lab chapter 1

8/10/2019 LAB Chapter 1

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guarantees social equality as equal status and opportunities for all. The government endeavours

to make the distribution of wealth more equal and provide a decent standard of living for all

ensuring economic equality, the commitments of a welfare state. The government has adopted amixed economy and the government has framed many laws to achieve the aim.

CONSTITUION IS SUPREME LAW- Clear understanding of concepts is vital for anydiscussion on taxation or legal matters as power to levy and collect tax is derived from

Constitution. If it is found that any Act, Rule, Notification or Government orders is not according

to the Constitution, it is illegal and void and it is called ultra vires the Constitution.

INDIA IS UNION OF THE STATES-Our Constitution generally follows British pattern, though

concepts of federal structure are borrowed from American and other Constitutions.

India is a Union of States- The structure of Government is federal in nature, Government of

India (central Government) has certain powers in respect of whole country. India is divided into

various States and Union Territories and each States and Unions like Gujrat, Maharashtra,

Tamilnadu, Kerala, Uttar Pradesh, Punjab etc. and Union Territories like Pondicherry,

Chandigarh etc.

Administration of State-President of India is head of the State. (Here, the word State is used

with a different meaning). The States has three organs.

A. LEGISLATIVE ORGAN-Parliament consists of President, Lok Sabha(House of

People) and Rajya Sabha(Council of States). Parliament makes laws for governance of

the country. It also sanctions budgetary expenditure for Government.

B. EXECUTIVE (ADMINISTREATIVE) ORGAN-Administration is looked after by

Government for which Council of Ministers is at its head. The Council of Ministers isheaded by Prime Minister. Government has to implement the laws passed by Parliament.

C. JUDICIAL ORGAN-It has always been found in all the countries that control and check

over executive power s essential. In absence of such control, misuse of power is very

much likely. Our Constitution therefore provