can
ask me to clear the loan of Ram or Mahesh may himself clear the loan & can demand the amount of loan &
interest from me.

3. Warranty as to quality or fitness by usage of trade:

It is an implied warranty that the goods must be fit for the purpose for which they are normally used in trade.

However at the time of purchase only the buyer must check the goods properly that he has purchased right
goods. If the buyer purchases wrong goods he cannot make the seller liable later on.

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4. Warranty as to disclosure of dangerous nature of goods:

If the goods have any dangerous nature & the buyer is ignorant or not aware of such dangerous nature, in this
case the seller must warn the buyer about the, dangerous nature of the goods, otherwise the seller may be
liable for damages.

Ex: Warning on cigarette packet, at the time of selling cigarettes.

Caveat Emptor

It means “Let the buyer beware”. As per this rule, the buyer is himself liable for wrong selection of the goods
& the seller is not liable to disclose the defects in the goods. It is the duty of buyer to make sure that the
goods which he is buying will satisfy his purpose, if the goods do not satisfy his purpose or the buyer makes
selection of wrong goods the seller will not be liable.

The rule of caveat emptor protects the seller. If the buyer relies on his personal skill & judgement he cannot
hold the seller liable.

As per this rule, if the goods have defects which can be found on ordinary examination of goods, seller will
not be responsible.

Ex: Ram bought a pig which was infected with corona, after the purchase, Ram kept the infected pig with his
other pigs, & other pigs were also infected with corona, the court decided that seller is not liable as buyer
made his own choice.

Ex: Ram wanted to buy the Horse for riding, but did not disclose it to the seller, the seller sold the horse
which was fit for carrying goods, the court decided that seller is not liable.

Exceptions to the rules of caveat Emptor (It means in the below mentioned cases seller will not get
protection)

1. Implied condition as to quality & witness: (refer to the earlier implied condition with 3 exceptions)

In the case of Priest vs Last, a buyer purchased bottle, to keep hot water & informed the seller that he want
to have bottle for holding boiling water, but the seller told that bottle will keep hot water, but when hot
water was kept the bottle busted, & injured the wife of buyer, the court decided that seller is liable to pay
damages.

In the case of Bombay Burma Trading Corporation Ltd vs Aga Muhammad, Timber was purchased with express
purpose of using it in railways, but was found unfit for railway purposes, court decided that buyer can cancel
the contract.

2. Condition as to description

3. Condition as to merchantable quality

4. Sale by sample

5. Sale by sample as well as description

6. Trade usage

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7. If the seller sells the goods by making some false statement or by doing any misrepresentation or fraud or
by concealing some defects, so that they cannot be found in ordinary
examination of the goods, in this case the rule of caveat emptor will not
apply.

Example: A seller hide the scratch in the car by a sticker so that the buyer
could not find it on ordinary examination, but afterwards the buyer discovers
it, the buyer can cancel the contract.

TRANSFER OF OWNERSHIP

Sale of Goods involves transfer of ownership from seller to buyer. In this topic
we will discuss about the time at when the ownership passes from seller to
buyer.

As a general rule, risk in the goods also transfers with the ownership. In case goods are lost or damaged, the
risk will be with the owner of goods, seller can sue the buyer for the price
only when ownership has been transferred to the buyer.

Passing of Property (Ownership) section 18 to 20

The rules relating to transfer of ownership depends upon the two basic
factors:

a) The ownership cannot pass to the buyer unless the goods are ascertained. So, the goods have to be
specific & ascertained then only ownership can be passed as per section – 18
b) The general rule regarding transfer of ownership is that, the ownership transfers, when the parties to
contract of sale intends to transfer ownership & the intention of the parties can be known from:
(i) The terms of contract
(ii) The conduct of parties
(iii) The facts & circumstances of the case

If the parties have not agreed anything regarding the transfer of ownership then the following rules will apply
for transfer of ownership.

a) Transfer of ownership in specific goods in deliverable state:

When there is unconditional contract of sale of specific goods which are in deliverable state, the
ownership in the goods passes to the buyer when the contract of sale is made, the payment of price or
delivery of goods may be made immediately or in future. Here we are discussing about transfer of
ownership.
Ex: Ram buys a “pen” & ask the seller to deliver it on the counter, the pen’s ownership is immediately
transferred to Ram.
b) Transfer of ownership in specific goods which are not in deliverable state:
In this case the ownership will be transferred to buyer if two conditions are fulfilled:
(i) The goods have come in to deliverable state
(ii) Buyer gets a notice of the fact that the goods have come into deliverable state

c) Specific goods in deliverable state, when the seller has to do something for ascertaining the price:
In case the seller, has brought the goods into deliverable state but has to weigh, measure, test or do
something for ascertaining the price of the goods the ownership in the goods does not pass to the
buyer unless such test, measurement or weight has been done.

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 d) Transfer of ownership in unascertained goods:
As per section 18, ownership in unascertained goods, passes when the goods have been ascertained.

e) The rule in respect of transfer of ownership in unascertained goods is given in section 23 which is as
follows:

a) When the unascertained goods or future goods are described & if the goods of those description
have come in deliverable state & are unconditionally appropriated either by seller with the
consent of buyer or by buyer with consent of seller, the consent or assent may be express or
implied & when such consent for appropriation is given the property (ownership) passes to buyer.

Example: I go to a shop & I have not yet decided the mobile phone that I need buy, I tell the seller that I want
mobile phone with best camera, so seller shows me a mobile phone I phone 13 & I give my consent to seller
for keeping it aside for delivery (appropriation) so when I give consent for appropriation without any
condition, the ownership passes to me. In case of future goods, the ownership will pass when the goods are
available with seller & appropriation is done. The consent may be express or implied, & may be given before
or after appropriation.

b) when the seller transfers the goods to the buyer or keeps it aside for delivery to the buyer or
transfer the goods to the carrier so that it could be delivered to the buyer & the seller does not
reserve a right of disposal with himself (means seller does not reserve the ownership) so we can
say that seller has unconditionally appropriated the goods to contract. The ownership is
transferred when the goods are transferred to bailee (the person who will deliver the goods to the
buyer).

Example: Raju orders a particular book by description from Shyam, Shyam sends the book by courier & in
courier the book is lost, Raju will be responsible for loss as ownership had been transferred when book was
delivered to courier

Note: The goods that are being sent must match with description given by the buyer

f) Transfer of ownership when: Goods sent on “approval” or “on sale” or “return” Basis:

In this type of sale, the ownership to the buyer passes:

(I) When the buyer accept the goods and informs the seller that he has accepted the goods OR
does any at which shows that he has accepted the goods (accepting goods from Amazaon and
signing delivery receipt or reselling the goods) OR
(II) If the buyer accepts the goods but does not communicate his acceptance to the seller & keeps
the goods with himself, beyond the time of return of goods OR if no time was fixed for return
of goods then the buyer keeps the goods beyond a reasonable time, without rejecting the
goods (you accept the goods and do not return the goods for 7 days which was time of return),
Or
(III) The buyer does any act which shows that he has accepted the goods for example if the buyer
further sells or pledges the goods.

(g) Sale for cash only or return basis:

In this type of transaction the ownership passes to the buyer only when the buyer pays cash.

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Example: Ram sold a T.V to shyam on sale for cash only or return basis, without paying cash shyam pledged
the T.V with Suresh, the court decided that pledged by Shyam is not valid as at the time of pledge shaym was
not the owner as shyam had not paid cash.

h) Reservation of Right of disposal

In some cases it may happen that the seller in-spite of delivering the goods to the bailee or the buyer,
reserves with himself the right of disposal of the goods & can state that the right of disposal will be given to
the buyer only when some conditions as specified by the seller are fulfilled by the buyer. Right of disposal
here means “ownership”

When the goods are delivered through railways & ship the seller after delivering the goods to railways or ship,
has kept railway receipt or Bill of lading with himself or tells that the goods will be delivered only on his order
or to his agent, then it will be assumed that the seller has reserved rights of disposal.

If the seller sends railway receipt or Bill of lading along with a bill of exchange & adds a condition that the
railway receipt or Bill of lading can be accepted only when the bill of exchange is honored or accepted in this
case, the owenership will be transferred to the buyer only when he accepts the bill of exchange.

If the buyer without accepting bill of exchange keeps the railway receipt or bill of lading, then the ownership
will not be transferred to the buyer.

For example: I deliver furniture to Ram by a truck & I instruct the driver not to deliver the furniture to the
buyer till the time buyer accepts the bill of exchange.

Example: I deliver furniture to Ram by a truck & I instruct the driver not to deliver the furniture to the buyer
till the time buyer pays the loading and transport charges.

Section 26: Risk Prima facie transfer with ownership

If something else is not agreed between the buyer & the seller, the risk relating to the goods remains with the
seller, till the time the ownership is passed to the buyer, once the ownership is passed to the buyer the risk is
with the buyer, whether delivery has been made or not.

However, this rule is subject to the following exceptions (It means, in the below mentioned cases the risk in
the goods will not be with the owner of the goods):

a) If delivery has been delayed by the default of either buyer or the seller & due to the delay in
delivery, the goods have suffered a loss, in this case, the risk of loss will be borne by the party due
to whose default delay was made in the delivery of the goods.
Example: I had purchased a car on 25th July, the car was to be delivered to me on 26th July. I
reached the showroom to take the delivery but I could not get delivery on showroom was closed
due to some reason & car was parked in the parking of showroom & it was stolen from parking, in
this case though I am the owner of car but risk will be faced by the seller as he made default in
delivering the car.
b) Irrespective of transfer of ownership the liabilities & duties of the parties as bailee of the goods
are not affected. It means if the owner of goods has given his goods on bailment to some person,
then such bailee should take care of goods, if the bailee does not take care & goods are destroyed,
the loss will be on the bailee & not on the owner.

However, the above discussed rules are subject to agreement between two parties i.e. parties can even agree
that the ownership will transfer after 5 days of transfer of possession or something else.

Transfer of title or ownership by the non-owners (Section 27):

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As per latin maxim (rule) “Nemo dat quod non habet”, a person cannot give what he himself does not have, so
if a person is not the owner of goods, he cannot transfer the ownership.

If this rule is applied strictly many innocent buyers will suffer for example if We have to buy a Maruti Car we
will have to go to Maruti India Limited as the owner of Maruti Cars is Maruti India Limited and dealer of Maruti
will not be able to sell Maruti Cars as he is not the owner. So the sales of Goods Act has provided the
exceptions to the rule of Namo Dat Quad Non Habet, which allows even non owners to transfer the ownership
in the Goods.

Bonafide buyer mean a buyer who is buying the goods in good faith. The buyer buys the goods in good faith,
when he places a trust on the person who is selling the goods and considers the seller as true owner of goods
and it not aware of the fact that seller has no authority to sell.
Exceptions (It means in the below mentioned cases even the non owners can transfer the ownership in the
goods):
1. Sale by mercantile agent : The ownership in the goods can be transferred by the mercantile agent
whether the agent sells goods or transfers documents of title on behalf of the seller if following
conditions are satisfied :
i. The agent is in the possession of documents of title of goods or the goods with the consent of
the owner.
ii. Sale is made in the ordinary course of business (it means sale is within the authority of the
agent)
iii. The buyer is acting in good faith (trust on the agent).

2. Sale by one of the joint owners : If one joint owner obtains the possession of goods from the other
joint owners with the consent of other joint owners and he sells such goods to a buyer who buys the
goods in good faith (sale can be made with or without consent of other joint owners). There will be a
valid transfer of ownership.
Ex: I and Shyam together buy a mobile for Rs 10000, with consent of Shyam I was having the mobile
and I sold the mobile to Suresh without consent of Shyam and Suresh bought the mobile in good faith,
in this case the ownership is transferred to Suresh.
3. Sale by person in possession under a voidable contract : If a person is holding the goods under a
voidable contract (coercion, undue influence, fraud, misrepresentation) and before the aggrieved
party cancels the contract, such person sells the goods to a buyer, who buys the goods in good faith.
In this case a valid ownership has been transferred to the buyer.
Ex: By exercising undue Influence I purchased a Car for Rs 1000 from my student and before the
student could cancel the contract I sold the car to Mahesh who bought the car in good faith for Rs 10
Lacs, in this case Mahesh has got the ownership.
4. Sale by a person who has already sold the goods but continuous to be in the possession of the goods or
document of title of goods : If seller has sold the goods but continuous to remain in possession of the
goods or document of title to the goods, and then sells the same goods to another person who is
buying the goods in good faith. In this case there is a valid transfer of ownership in favour of
subsequent [next] buyer. (even the transaction of pledge by seller in possession will be valid)
5. Sale by the buyer obtaining possession of the goods before ownership has been transferred to him : If
the buyer obtains possession of the goods or gets the document of title to the goods with consent of
the seller before getting the ownership, and the buyer sells or pledges or in any other manner disposes
the goods to a subsequent buyer who buys the goods in good faith without the notice the lien (the
buyer may not have paid full price of the goods that’s why he did not get the ownership but got
possession and is selling the goods subject to lien) or any other burden on goods. In this case the
ownership will be transferred to the subsequent buyer.
This rule does not apply to the transactions of hire purchase, but can apply to hire purchase if the
hirer has paid all the installments and got the ownership.

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 6. Effect of estoppels : If seller has represented that some other person is capable of transferring the
ownership on his behalf, the seller cannot later on deny the authority of such person. In order to
prove the transfer of ownership it shall also be established that seller or the true owner has made an
express or implied representation that the other person is capable of transferring the ownership on
behalf of the seller or the true owner.
Example: I was not the owner of horse and in front of the true owner of horse, I told a buyer that the
horse belongs to me the true owner heard me but did not take any objection so the buyer paid me
money and I gave the horse to the buyer in this case it will be treated that I have validly transferred
the ownership to the buyer and the true owner has also given the consent to the sale impliedly.
7. Sale by an unpaid seller : If the unpaid seller is the seller who has transferred the ownership but not
received full payment of goods. Such unpaid seller can transfer the ownership to some other buyer
and the other buyer gets the ownership against the original buyer.
8. Sale by finder of goods : The finder of goods can also sell the goods and transfer the ownership if he
has taken all the steps to trace the true owner and the goods are of perishable nature.
9. Sale by receiver or official liquidator : Liquidator or the receiver appointed by the court tan validity
transfer the ownership.
10. Sale by pledgee or pawnee of the goods when the pledgor or pawner has failed to repay the debt.

Performance of contract of sale: (Section 31-44)

The contract of sale will be performed when the goods are delivered by the seller & the goods are accepted
by the buyer & payment of price by the buyer as per the terms of contract of sale.

For performance of contract of sale there has to be delivery of goods from seller to the buyer. The delivery of
goods can be done through actual delivery, constructive delivery or symbolic delivery. If the buyer takes
delivery through unfair or fraudulent means these will be no delivery of the goods.

For example buyer takes goods from the seller and says that he will show the goods to his mother and then he
will buy the Goods and after taking the goods buyer never returns, in this case it will be considered that buyer
has taken delivery by unlawful means.

Section 31:

It is the duty of the seller to deliver the goods & the duty of buyer is to accept the goods & pay for them as
per the terms of contract of sale.

Section 32:

If something else has not been agreed between the parties then payment & delivery are to be made
concurrently i.e. the seller should be ready & willing to give the delivery of goods to the buyer against
payment of price & buyer is ready & willing to pay against the delivery of goods by seller.

Delivery of Goods :
Rules regarding delivery of goods (Section 33-41) :
1. Delivery: Delivery of goods can be done by doing anything which both the buyer and seller agree that
it shall be treated as delivery or it may be anything as a result of which the buyer or any person on
behalf of buyer, gets the possession of the goods
2. Effect of part delivery : If the seller makes part delivery of goods in course of delivering of the whole
goods. In this case part delivery is considered as full delivery of the goods, but if part delivery is done
with an intention of severing it [separating it] from the whole goods than part delivery is not
considered as full delivery.
Example: I promise you to deliver 500 kgs of rice but, in my tempo I could fit only 200 kgs of rice so I
will deliver you rice in three different deliveries so in this case even the part delivery will be
considered as full delivery and after receiving the first trench of 200 kgs you can not put an end to the

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 contract that I have made a part delivery as this part delivery is made in the course of making full
delivery, however if I deliver only 200 kgs and say that this 200 kgs is not the part of 500 kgs rice then
part delivery will not be considered as full delivery.
3. Buyer has to apply for the delivery : It is the buyer who will request the seller to deliver the goods.
Seller is not bound to deliver the goods unless buyer applies for delivery, if something else has not
been agreed between the parties.
4. Place of delivery : Goods will be delivered at the place where parties expressly agree for delivery.
Like when we order goods from Amazon, we give the address of delivery and Amazon delivers at the
same place. However if parties have not agreed anything with regard to delivery then following rules
as given in section 36 will apply:
i. In case of contract to sell.
ii. In case of Agreement to sale.
iii. In case of agreement to sell where goods are to be manufactured or produced in future.
a) In case of Contract to Sell – where goods were kept at time of contract to sell.
b) In case of Agreement to Sell which were existing at the time of agreement to sell– Where goods
are lying at the time of agreement to sale.
c) In case of agreement to sell where goods are to be manufactured or produced in future – Where
the goods are manufactured or produced.
5. Time of Delivery : If under the contract of sale the seller has an obligation to deliver the goods but no
time of delivery is fixed between buyer and the seller then the goods are to be delivered within a
reasonable time.
6. Goods in possession of third party [Constructive Delivery] : If goods are in possession of third party the
delivery completes when the third party accepts that he is holding goods on the behalf of the buyer
[constructive delivery].
If the goods are in possession of the third party and seller issues document of title or a symbol
attached to the goods to the buyer, in this case no acknowledgement or attainment is required from
ware-house keeper or any other person.
For example if the goods are in warehouse and the seller issues the warehouse receipt to the buyer in
this case delivery completes as soon as the buyer gets the document of title and no acknowledgement
from the warehose keeper will be required in this case.
7. Time for tender of delivery : A demand for delivery by the buyer or offer or tender of delivery by the
sell should be considered ineffectual or invalid if it is not made at a reasonable hour. The reasonable
hour depends upon facts and circumstances of the case.
8. Expenses for delivery : the duty of bringing the goods into deliverable state must be borne by the
seller, if anything else has not been agreed between the buyer and seller. It means the buyer can ask
the seller that deliverable state for the buyer will be, when goods are delivered at place specified by
the buyer and then seller will bear the expenses to deliver the goods. However parties can also agree
something else by making an agreement.
9. Delivery of wrong quantity : the seller must deliver the quantities as agreed in the contract of sale, if
the seller delivers wrong quantities then following treatment will be given as per section 37:
i. If Excess Quantity is delivered the buyer may:
a) Reject whole.
b) Accept whole and pay for the excess at the contract rate.
c) Accept only relevant quantity.
ii. If Less Quantity is delivered the buyer may:
a) Accept the whole and demand remaining at contract rate.
b) Reject whole.
c) If the buyer accepts the goods supplied by seller he must pay for the goods as per the
contract price
iii. If goods are mixed with the goods of different description :
a) Reject the whole
b) Accept only the relevant goods and reject the goods of different description.

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Mixing of goods with goods of inferior quality is not considered as mixing of goods with goods of different
description, so if the goods are mixed with inferior quality goods the buyer may proceed to cancel the
contract as per the implied conditions.
The section 37 is subject to agreement between parties or subject to any usage of trade or subject to the
course of dealing between the parties.
10. Installment deliveries : The buyer is not under any obligation to accept delivery of goods in
installment. But however, the buyer and seller may agree for installment deliveries.
11. Delivery of goods to a carrier : In goods are delivered to the carrier by the seller then it is a prima
facie delivery of goods to the buyer.

CIF Contracts
CIF means the price is to include cost, insurance and
freight. This type of contracts are entered when the goods
are to be delivered through sea route. When the goods are
sold on CIF basis the ownership passes to the buyer when
the buyer receives the documents (insurance policy, bill of
lading etc). When the goods are delivered on Free on Board
(FOB) basis the ownership passes to the buyer immediately
when the goods are put on the board or the ship.
12. Deterioration during transit: If the goods are to be delivered at a distant place the loss arising due to
deterioration of goods during transit will fall on the buyer of goods even if the seller agrees to deliver
at his own risk.
Bull Vs. Robinson
In the given case it was decided that if the goods are destroyed in transit in such a manner that they
may be used in the ordinary course of business, the buyer is liable to accept such goods.
13. Buyer’s Right to examine the goods : if the goods are delivered to the buyer who has not previously
checked or examined the goods, then if anything else is not agreed between the buyer and seller
then, it is the duty of the seller to provide a reasonable opportunity to the buyer to make sure that
the goods are in conformity with selection mode by him.

Section 42 – Rules Relating to Acceptance of Delivery of Goods

It will be considered or deemed that the buyer has accepted the goods or delivery gets complete when:
a) Buyer informs the seller that he has accepted the goods.
or
b) The buyer does not inform the seller but, does something which is inconsistent with the
ownership of seller or affects the ownership of seller.
Or,
c) Retains the goods with himself beyond a reasonable time without informing the seller that he
has rejected the goods.
Section 43: Buyer is not bound to return the Rejected Goods
If anything else is not agreed between the buyer and the seller, in the contract of sale if the buyer had a right
to reject the goods and if buyer refuses to accept the goods or rejects the goods then the buyer has no
obligation to return the rejected goods, it will be sufficient if the buyer informs the seller that he has
rejected the goods.
Section 44: Liability of the Buyer for Neglecting or Refusing Delivery of Goods
When the seller is ready and willing to deliver the goods to the buyer and requests the buyer to take the
delivery, and if the buyer wrongfully neglects or refuses to accept the goods within a reasonable time, the
seller may sue the buyer for damages for non-acceptance of the good the seller may also claim damages from
the buyer in respect of the expenses for care and custody of the goods.

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However this section shall not affect the rights of the seller when the neglect or refusal by the buyer to
accept the goods makes the contract repudiated, so if buyer refuses to accept the goods the sellers right of
reselling the goods or to sue the buyer for damages etc will not be affected.
Unpaid Seller

Unpaid Seller :
The seller who has transferred the ownership but has not received full price
of the goods or he has received a bill of exchange which has been
dishonoured is referred as unpaid seller
A seller will be considered (deemed) as unpaid seller under section, if:
a) The whole price of goods has not been paid or
offered when it was agreed that the seller will get immediate payment of the
price. Or
b) Any bill of exchange was received as
conditional payment and the condition on basis of which it was received has
not been fulfilled due to which the instrument gets dishonored (means seller
got the bill of exchange on some conditions and such conditions could not be
fulfilled by seller, for example if the buyer had asked the seller to present the
bill of exchange on specific day but due to some reasons if the seller could not present
the bill on that specific day and due this if instrument gets dishonored, still the seller
will be considered as unpaid seller) or if the seller received the bill of exchange and
such bill of exchange got dishonored.
The word seller used here includes any person who is acting as seller or is in the position of the seller such as
agent of the seller who has bill of lading or railway receipt or any document of title of goods or the consignor
or agent who has paid price to the seller or is responsible to pay the price to the seller and if such seller does
not receive the price from the buyer then such seller (agent) also becomes an unpaid seller.
Right of an unpaid sellers :

1. Right of an unpaid seller against goods : Right against the goods can be exercised only in the case
when buyer has not received the possession of the goods and the possession is with the seller though
ownership has been passed to the buyer:

1) Right of Lien (section 47):

Right of lien means right to retain the possession of goods until full payment has been received.
The Right of lien can be exercised only in following cases.
a) The seller has possession of the goods.
b) The seller should not have delivered the goods to a carrier.
c) Goods must have been sold without stipulation of credit (if there is credit sale then buyer is allowed
to defer the payment as it has been allowed by the seller so as long as credit period continues the
seller can not exercise right of lien).
d) If the goods have been sold on credit the right of lien can be exercised after the expiry of credit
period (if unpaid seller has the possession of goods even after expiry of period of credit).
e) The buyer should have become insolvent.
Even when unpaid seller holds the goods as agent or bailee of the buyer the unpaid seller can exercise the
right of lien, for example if the buyer after buying the goods keeps the goods with seller for safekeeping
of the goods, then also the unpaid seller can exercise the right of lien on goods.
If the unpaid seller has made part delivery of goods to the buyer, then the unpaid seller can exercise the
right of lien on remaining goods (remainders) however if the circumstances of the case shows that the
unpaid seller had waived the right of lien then unpaid seller will not be able to exercise the right of lien.
In the following cases the unpaid seller will not be able to exercise the right of lien:

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 1) If the goods are delivered to the carrier or any other independent bailee (who is not the agent of the
buyer or seller) for the purpose of sending of the goods to the buyer without reserving the right of
disposal of goods.
Or
2) If the buyer or his agent lawfully obtains the possession of the goods or document of title of goods.
(seller gives possession)
3) If seller creates estoppel regarding non existence of right of lien, he cannot later on exercise the
right of lien.
4) When the seller waives the right of lien.

Even if the unpaid seller gets a decree of the Court in his favour, the right of lien will continue till the time
he receives the full payment of the goods.
2) Right of stoppage in transit (section 50 to 52):
When seller has parted (given away) with the possession of the goods and the goods have come in
to the custody of independent carrier (bailee) the seller can exercise the right of stoppage in
transit if he comes to know that buyer has become insolvent and the seller can ask the carrier to
bring back the goods to him (seller) and the seller will be able to keep the possession of goods as
long as the seller does not receive the full payment of the goods.
Duration of Transit
a) The goods will be considered to be in transit from the time when the goods were delivered to the
carrier for the purpose of its delivery to the buyer or his agent and shall be continued to be in transit
till the time the buyer or his agent take the delivery of goods from the carrier or the bailee.
b) If the buyer rejects the goods and the goods again come in the custody of the carrier or the bailee, it
will be considered that the goods are still in transit, even when seller refuses to accept or receive
them back, the goods will be considered to be in transit.
c) If the goods are delivered by the seller to a ship which is chartered by the buyer (ship jise buyer ne
kiray par liya hai) and if the facts and circumstances of case suggest that the master of ship is holding
the goods as agent of the buyer then it will be considered that goods have been delivered to the
buyer.
d) If part delivery has been made to the buyer or his agent then the stoppage in transit can be exercised
for remaining goods, however if the part delivery was made in a situation which suggests that there
was an agreement to give the possession of whole goods (matlab part delivery ko hi whole delivery
agar mani ja rahi hai to fir baki ke goods ke liye stoppage in transit nai hoga).

How Stoppage in Transit is Done or Effected by Unpaid Seller – Section 52

The unpaid seller can exercise the right of stoppage in transit by actually taking the possession of goods or
by giving a notice to the carrier or bailee in whose possession the goods are of his (sellers) intention to
acquire the possession of the goods. The notice can be given to the person in whose possession the goods
are or to his principal (driver or the owner of carrier). In case the notice is given to the principal it shall
be given in such time and in such manner that the principal by exercise of reasonable diligence (thodi si
jaanch kar ke) may communicate his agent or servant in proper time so that delivery to the buyer can be
stopped. (stoppage in transit karne ke liye carrier ko notice do aur kam se kam itne time main digiye ki
buyer ko delivery ruk jaye)

When the notice of stoppage in transit is given by the seller to the carrier to the other bailee who has the
possession of goods in this case the carrier or bailee shall redeliver the goods as per the instructions of the
seller and the expenses of redelivery shall also be borne by seller. (seller delivery rokne ke sath sath yeh
bhi bol sakta hai ki ab goods kaha deliver karne hai aur aur us nai delivery ka kharcha seller bear karega)

When Transit Comes to an End

1. When buyer or his agent obtains delivery

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 2. When the buyer obtains delivery before the arrival of goods at destination, it is called as
interception by the buyer and it can be done with or without the consent of the seller.
3. If the carrier or other bailee informs the buyer that he holds the goods on behalf of the buyer,
however in this case transit will not come to an end if the seller has reserved the right of disposal.
4. If the carrier wrongfully delivers the goods to the buyer.
5. When the goods are delivered to the carrier hired by the buyer.
6. If the part delivery has been made to the buyer then transit will come to an end for the remaining
goods when are yet to be sent to the buyer as those goods will not be delivered.

Difference between
Right of lien Right of stoppage in transit
1. Right of lien is exercised to retain the Right of stoppage is exercised to regain the
possession of the goods. possession of the goods.
2. Right of lien can be exercised even Right of stoppage can be exercised only when
when the buyer is not insolvent. (means the buyer is insolvent.
buyer has not defaulted in payment of
price but has not made the payment of
other expenses in relation to the goods)
3. Right of lien comes to end, the right of Right of stoppage begins when right of lien
stoppage begins. We can also say that comes to an end.
right of stoppage in transit is the We can also say that right of stoppage in transit
extension of the right of lien. is the extension of the right of lien.
4. In order to exercise the right of lien the In order to exercise the right of stoppage in
buyer must have possession of the transit the seller should have parted the
goods. possession or the possession should be with the
carrier or the bailee or the buyer or his agent
should have not acquired the possession.

Effect of sub-sale or pledge by buyer (Section 53) :

These is a general rule that unpaid seller’s rights relating to lien and stoppage in transit, in the goods are not
affected by sub-sale or pledge by buyer to a subsequent buyer. (agar buyer sub sale ya pledge kar de to bhi
unpaid seller ke rights ko nuksan nai hota), it is due to the rule that the subsequent buyer or the second buyer
can not get a better position then his seller (agar chor se saman kharreeda hai to buyer bhi chor hi kahlaega)
Exceptions to the above rule (means in the following cases the unpaid seller will loose his rights in the goods)
:
1. When possession or document of title of goods has been given to the buyer and buyer has further sold
the goods or pledged the goods to a person who acts in good faith and the transaction is for
consideration).
Example: I sold goods to Mayur, Mayur promised me to pay price so I gave the bill of lading to Mayur,
when Mayur got the bill of lading he sold the goods to Sudesh who bought the goods in good faith in
this case Sudesh will get the ownership in goods though Mayur has become insolvent and defaulted in
payment of price to me.
In this case following points are to be noted:
a) If the first buyer makes sub sale, then the right of lien and stoppage of transit of unpaid seller
comes to an end.
b) If the first buyer makes pledge of the goods then the right of unpaid seller of lien and stoppage in
transit will be subject to the rights of pledgee with whom the first buyer has pledged the goods
(pahle pledgee ko rights milenge goods main aur pledgee ke reights complete hone ke bad rights
unpaid seller ke pas aaeynge).

2. If the seller has consented the sub sale or pledge or other disposition of goods made by the buyer.

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 In the case of Mount DF Ltd Vs Jay and Jay Provisions Company Limited, Ram contracted to sell the
goods which were in the possession of a wharfinger to Shyam, and it was agreed that the goods will be
sold by Shyam and the price recovered by the Customers of Shyam will be paid to Ram so Shyam
started selling the goods and customers paid money to shyam but shyam did not transfer the payment
to Ram, so Ram wanted to exercise the right of lien on the goods, but the Court decided that Ram can
not exercise a right of lien as he only consented to subsale.

Even after the exercise of right of stoppage in transit the Contract of sale does not come to an end, contract
remains in force and the buyer can demand for goods after paying the price.

3. Right of Re-sell :
a) The seller can re-sell the goods: This right is very important for unpaid seller as, if this right is not
given to the unpaid seller, the unpaid seller will just be able to have the possession of the goods
by way of right of lien and stoppage in transit and will have to wait for the original buyer for
payment but thorough the right of resell the unpaid seller will be able to resell the goods.
The right of resell can be exercised in the given manner:
a) If the buyer has not made payment for the goods and the seller has possession of goods, If the
goods are of perishable nature, then seller is not required to give any notice to the buyer and
he can directly sell the goods. If there is any deficit (price of resell is less then price on which
goods were sold to the buyer) in re-sell, the seller can recover the deficit from the buyer and
if there is any profit on re-sell, the seller can retain the profit.
b) In case of non-perishable goods, the seller is required to give a notice to the buyer before
making any re-sell of goods.
If the seller re-sells the goods without giving notice to the buyer. The seller cannot recover the
amount of loss on account of resell, from the buyer and if seller makes any profit on re-sell he
must transfer the profit to the buyer.
However if the unpaid seller gives notice of resell to the buyer and the buyer within a reasonable
time pays the price of offers to pay the price the seller after expiry of such reasonable period may
resell the goods, If there is any deficit (price of resell is less then price on which goods were sold
to the buyer) in re-sell, the seller can recover the deficit from the buyer and if there is any profit
on re-sell, the seller can retain the profit.
(perishable goods bina bataye bech do agar buyer ko bataya to jab tak shayad wo apise pay kare
goods kharab ho jaye to directly sell kar sakte aur agar non perishable goods hai to kayde se buyer
ko inform karna chahiye resell karne ke pahle)
c) In case of resell of the goods to subsequent buyer, the subsequent buyer gets a good title to
the goods by unpaid seller whether notice of resell was given or not to the original buyer.
d) In Some cases the it is expressly agreed between the buyer and seller that if the buyer does
not make the payment of goods within the time agreed between the buyer and the seller then
the seller will have a right to resell the goods and in this case if the seller makes resell on
account of such right in case of default by the buyer, the seller will not be required to give any
notice of resell to the buyer. (seller will get all the rights of recovering the deficit and
retaining the profit)
e) The unpaid seller also has a right of withholding the delivery of goods and it is similar to lien
or quasi lien (stopping the delivery and retaining the possession)

2. Right unpaid seller against the buyer personally (Section 55-61)

The unpaid seller has following rights against the buyer personally – (Sellers Remedies for Breach of
Contract of Sale)

i. Unpaid seller can sue the buyer for price.

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 a) If seller transfers the ownership as well as possession of the goods to the buyer but the buyer
wrongfully refuses or neglects to pay for the price, the seller may sue the buyer for the price of the
goods. (seller ne ownership or possession donon de diya hai par buyer ne price nai diya hai to seller
buyer ko sue kar sakta hai price ke liye)

b) If seller has not transferred the ownership nor the possession of the goods but the buyer had agreed to
pay for the price of the goods on a certain day irrespective of transfer of ownership or possession or
appropriation of goods to the contract of sale, the seller may sue the buyer, if the buyer does not
make the payment on certain date. (agar buyer ne promise kiya tha ki wo ek particular day ko
payment kar dega chahe ownership ya possession mile y ana mile aur agar us specific day ko buyer
paise nai deta to seller buyer ko price ke liye sue kar sakta hai)

ii. Unpaid seller can sue the buyer for damages and for non-acceptance of goods.

If the buyer wrongfully neglects or refuses to accept and pay for the goods, the seller may sue
the buyer for damages for non-acceptance of the goods, the seller may also claim damages
from the buyer in respect of the expenses for care and custody of the goods, the amount of
damages will be as per section 73 of Indian Contract Act, 1872.
iii. Repudiation of contract before due date

If the buyer cancels the contract before the date of performance or before the date delivery,
the seller may treat that there is a breach of contract and can sue buyer for damages
(anticipatory breach).
iv. Suit for interest
The seller can claim the interest of from the buyer on the unpaid amount by the buyer if there
is an agreement between buyer and seller regarding the payment of interest and such interest
may be charged from the date on which the payment becomes due.
If nothing is mentioned in agreement related to payment of interest the seller can claim
interest from the buyer by giving a notice to the buyer regarding charging of interest.
If the matter regarding price reaches the Court, the court may also give an order to the buyer
for payment of interest at the rate decided by the court (the rate that Court thinks fit) from
the date of delivery of the goods or the date on which price was payable.

Rights of Buyer in case of breach of contract by Seller :

1. Damages for Non Delivery of Goods: When the seller wrongfully neglects or refuses to deliver the
goods to the buyer the buyer may sue the seller for damages on account of non delivery of goods.
Example: I agreed to sell Ras Malai to You for Rs 50 per kg at the time of contract of sale I was aware that you
are going to sell my ras malai at Rs 70 to Vikas, now on the day agreed for delivery of Ras Malai I made a
default in delivering the ras malai and as a result of this You could not deliver the ras malai to vikas in this
case you can reover a damage of rs 20 from me (difference between the contract price and resell price)
2. Buyer can sue the seller for specific performance of the contract.
Specific performance is covered under specific relief act 1877. If the subject matter of the contract
has some special value and the compensation in money is not an adequate remedy to the buyer. The
buyer may sue the seller for specific performance of the contract.
If these conditions are satisfied the Court grants specific performance:
The contract must be to sell specific and ascertained goods + The matter is covered under Specific
Relief Act, 1963 + Damages or compensation in terms of money is not adequate remedy to the buyer +
if the goods are of special nature or value or are unique and not easily obtainable.
Example: I promise to sell you Tippu Sultan ki talwar for Rs 1 lac but I breached my promise, you can
claim specific performance in this case from the Court.
3. Suit for damages for breach of warranty.

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 i. The buyer can claim damages for breach of warranty, in following two cases.
a) There is a breach of warranty by the seller.
b) The buyer has treated Breach of condition as breach of warranty.
So in these cases buyer can not reject the goods but can claim damages or the buyer may also claim
diminution or extinction of price (utna price main nai dunga jo goods ka kam hogaya hai breach of
warranty ke chalte)
4. Repudiation of the Contract before Due Date: If any of the parties to the contract repudiates (cancels
or breachers) the contract before the day of delivery, the other party may keep the contract alive and
may wait till the day of delivery or may treat the contract as repudiated on the day of repudiation
only and claim for damages for the breach (in this case we will assume that seller is making breach or
default and buyer will claim damages as we are covering the rights of the buyer).
5. Suit for Interest:
1) if Sales of Goods Act or any other law gives a right to claim interest or special damages to the
buyer or the seller or if a right to recover money already paid has to be recovered as consideration
against such payment has not been recovered, then parties can recover it, Sales of Goods Act
does not affects such right of the parties.

2) In case the buyer has made the payment but the seller has made a breach of the contract and as a
result if the buyer sues the seller for refund of the price and interest, the Court may award
interest to the buyer at the rate which court thinks appropriate and ask the seller to pay such
interest from the date on which payment was made by the buyer.

Auction sale (section 64):

Auction sale is a sale where by goods are sold by inviting offers for sale of any product and the goods are sold
to the highest bidder. Auction sale become a concluded sale on the
fall of hammer.

Characteristics of auction sale

1. Auction sale is done by the
auctioneer. An auctioneer is the agent of the owner or seller,
however the auctioneer may also sell his own goods in the Auction
as a principal and when he sells his goods as a principal, he is not
required to disclose the fact that he is selling his own goods.
2. The Auction sale completes on the
auctioneer announces its completion by fall of hammer or by any
other customary manner, and until such announcement is made the
bidder may retract (withdraw) his bid.
3. A right to make a bid may be expressly (by giving a notice) reserved by the auctioneer. If auctioneer
or the seller makes any bid at the auction a notice has to be given to the other bidders. In this case
the seller himself or any one person on behalf of seller may bid at the auction only when notice has
been given.
4. If the notice is not given about the bidding by the seller, it shall not be lawful for the seller to bid
himself or appoint any person to bid on his behalf at the auction, if the auctioneer or the seller
himself takes the part in bidding or appoints any person to take the part in bidding by avoiding this
rule, the auction sale shall be considered as fraudulent by the buyer.
5. If seller makes use of pretended biding to raise the price. The sale is voidable at the option of buyer.
(Pretended biding means fake biding without the intention to buy the goods)
6. The auctioneer is not bound to accept the highest bid. It is his description to accept or reject the bid.
7. The bidder may retract his bid before acceptance is made.
8. The auction sale comes to an end or the offer is accepted by the auctioneer by fall or by using the
words “going, going & gone” or any other customary manner.

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 9. Sale with reserve or upset price - ‘Reserve or upset price’ may be defined as the minimum price below
which the auctioneer will not sell the goods. Such a price is fixed by the seller to protect himself from
selling the goods at a very low price.
Therefore, where the highest bid is below the reserve price the auctioneer can refuse to deliver the
goods, if the sale is subject to a reserved or upset price, even if the auctioneer accepts the bid by
mistake.

10. Damping – Damping is an unlawful act by which an intended purchaser is prevented or discouraged
from bidding or raising the price at an auction sale either by pointing out ‘defects’ in the goods or by
taking the intending bidders away from the place of auction so that they may not participate in it or in
any other mode. It is illegal.

Example: In an auction sale I purchased a car by fall of hammer, I gave a cheque against my purchase, in this
case an agreement was made between me and seller that, I will not get the ownership till the time the
cheque gets cleared, however before the cheque got cleared I sold the car to Mahesh, so the Court decided
that sale to me in auction was valid and sub sale by me was also valid I had got the ownership on fall of
hammer. So I have transferred a good title to Mahesh.

Inclusion of Increased and Decreased Taxes in Contract of Sale:

In case after the contract of sale has been made but before the contract has been performed, any tax which
is applicable to sale, increases, reduces, or remitted in respect of the goods which is subject matter of sale,
and if the parties had not agreed regarding payment of such taxes than, the buyer will be required to pay
such additional tax or if tax is reduced then benefit of such reduced tax will also be available to the buyer,
however both the parties by an agreement can agree something else. The taxes that are normally imposed are
customs or excise duty or tax on purchase or sale of goods (GST)
Note: Performance of contract of sale means delivery of the goods by seller and acceptance of delivery by the
buyer as per section 31 of Sales of Goods Act, 1930. (agar delivery ke pahle tax ke rates change hote hai to
upar wale rules apply honge)

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 CHAPTER – 19
NEGOTIABLE
INSTRUMENT ACT, 1881

INTRODUCTION

Negotiable means transferable.

− Instrument means a piece of
paper that creates rights and obligations.
− Negotiable instrument
means a piece of paper which is freely transferable and
creates rights and obligations in the favour of parties and
the person who owns the instrument is known as the
owner of the instrument.
− The instrument is
transferable till maturity and after its maturity it becomes
stale.
− Negotiable Instrument Act Vs Contract Act, the contract act convers all types of contract, while the
negotiable instrument creates a specific contract which is created by negotiable instruments. Negotiable
instrument is a kind of contract.

CLASSIFICATION OF NEGOTIABLE INSTRUMENTS

▪ Bearer instrument
The instrument which expressly contains the word “bearer” or if the name of payee is not mentioned in
the instrument, the payment of the instrument will be given to the person who has the possession of
instrument, such instrument is referred as bearer instrument.

▪ Order instrument
− It is an instrument the payment of which is made to the payee or his order.
− If an instrument contains the word “pay to” or “order of” or it does not restrict the further
transferability of the instrument then such instrument will be referred as order instrument.

▪ Inland instrument
An instrument

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 − Drawn & payable in India
− Drawn in India on a person resident in India but payable outside India

▪ Foreign instrument
An instrument
− Drawn & payable outside India
− Drawn in India on a person resident outside India and payable outside India

Demand A promissory note or bill of exchange is payable on demand in the following cases;
Instruments • when it is expressed to be payable ‘on demand’ or 'at sight’ or ‘on presentment';
• when no time for payment is specified in it.
It may be noted that a cheque is always payable on demand.
Such a bill or note may be presented for payment at any time at the option of the holder,
but it must be presented within a reasonable time.

Time A bill or note is a time instrument, if it is stated to be payable:

Instruments • at a fixed period after its date; or
• at a fixed period after sight; or
• on or at a fixed period after an event which is certain to happen.
When a promissory note or bill of exchange is payable after a specified period, the date on
which it falls due, known as date of maturity, has to be calculated. Every instrument
payable otherwise than on demand, is entitled to 3 days of grace.

▪ Ambiguous instrument
The instruments which creates a confusion i.e., whether it is a promissory note or a bill of exchange, such
instruments are referred as ambiguous instrument.

▪ Inchoate or incomplete instrument

− It means the incomplete instrument that does not contain the amount to be paid to the holder
− If that instrument comes to:
a) Holder – He can fill amount as much as he has to recover from drawee
b) Holder in due course – can fill amount covered under stamp
Banker: As per section 3 of the act banker includes any person acting as a banker and includes any post office
bank.
KINDS OF NEGOTIABLE INSTRUMENT
(a) Promissory note
(b) Bills of exchange
(c) Cheque
PROMISSORY NOTE - Section 4
→ A “promissory note” is an instrument in writing (not being a bank-note or a currency-note) containing an
unconditional undertaking (promise) signed by the maker, to pay a certain sum of money only to, or to the
order of, a certain person, or to the bearer of the instrument.
→ It has to be in writing & signed by the maker of the instrument.

▪ Parties:-
a) Maker:-The person who makes the promise to pay.
b) Payee:- The person who will receive the payment.
Example:

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“I promise to pay B or order Rs. 500.”
‘‘I acknowledge myself to be indebted to B in Rs. 1,000, to be paid on demand, for value received.”

▪ Characteristics of promissory note:-

a) Must be in writing
b) Must be unconditional
c) There has to be a promise to pay.
d) Specific amount, specific person, specific time or on demand
e) Promise to pay in terms of money and money only.
f) Stamp duty must be paid.
g) Maker of the note to be certain person.
However as per section 31 of RBI Act, 1934, no promissory note payable to bearer on demand can be drawn,
accepted, made or issued by any person except RBI or by Central Government when they are authorized by
the Act (this is done to prohibit private persons from issue of currency notes)
The following are not promissory notes:
Mr. B. I.O.U. Rs. 1,000.”
“I promise to pay B Rs. 500 and all other sums which shall be due to him.”
“I promise to pay B Rs. 500 first deducting there out any money which he may owe me.”
“I promise to pay B Rs. 500 seven days after my marriage with C.”
“I promise to pay B Rs. 500 on D’s death, provided D leaves me enough to pay that sum.”
“I promise to pay B Rs. 500 and to deliver to him my black horse on 1st January next.”

Even if the word promise does not appear in the instrument but the language of the instrument suggests that
there is a specific commitment on the part of the maker of the instrument, such instrument will be
considered as promissory note.
The following instruments have been held by the Courts to be promissory notes:
a) Rs 10000 balance to you, I am still indebted and do promise to pay.
b) Received of A Rs 1000, which I promise to pay with interest.
c) I do acknowledge myself to be indebted to A in Rs 1000, to be paid on demand for value received.
The following instruments have been held not to be the promissory note:
a. I have received Rs 100o which I have borrowed of you and I have to be accountable to you for the
same with interest.
b. I am liable to A in the sum of Rs 1000 which is to be paid by instalments for rent.
Que: I promise to pay on demand, at my convenience, Subhash, the sum of Rs 5000 only in cash, for value
received with interest at 10% per annum, is this instrument a promissory note?
Ans: the words “at my convenience” makes the instrument, conditional.
The following instruments will be invalid as per section 4:
a. I promise to pay Rs 200 with all the fines.
b. I promise to pay Mr k Rs 500 after deducting interest.
c. I acknowledge myself to be indebted to you for Rs 500 and shall pay interest on the amount at 12% per
annum (here there is no promise to pay the principle but only promise to pay interest)
Stamp duties have to be paid on promissory notes as per the article 4 of Indian Stamp Act, the value of stamp
duty will depend on the value for which the promissory note is drawn.

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BILLS OF EXCHANGE - Section 5
▪ “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.
▪ Parties
a) Drawer
− The person who draws the bill.
− The person who creates the liability.
b) Drawee
− The person on whom the bill is drawn.
c) Payee
− The person who will receive the payment.
d) Drawee in case of need
− The drawer may introduce another party in case the original drawee is not accepting the bill or paying
the bill, such new drawee is called as drawee in case of need.
Acceptor for honour
− When the drawee is not able to accept the bill or pay for the bill, in this case any person may accept
the bill for the honour of drawee, such person is called as acceptor for honour.
− When the acceptor for honour accepts the bill, the drawer gets a notary for the acceptances to have
the proof of acceptance by acceptor for honour.
▪ Characteristics
a) Order by drawer to drawee to pay the money.
b) Unconditional order
c) Drawee has to be certain
d) Should be in writing and signed by drawer
e) Specific time or on demand, specific sum and promise to pay in terms of money only.
f) Subject to stamp duty.
g) Drawer and payee can be the same person.
It is not necessary that there are always three parties in bills of exchange some times a single party can play 2
roles but essentially there has to be at least 2 parties to bills of exchange.
It must be noted that there can not be an odder to pay oneself, and therefore the drawer and drawee can not
be same person, however if one and the same person is the drawer and drawee and if the instrument is
negotiated it becomes a valid negotiable instrument. The holder will be treat it as either promissory note or
bill of exchange.

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CHEQUE – Section 6, 123 to 131
“Cheque”. —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.
Explanation I —For the purposes of this section, the expressions—
(a) “a cheque in the electronic form” means a cheque which contains the exact mirror image of a paper
cheque, and is generated, written and signed in a secure system ensuring the minimum safety standards with
the use of digital signature (with or without biometrics signature) and asymmetric crypto system;
(b) “a truncated cheque” means a cheque which is truncated during the course of a clearing cycle, either by
the clearing house or by the bank whether paying or receiving payment, immediately on generation of an
electronic image for transmission, substituting the further physical movement of the cheque in writing.
→ Explanation : For the purposes of this section, the expression “clearing house” means the clearing house
managed by the Reserve Bank of India or a clearing house recognised as such by the Reserve Bank of India.
→ Truncation of the cheque refers to the process of clearance of cheques which involves, digitalisation of a
paper cheque in to electronic form for transmission to the paying bank to reduce the time and cost of
cheque clearance.
→ It is always payable on demand & no stamp duty is charged & no stamp duty is charged.

Promissory Note Bills of Exchange

There are 2 parties in promissory note, Here there are 3 parties i.e. drawer, drawee
i.e. maker and payee. and payee
Promise to pay Order to pay
Liability of maker is primary Liability of drawer is secondary and
conditional

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Maker has immediate relation with the The drawer shares an immediate relation with
payee drawee
Promissory notes can not be drawn in Bills can be drawn in sets
sets
The provisions relating to acceptance,
presentment do not apply to
promissory notes.
Presentment for payment and notice of Presentment for payment and notice of
dishonor are not required. dishonor are required
Bill of Exchange Cheque
Here there are 3 parties i.e. drawer, drawee It is also a bill of exchange in which
and payee drawee is always a bank
Here there are 3 parties i.e. drawer, drawee Order to pay to a bank
and payee
Bill of exchange requires acceptance. Cheque does not require acceptance
If bill of exchange is not presented within The drawer of cheque is not discharged
time, the drawer of cheque is discharged. by failure of holder to present it within
time.
Notice of dishonor is necessary Notice of dishonor is not necessary
Bill of exchange can not be crossed. Cheques can be crossed.
It is advisable that the bill be protested in Cheques need not be protested for
case of dishonor dishonor
Acceptor,
Acceptance - Section 7, 33 and 34
After the drawee has signed his assent on the bill and delivered the same or gives the notice of his signing to
the holder or to some other person on behalf of the holder, he is called acceptor.
Who can be acceptor?
Drawee, all or some of several drawees or person named in the bill as drawer in case of need or an acceptor
for honour or can bind himself by acceptance.
If a person is not named as drawee but still he accepts the bill then he cant deny his liability as an acceptor.

Essentials of Valid Acceptance

1. Acceptance must be in writing.
2. Acceptance must be signed.
3. Acceptance must be on the bill (whether on the face or on the back of bill)4
4. Acceptance must be complete by delivery or notice.
5. In case bills are drawn in sets acceptance must be done on one part only if acceptance is done for
every part separate liability will be created in respect of each part.

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Drawee in Case of Need – Section 7
When in the bill (or on any endorsement relating to bill) the name of any person is given in addition to the
drawee to be contacted in any case of need such person is called as drawee in case of need. As per section
115 it is necessary to present the bill to such person before the bill can be treated as dishonored.

Bills in Sets – Section 132-133

When a person makes more then one copy or part of the bill and each part is numbered and contains a
provision that it shall continue to be payable so long others remain unpaid. All the parts together makes a set,
but the whole set constitutes only one bill. The person who acquires the bill first is entitled to the other parts
and the money represented by such bill.
Basically these sets are used when bills are sent to foreign countries and unnecessary delay is to be avoided in
delivery of the bills.
The bills in set are same just numbering is different and if one bill is accepted all the sets are discharged. But
if the acceptor separately accepts all the bills then he will be liable to all the [Link] BILLS
These bills are not genuine bills as these bills drawn to accommodate a party.
For e.g. – A person may promise another person to pay a specific some of money after a certain period. Such a
party who makes the promise is called as accommodating party. The person who has received such note will
approach the bank who may discount the bill.
→ Will the accommodating party be liable to the bank – yes as the bank discounting the bill on the promise
of accommodating party.
→ Will the Accommodating party be liable to the payee – No as the contract did not have any consideration.

Crossing of Cheques

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A cheque can be crossed generally or specially. If a cheque has two parallel transverse lines across its face,
either with or without words "and company" or "not negotiable", it is deemed to be crossed generally. In such
a case, the bank on which it is drawn must pay it to a bank only (i.e., not across the counter). If, in addition
to the crossing, the cheque has the name of a bank across its face it is deemed to be crossed specially, and
the bank on which it is drawn must pay it only to the bank to whom it is crossed.
The obvious advantage of crossing cheque is that a cheque which is not crossed, i.e., an open or bearer
cheque, has certain risks attached to it. If, for instance, such a cheque is lost or stolen, the finder or the thief
can encash it.

Even an uncrossed cheque can be crossed by the holder thereof. Such a crossing does not amount to a
material alteration of the cheque.

If a cheque is crossed and marked "not negotiable", a person taking such a cheque cannot get (or give) a
better title to the cheque than that which the person from whom he took had. In other words, such a cheque
is deprived of the main feature of negotiability.

Types of crossing
1) General crossing – we draw 2 transverse parallel lines with addition of word “&co”
2) Special crossing – It is an instruction by one bank to the other bank to deposit the amount of cheque in the
account of collecting bank & then collecting bank will deposit the amount in the A/c of its customer. It is
crossing between two bankers.

Not negotiable crossing –

→ By just drawing two parallel lines it is not sure that the negotiability of the instrument will be restricted,
so people started adding the word ‘’not negotiable ‘’ between two parallel lines of crossing.
→ The parties also write the word account payee between two parallel lines, it is an instruction to the bank
to deposit the amount of the cheque in the bank A/c. of payee.
→ The best mode of crossing is account payee + not negotiable crossing.

Order instruments and bearer instruments

A negotiable instrument is payable to order, -
(i) If it is expressed to be so payable, or
(ii) If it is expressed to be payable to a particular person, and does not contain any words prohibiting transfer
or indicating an intention that it is not transferable.
A negotiable instrument is payable to bearer,
(i) If it is expressed to be so payable, or
(ii) If the only or the last endorsement on it is an endorsement in blank.

Protection given by the Act to Bankers

1. If an order cheque purports to be indorsed by the payee or on his behalf, the banker is discharged by
payment in due course.
2. In case of a bearer cheque, the bank is discharged by payment in due course to the bearer thereof,
irrespective of any endorsement on the cheque.
3. A bank on which a crossed cheque is drawn is protected if it pays the amount in due course. (If such
payment is not made in due course, the bank will be liable to the owner of the cheque for the loss sustained
by him.)
4. A banker who has, in good faith and without negligence, received payment on behalf of a Customer of a
crossed cheque, does not incur any liability to the true owner of the cheque only because he had received
such payment, in case the title to the cheque proves defective.

Liability of the drawee of a cheque (i.e., a banker)

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If the banker has sufficient funds of the drawer in his hands, properly applicable to the payment of the
cheque, he must pay the cheque when required to do so. If he does not, he is liable to compensate the
drawer for any loss or damage caused by such default.
However, in the following seven cases, a banker is bound to dishonour a cheque:
1. When the customer has become insolvent and the banker has notice of the same.
2. If the customer has died and the banker has notice of his death.
3. If the customer has become a lunatic and the banker has notice of his lunacy.
4. When the authority of the banker to pay a cheque is terminated by the customer, as for instance, by "Stop
Payment" instructions.
5. When a garnishee or other legal order is served on the banker by the Court.
6. When the banker is prevented, by any governmental or exchange control regulations, from honouring a
particular cheque.
7. When the customer has lost a cheque, and has informed the banker not to make any
payment on that cheque.
Apart from the above, in the following ten cases, a banker is justified in dishonouring a cheque:
1. If the banker does not have sufficient funds of the drawer, unless there is an over-draft arrangement.
2. If the banker has sufficient funds, but they are not properly applicable to the payment of such cheque.
3. If the cheque is irregular or ambiguous or drawn in a form of doubtful validity.
4. If the cheque is presented at a branch of a bank where the customer has no account.
5. If the account of the customer is closed.
6. Where there is a joint account, and the cheque is not signed by all the account-holders.
7. If the cheque is not presented within a reasonable time after its date of issue.
8. When a cheque is drawn in breach of trust.

Protection given by the Act to collecting bankers

If a banker has, in good faith and without negligence, received payment for a customer of a Crossed cheque,
he does not incur any liability to the true owner of the cheque only by reason of having received such
payment, if the title to such a cheque proves to be defective.
In order to avail of this protection, the following four conditions must be fulfilled:
1. The banker must be a collecting banker.
2. The banker must receive such payment on behalf of a "customer".
3. The cheque in question must be a crossed cheque.
4. The banker must have acted in good faith and without negligence.

Payment in due course

A payment is said to be in due course if it is made-
(i) In accordance with the apparent tenor of the instrument,
(ii) In good faith,
(iii) Without negligence,
(iv) To the person in possession of the instrument (in the case of a bearer instrument) or to the last indorsee
(in the case of an order instrument).

Holder
The holder of a negotiable instrument is the person entitled, in his own name, to the possession thereof, and
to receive or recover the money due on the instrument from the parties thereto.
If the negotiable instrument is lost or destroyed, its holder is the person so entitled at the time of the loss or
destruction.

Holder in due course

A holder is due course means any person who-
(a) For consideration

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(b) Becomes -
(i) The possessor of a negotiable instrument payable to bearer, or
(ii) The payee or endorsee of a negotiable instrument payable to order;
(c) Before the amount mentioned in the instrument becomes payable;
(d) Without having sufficient cause to believe that any defect existed in the title of the person from whom he
derived his title.

The following are the eight rights of a holder in due course of a bill of exchange:
1. If an inchoate stamped instrument comes into the hands of a holder in due course, he can recover the full
amount mentioned therein, provided the stamp is sufficient to cover that amount.
2. If a bill of exchange payable to order is drawn in a fictitious name and is indorsed by the same hand as the
drawer's signature, the acceptor cannot allege, as against a holder in due course, that such a name was
fictitious.
3. If an instrument is negotiated to a holder in due course, the other parties to the instrument cannot avoid
liability on the ground that delivery of the instrument was conditional or for a special purpose only.
4. A holder in due course can get a better title than that of his transferor.
5. Once an instrument passes through a holder in due course, it gets cleansed of all its defects, unless the
person seeking to take advantage was himself a party to the fraud or
illegality.
6. When a holder in due course files a suit on an instrument, the maker or a promissory note or the drawee of
a bill of exchange cannot deny the validity of the instrument as originally made or drawn.

7. When a holder in due course files a suit on an instrument, the maker of a promissory note, or the acceptor
of a bill of exchange payable to order cannot deny the payee's capacity, at the date of the instrument, to
indorse the same.
8. The defence of accommodation acceptance cannot be set up against a holder in due
course.
Que: Rama bought an electric watch of Rs 50000 from shyam and co and drew a cheque in favor on Mr K the owner
of shyam and co, K put the cheque in the office drawer, one of the employees of mr k took the cehque forged the
signature of Mr K and endorsed it to Mr P for the goods that mr p purchased from employee for Rs 50000. Mr P
encashed the cheque on the same day, After 3 days K came to know about the theft and he informed Mr Rama,
examine the liability of Mr Rama.

Kinds of Instrument

(a) Inland and foreign instruments

A negotiable instrument drawn or made in India and made payable in India or drawn on any person resident in
India is an inland instrument. All other instruments not so drawn, made or made payable, are foreign
instruments.
Foreign bills of exchange must be protested for dishonour, if so required by the law of the place where they
are drawn.
In the absence of a contract to the contrary, --
(a) the liability of the maker or drawer of a foreign instrument is regulated, in all essential matters, by the
law of the place where he made the instrument; and

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(b) the liability of the acceptor and the indorser of such an instrument is regulated, in all essential matters,
by the law of the place where the instrument is made payable.

(b) Ambiguous instruments

If an instrument can be construed either as a promissory note or as a bill of exchange, the holder has an
option to treat it as either. However, once the holder has made his choice, he is bound by it.

(c) "On demand" instruments

A promissory note or bill of exchange in which no time for payment is specified is payable on demand.
Similarly, a cheque is always payable on demand.

(d) Inchoate stamped instruments

If a person signs and delivers to another, a stamped instrument, leaving the amount blank, he gives prima
facie authority to the holder to fill in the instrument for any amount not exceeding the amount covered by
the stamp. However, no person other than a holder in due course can recover from the person delivering such
an instrument anything in excess of the amount intended by him to be paid under the instrument.

"At sight", "on presentment", "after sight"

In a promissory note or bill of exchange, "at sight" and "on presentment' mean the same thing as on demand.
The expression "after sight" means -
(i) In a promissory note - after presentment for sight; and
(ii) In a bill of exchange - after acceptance, or noting for acceptance, or protest for non- acceptance.

Maturity and days of grace

A promissory note or bill of exchange which is not expressed to be payable on demand or at sight or on
presentment, matures on the third day after the day on which it is expressed to be payable. If the last day of
grace is a public holiday, if falls due on the next business day.
In case of a promissory note payable by installments, the three days of grace must be allowed for each
instalment.
Que: Calculate the date of maturity of the following bills of exchange and also explain the rules for calculating the
date of maturity:

a) The bill of exchange drawn on 21/6/2023, payable 100 days after the date.
b) Bill drawn on 20/4//2023 payable 20 days after sight and the bill is presented for acceptance on
30/4/2023/.

Negotiable instruments made without consideration

There is a presumption that every negotiable instrument was made or drawn for a consideration. Therefore,
when a suit is filed on a negotiable instrument, it is for the defendant to prove absence of consideration.
A negotiable instrument made, drawn, accepted, indorsed or transferred without consideration (or for a
consideration which subsequently fails) creates no obligations between parties in immediate relation.
However, the plea (statement) of want of (or failure of) consideration between parties in immediate relation

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cannot set up against a holder who has given consideration for the instrument or against any subsequent
holder deriving title from him.

Capacity of parties
Any person capable of contracting according to the law to which he is subject, may bind himself, and be
bound, by the making, drawing, acceptance, indorsement, delivery and negotiation of an instrument.
A minor can draw, indorse, deliver and negotiate a negotiable instrument, so as to bind all parties except
himself.
A legal representative of a deceased person who signs his name on a negotiable instrument becomes
personality liable, unless he expressly limits his liability to the extent of the assets of the deceased received
by him as such representative.
If a corporation is empowered by its Charter of Incorporation or its Memorandum of Association, it may
endorse or accept a negotiable instrument.
A person capable of binding himself or being bound under a negotiable instrument, may also do so through a
duly authorised agent acting in his name.
(minor bhi instrument draw kar sakta hai par wo personally liable nai hoga)
The legal representative of a deceased person cannot negotiate by delivery only a promissory note, bill of exchange
or cheque payable to order and indorsed by the deceased but not delivered.
Que: A drew a cheque for Rs 20000 payable to B and delivered to him B endorsed the cheque in favor of R and kept
in his table drawer, subsequently B died and cheque was found by R and R filed a suit for recovery of the cheque, can
R recover the amount of cheque.

Que: A made endorsement of bill of exchange of Rs 50000 to Mr B but before the bill could be delivered to Mr A died
and Mr S the son of Mr A wants to complete the negotiable instrument drawn by his father what are the provisions
in this regard.

Liabilities of parties
In the absence of a contract to the contrary, -
(i) the maker of a promissory note, and
(ii) the acceptor of a bill of exchange,
are bound to pay the amount thereof at maturity according to the apparent tenor (requirement) of the note
or acceptance respectively. Similarly, the acceptor of a bill of exchange at or after maturity is bound to pay
amount bill of exchange to the holder on demand. In default of such payment, the defaulting party becomes

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liable to compensate any party to the note or bill for any loss or damage sustained by him due to such
default.
Every prior party to a negotiable instrument is liable thereon to a holder in due course until the instrument is
duly satisfied.

On acceptance of a bill, the drawee becomes primarily liable, and the drawer and the indorser are liable only
as sureties. However, as between the parties liable as sureties, each prior party is a principal debtor in
respect of each succeeding party.
If any party to an instrument who is liable thereon as a surety is called to pay the amount, such a party can,
after paying the amount, recover the same from the party primarily liable on the instrument.
If the holder of a negotiable instrument, without the consent of the indorser, destroys or impairs the
indorser's remedy against a prior party, the indorser is discharged from liability to the same extent as if the
instrument had been paid at maturity.

Holder's right to duplicate bill

If a bill of exchange is lost before it is overdue, the holder can apply to the drawer to give him a duplicate bill
on a proper indemnity. If the drawer refuses to issue a duplicate bill, he can be compelled to do so.

Rights of the holder of accommodation bill

Any person who in good faith and for consideration, becomes the holder after maturity, of a bill or note
made, drawn or accepted without consideration, for the purpose of enabling another party to raise money,
may recover the amount of the bill or note from any prior party.

Negotiation
When a promissory note, bill of exchange or cheque is transferred to any person, so as to constitute him the
holder thereof, the instrument is said to be negotiated.
A negotiable instrument payable to order is negotiated by indorsement and delivery thereof.
A negotiable instrument payable to bearer is negotiated by the delivery thereof.

Negotiation back
A holder in due course can sue all prior parties to an instrument. Therefore, if a bill is negotiated back to a
prior holder. This is known as negotiation back.

Instrument obtained by unlawful means or for unlawful consideration

If a negotiable instrument has been lost or has been obtained by means of an offence or fraud or for an
unlawful consideration, no possessor or indorsee who claims through the person who found or so obtained the
instrument, is entitled to receive the amount due on such instrument, unless the possessor or indorsee is a
holder in due course.

Rights of holder of dishonoured or overdue instrument

The holder of a negotiable instrument who had acquired it after dishonour with notice thereof, or after
maturity, has, as against the other parties, the rights on such instrument of his transferor.
However, any person who has, in good faith and for consideration, becomes the holder, after maturity, of a
note or bill made, drawn or accepted without consideration, for the purpose of enabling a party thereto raise
money thereon, can recover the amount of the note or bill from any prior party.
Que: Mr. K gets an overdue negotiable instrument which he takes in good faith and for value from Mr
Ram, The instrument was originally drawn by Mr Sunil to accommodate Mr Z, without any consideration.
When Mr K got the instrument and demanded the payment the instrument was dishonoured. Mr K sues Mr
Sunil but Mr Sunil denies his liability on the ground that he drew the instrument to accommodate Mr Z
and he has no liability, decide?

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Presentment
The three kinds of presentment are:
(a) Presentment of bills of exchange for acceptance;
(b) Presentment of promissory note for sight; and
(c) Presentment of negotiable instruments for payment.
A bill of exchange payable after sight must be presented to the drawee for acceptance within a reasonable
time after it is drawn. In default of such presentment, no party thereto can be made liable thereon to the
person making such default.

If, after reasonable search, the drawee cannot be found, the bill is deemed to be dishonoured.
If authorised by agreement or by usage, presentment can also be made through the post by means of a
registered letter.
Presentment must be on a business day and during the usual hours of business. If an instrument is payable at a
specified place only, it must be presented for payment at that place only.
In the case of a bill of exchange, the holder must, if so required by the drawee, allow the latter forty-eight
hours to consider whether or not he will accept the bill.
In the case of a cheque it must be presented at the bank on which it is drawn within a reasonable time.
Delay in presentment would, however, be excused if the delay is caused by circumstances beyond the control
of the holder, and is not due to his default, is conduct or negligence.
Presentment is, however, not necessary in the following cases:
1. If the maker, drawee or acceptor-
(a) Intentionally prevents presentment; or
(b) Closes his place of business during the usual business hours; or
(c) Does not attend the place during the usual business hours; or
(d) cannot, after due search, be found.
2. If the party has agreed to pay, notwithstanding non-presentment.
3. If, with knowledge of non-presentment, the party -
(i) Makes a part-payment, or
(ii) Promises to pay the amount, or
(iii) Otherwise waives his right to take advantage of non-presentment.
4. As against the drawer, if the drawer could not suffer damage from the want of such presentment.

Interest
If the rate of interest is specified on a promissory note or bill of exchange, interest at such rate is to be
calculated, on the principal amount from the date of the instrument until tender or realisation of the amount,
or until such date after the institution of the suit as the Court directs. If no such rate of interest is specified,
interest is to be calculated at eighteen per cent per annum.
An indorser of an instrument is liable to pay interest only from the time he receives the notice of dishonour.

Modes of discharge of parties

The discharge of one or more parties does not necessarily mean the discharge of the instrument. The nine
modes of discharge of the parties are us under:
1. The maker, acceptor or indorser will be discharged from liability

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(a) by cancellation,
(b) by release or
(c) by payment.

2. If the holder allows the drawee more than forty-eight hours to consider whether he will accept the same,
all previous parties not consenting to such allowance are thereby discharged from liability to such holder.

3. Delay in presentment of a cheque, when the drawer suffers actual damage thereby, serves as a discharge
against him to the extent of such damage.

4. When a cheque payable to order purports to be indorsed, by or on behalf of the payee, the drawee is
discharged by payment in due course.

5. When a cheque is originally expressed to be payable to bearer, the drawee is discharged by payment in due
course to the bearer thereof.

6. When a draft drawn by one branch of a bank on another branch pur ports to be indorsed by, or on behalf
of, the payee, the bank is discharged by payment in due course.

7. Parties not consenting to a qualified or limited acceptance are discharged by such acceptance, by the
holder for such acceptance varies the effect of the instrument as drawn.

8. Any material alteration of a negotiable instrument without the consent of the parties thereto, renders the
same void against them, unless it was made to carry out the common intention of the original parties. Such an
alteration, therefore discharges all such parties.

9. Discharge by operation of law, viz.

(a) by an order of the Insolvency Court;
(b) by merger; or
(c) by lapse of time.

Dishonour
Dishonour of a negotiable instrument can be -
(a) by non-acceptance, or
(b) by non-payment.
A bill of exchange is said to be dishonoured by non-acceptance when the drawee makes a default in
acceptance upon being duly required to accept the bill.
A promissory note, bill of exchange or cheque said to be dishonoured by non-payment when-
(i) The maker of the note, or
(ii) The acceptor of the bill, or
(iii) The drawee of the cheque

Notice of dishonour
The holder of a negotiable instrument must give a notice of dishonour to all the other parties whom the
holder seeks to make liable on the instrument. The maker of a promissory note and the drawee or acceptor of
a bill of exchange are, however, not entitled to a notice of dishonour.
Such a notice may be oral or written. It may also be given to a duly authorised agent or to the legal
representative or the assignee of the person, in case of his death or isolvency.

If the notice is duly directed and sent by post and miscarried, such miscarriage does not make the notice
invalid. Similarly, when the addressee is dead, but the party sending the notice is ignorant of his death, the
notice would be sufficient.

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The party receiving a notice of dishonour must, in order to render any prior party liable to himself, give
notice of dishonour to such other party within a reasonable time, unless the other party has received a due
notice.

A notice of dishonour is not necessary in the following seven cases:

(1) When it is dispensed with by the party entitled to such notice;
(2) In order to charge the drawer-when he has countermanded payment;
(3) When the party charged could not suffer damage for want of notice;
(4) When the party entitled to the notice cannot be found after due search, or for any other reason, the party
cannot give the notice for no fault of his;
(5) To charge the drawer - when the acceptor is also a drawer;
(6) In the case of promissory note which is not negotiable; and
(7) When the party entitled to the notice unconditionally promises to pay the amount, knowing all the facts.

Difference Between Negotiation and Assignment

Negotiation Assignment
Negotiation is done on the promissory note Through assignment a person transfers his right
promissory note, bills of exchange.
It takes place through delivery& endorsement Assignment takes place through a written & signed
agreement
It is defined in negotiable instrument act It is defined in contract act
No notice of negotiation is required to the maker or Notice of Assignment has to be given by the assignee
drawer. to the debtor
Importance of delivery of the instrument
Only drawing of instrument does not result in negotiation it rather it should also be delivered.

Noting.—When a promissory note or bill of exchange has been dishonoured by non-acceptance or non-payment, the
holder may cause such dishonour to be noted by a notary public upon the instrument, or upon a paper attached
thereto, or partly upon each. Such note must be made within a reasonable time after dishonour, and must specify
the date of dishonour, the reason, if any, assigned for such dishonour, or, if the instrument has not been expressly
dishonoured, the reason why the holder treats it as dishonoured, and the notary's charges.

Protest.—When a promissory note or bill of exchange has been dishonoured by non-acceptance or non-payment,
the holder may, within a reasonable time, cause such dishonour to be noted and certified by a notary public. Such
certificate is called a protest.
KINDS OF NEGOTIATION
There are two types of negotiation
Negotiation by way of delivery & endorsement –
When order instrument are to be negotiated they can be negotiated through endorsement it means writing
something on the back or on the face of the instrument along with signature of the endorser with the
intention of transferring / negotiating it further.
Negotiation by Mere Delivery:-
The instrument that are bearer instrument can be negotiated by mere delivery

Endorsement • Where the maker or holder of a negotiable instrument signs the same
otherwise than as such maker for the purpose of negotiation, on the back or
Face thereof or on a slip of paper annexed thereto (called Allonge), or so,
signs for the same purpose, a stamped paper intended to be completed as a

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 negotiable instrument, he is said to endorse the same, the person to whom
the instrument is endorsed is called the endorsee.
• In other words, 'endorsement' means and involves the writing of something on
the back of an instrument for the purpose of transferring the right, title and
interest therein to some other person.

Classes of An endorsement may be (a) Blank or General, (b) Special or Full,

endorsement (c) Restrictive, or (d) Partial, and (e) Conditional or Qualified.

Blank • or
AnGeneral
endorsement is to be blank or
general where the endorser merely
writes his signature on the back of the
instrument, and the instrument so
endorsed becomes payable to bearer,
even though originally it was payable
to order.
• Thus, where bill is payable to "X or
order", and he writes on its back "X",
it is an endorsement in blank by X
and the property in the bill can pass
by mere delivery, as long as the
endorsement continues to be a blank.
• But a holder of an instrument
endorsed in blank may convert the
endorsement in blank into an
endorsement in full, by writing above
the endorser’s signature, a direction
to pay the instrument to another
person or his order.

Special or • If the endorser signs his name and

adds a direction to pay the amount
Full
mentioned in the instrument to, or to
the order of a specified person, (he
endorsement is said to be special or
in full.
• A bill made payable to X or X or
order, and endorsed "pay to the order
of Y” would be specially endorsed
and Y endorses it further.
• A blank endorsement can be turned
into a special one by the addition of
an order making the bill payable to
the transferee.

Restrictive • An endorsement is restrictive which

prohibits or restricts the further
negotiation of an instrument.
• Examples of restrictive endorsement:
"Pay A only" or "Pay A for my use" or

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 "Pay A on account of B" or "Pay A or
order for collection".

Partial • An endorsement partial is one which

purports to transfer to the endorsee
a part only of the amount payable on
the instrument.
• A partial endorsement docs not
operate as negotiation of the
instrument.
• A holds a bill for Rs. 1,000 and
endorses it as "Pay B or order Rs.
500". The endorsement is partial and
invalid.

Conditional or qualified An endorsement is conditional or qualified

which limits or negatives the liability of
the endorser. An endorser may limit his
liability in any of the following ways:
• By sans recourse endorsement, i.e,
by making it clear that he does not
incur the liability of an endorser to
the endorsee or subsequent holders
and they should not look to him in
case of dishonour of instrument. The
endorser excludes his liability by
adding the words "sans recourse” or
"without recourse", e.g., "pay A or
order sans recourse",
• By making his liability depending
upon happening of a specified event
which may never happen, e.g., the
holder of a bill may endorse it thus:
"Pay A or order on his marrying B". In
such a case, the endorser will not be
liable until A marries B.

Sans Recours • The holder of a bill may endorse it in such a way that he does not incur the
liability of an endorser to the endorsee.
Endorsement
• He can do so by adding the words "sans recours” (without resource] to the
endorsement.
• The examples of such endorsement are 'Pay A or order without recourse to
me’ or 'Pay A or order sans recours' or 'Pay A or order at his own risk’. Here if
the instrument is dishonoured, the subsequent holder or the endorsee cannot
look to the endorser for payment of the same.
• Where an holder excludes or limits his liability in
this manner and afterwards becomes the holder of the same instrument, all
intermediate endorsers continue to be liable to him. For example, A, the holder
of a bill, endorsers it ‘sans recours’ to B. B endorses it to C, C to D, D to E and E

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 endorses it again to A. A can recover the amount of the bill from B, C, D and E or
any of them.

The following are the five essentials of a valid indorsement:

(i) The indorsement must be on the instrument or on an allonage, i.e., a slip of
paper attached to the instrument.
(ii) The indorsement must be made by the maker, holder, drawer, payee or
indorsee. A
stranger to an instrument cannot indorse it.
(iii) The indorsement must be signed by the indorser.
(iv) No specific form of words is prescribed for an indorsement. The indorser may
merely sign his name (in which case, it will be an indorsement in blank) or add
the name of the person to whom the instrument is payable (in which case, it will
amount to an indorsement in full.)
(v) The indorsement must be completed by delivery of the instrument.
The effect of an indorsement is that the indorser guarantees to his indorsee or
subsequent holder-
(a) that he had a good title to the instrument when he parted with it;
(b) that, at the time of indorsement, it was genuine in all particulars; and
(c) that all prior indorsements are genuine.
Acceptance • Acceptance is ordinarily made by the drawee by signing his name across the
face of the bill and by delivery. Acceptance, therefore, means the
signification of assent to the order of the drawer by delivery or notification
thereof.

Essentials of a valid • Acceptance must be written.

acceptance
• Acceptance must be signed.
• Acceptance must be on the bill.
• Acceptance must be completed by delivery.

• Acceptance may be either general or qualified. By a general acceptance, the

acceptor assents without qualification to the order of the drawer.
• The acceptance of a bill is said to be qualified, when the drawee does not accept it
according to the apparent tenor of the bill, but attaches some conditions or
qualifications which have the effect of either reducing his (acceptor's) liability or
acceptance of the liability subject to certain conditions.

MATERIAL ALTERNATION – (SECTION 87)

Any kind of alteration in the instrument that changes the character of instrument is called as material
alteration.
If the following details of the instrument are altered then it will amount to material alteration - Date of
instrument, Amount of instrument, time of payment, place of payment, rate of interest, addition of new
party.
The material alteration shall be approved by all the parties to the negotiable instrument& if any party does
not grant approval to the material alteration then such party is discharged from the negotiable instrument.
However the below mentioned alteration shall not amount to material alteration –
1) Converting blank endorsement into full endorsement,
2) Addition of the word ‘’on demand’’ when no time of payment was specified in the instrument
3) Crossing of a cheque.
RETIREMENT OF THE BILL

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When the drawee or the maker of an instrument makes the payment of the instrument before maturity, it is
called as retirement.

HUNDI

Hundis are the negotiable instrument drawn in the local

language. Local customs apply the hundis and if there are no
local customs in any areas then negotiable instrument act will
be applicable to hundis.
Types of hundies –
1) shahjog hundi – the hundi payble to shah is called as
shahjog hundi.
2) Jokhmi hundi – the hundi will be payable when the goods
arriving through ship reaches safely on the post.
3) Jawabee hundi – According to Macpherson, “A person
desirous of making a remittance writes to the payee and delivers the letter to a banker, who either
endorses it on to any of his correspondents near the payee’s place of residence, or negotiates its transfer.
On the arrival, the letter is forwarded to the payee, who attends and gives his receipt in the form of an
answer to the letter which is forwarded by the same channel of the drawer or the order.” Therefore, this
is a form of hundi which is used for remitting money from one place to another.
4) Nam Jog hundi – the hundi payable to the person whose name is mentioned in the hundi or to his order.
5) Darshani hundi – The hundi payable after sight.
6) Miadi hundi – the hundi payable after a specific period of time.
7) Dhani jog hundi – Dhani means owner so the hundi payble to its owner. Or bearer is called as Dhanijog
hundi.
PRESUMPTIONS OF LAW IN RELATION TO NEGOTIABLE INSTRUMENT
1) Every negotiable instrument is drawn for Consideration
2) The date mentioned in a negotiable instrument is date on which it is drawn
3) Every negotiable instrument is accepted or negotiated before maturity.
4) Every negotiable instrument is endorse in the order as provided in negotiable instrument.
5) Every holder is a holder in due course.
6) If a negotiable instrument is lost or destroyed, it was duly signed or stamped.
PAYMENT OF INTEREST IN CASE OF DISHONOUR
If an instrument is dishonoured the party liable to accept the bill has to pay 18% interest Per Annum from the
date of dishonour.
PENALTIES IN CASE OF DISHONOUR (SEC138 TO 147)
In the case of Modi cement ltd vs k.k. nandi the Supreme Court decided that even if the drawer had issued
stop payment instruction to the bank, the payee may take an action under section 138 the cases relating to
dishonour of cheque may also be tried through summery trails

Dishonour of cheques for insufficiency of funds

• If a person issues a Cheques from his account to discharge a legal obligation or debt and if such
cheque is returned due to insufficiency of funds or due to shortage of funds then the issuer of cheque
shall be considered to have committed an offence and shall be punishable with imprisonment which
may be extended to 2 years or the which may extend to twice the amount of cheque or both.

However the above provision will apply only if :

a) The cheque was presented within 6 months from the date on which it was drawn or within the
period of its validity whichever is earlier.
b) The payee or holder in due course ,makes the demand for the said amount by giving notice within
30 days of receiving information from in bank regarding dishonor .

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 c) The drawer fails to make payment within next 15 days of such notice .

Section 139- Presumption in favour of holder

It shall be presumed that the holder received the cheque in discharge of legal debts .

Section 140- Defence which may not be allowed under section 138

In the suit under section 138 the drawer cannot state that he had no reason to believe that the cheque may
be dishonoured.

Section 141 – Offence by companies

In case company commits an offence, the officer of the company who was responsible for affairs of the
company will be liable u/s 138, however if he proves that he was not aware of the offence then no
punishment will be given to such person.

If a director is nominated on the board of the company by central government or state government then such
person will also not be liable.

If it is proved that the offence is committed of Director or secretary of the company then such person will
also be liable.

Section 142 : Cognizance of offence

Inspite of anything contained in code of criminal procedure :

a) No case shall be accepted by court unless the payee makes a complaint in writing
b) The complaint has to be made within one month from the date of cause of action
c) The courts of metropolitian magistrate or judicial magistrate and above can try the offence
d) The case shall be filed in the court within whose Jurisdiction:
1) The branch of bank where the payee or holder maintains the account is located .( 2t cheque is
presented through an account )
2) If the cheque is not presented through an account then the branch of drawee bank where the
drawer maintains account.

Power of Court to try Cases Summarily

a) As per section 143 of Negotiable Instrument Act, 1881, the cases of dishonour can be tried summarily
in the following manner:
b) The case will be tried by the Judicial Magistrate of First Class or by Metropolitian Magistrate as per the
provisions of CRPC, 1973.
c) Under Summary Trial the magistrate may grant maximum imprisonment of 1 year and fine exceeding
Rs 5000.
d) At the commencement or during the course of summary trial if the magistrate believes that the nature
of the case is such that it may involve an imprisonment of exceeding 1 year or the magistrate believes
for other reasons that the case should not be tried summarily, in this case the magistrate may recall
and rehear and recall the witnesses in the manner given in CRPC, 1973.
e) In summaty trial the hearing must take place on day to day basis till the conclusion of the case and
adjournments beyond next day shall be granted only when it is necessary and afer recording reasons
in writing.
f) Every endeavour shall be made to conclude the trial within 6 months of receiving the complaint.

Power to Direct Interim Compensation: Section 143A

The Court trying the offence under section 138 of may order the drawer to pay interim compensation to the
payee in the following manner:

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In summary trial when the drawer pleads “not guilty” or In cases other then summary trial “on framing of
charges” the Court can order for payment of interim compensation.

The amount of interim compensation can not exceed 20% of the amount of cheque.

The amount has to be paid within 60 days from the date of the order of the court and the court may grant an
extension of 30 days in case sufficient reasons are shown by the drawer.

In case the drawer is acquitted by the Court the payee will have to return the compensation with interest at
the prevailing bank rate.

The amount will have to be returned by the payee within 60 days from the date of order and 30 days
extension can be granted by the Court on sufficient cause.

The amount of interim compensation may be recovered in the same manner as fine is recovered under section
421 of CRPC, 1973.

The amount of fine that the court will impose upon conclusion of the case will be reduced by the amount of
interim compensation.

Mode of Service of Summons - Section 144

Summons may be served on accused or witness att a place where he ordinarily resides or carries on business
or personally works for gain by speed post or by courier services as approved by the High Court.

In case Court receives an acknowledgement form the postal department or courier service that summon has
been accepted by the accused pr summon has been refused by the accused in both the cases the court will
declare that the summon has been duly served.

Evidence on Affidavit: Section 145

Notwithstanding anything contained in CRPC, 1973, the evidence of the complainant during inquiry, trial,
investigation may be given by him on affidavit.

The Court may however examine the facts or evidence given on affidavit.

Bank’s Slip Prima Facie Evidence of Certain Facts: 146

Banks Slip or memo which contains official mark stating that chque is dishonoured, is considered as prima
facie fact of dishounour of cheque unless this fact is disapproved.

Offences to be Compoundable: 147

Every offence under Negotiable Instrument Act, 1881 shall be compoundable.

Power of Appellate Court to Order Payment Pending Appeal against Conviction: 148

In case the drawer who has been convicted by the lower court, files an appeal in the superior court (appellate
court), the superior court may ask the drawer to deposit minimum 20% of the amount of fine or compensation
awarded by the lower court in addition to the interim compensation already paid by the drawer.

The amount shall be deposited within 6o days of the order, however 30 days extension can be granted by the
appeallate court on sufficient cause.

At any stage of trial the appeallate court may release (give) the depost to the Complainant.

If the draer is acquitted in appeal, the released amount shall be returned back to the drawer within 60 days
of the order and extension of 60 days can be granted on sufficient cause with interest at the prevailing bank
rate.

NEFT & RTGS

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 National electronic fund transfer is the process through
which bank to bank transfer of fund can be made
electronically.
Real time gross settlement is the process through
which the real time order of customers are executed &
funds are transferred to other A/c funds settlement
takes place in the books of RBI& the payment are
irrevocable.

Advantages of NEFT

Round the clock availability on all days of the year.

Near-real-time funds transfer to the beneficiary account and settlement in a secure manner.

Pan-India coverage through large network of branches of all types of banks.

The beneficiary need not visit a bank branch for depositing the paper instruments. Remitter can
initiate the remittances from his / her home / place of work using internet banking, if his / her bank offers
such service.

Positive confirmation to the remitter by SMS / e-mail on credit to beneficiary account.

Penal interest provision for delay in credit or return of transactions.

No levy of charges by RBI from banks.

No charges to savings bank account customers for online NEFT transactions.

The transaction charges have been capped by RBI.

Besides funds transfer, NEFT system can be used for a variety of transactions including payment of
credit card dues to the card issuing banks, payment of loan EMI, inward foreign exchange remittances, etc.

The transaction has legal backing.

benefits of RTgS

It is a safe and secure system for funds transfer.

RTGS transactions / transfers have no amount cap set by RBI.

The system is available on all days on 24x7x365 basis. There is real time transfer of funds to the
beneficiary account.

The remitter need not use a physical cheque or a demand draft.

The beneficiary need not visit a bank branch for depositing the paper instruments.

The beneficiary need not be apprehensive about loss / theft of physical instruments or the likelihood
of fraudulent encashment thereof.

Remitter can initiate the remittances from his / her home / place of work using internet banking, if
his / her bank offers such service.

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 The transaction charges have been capped by RBI.

The transaction has legal backing.

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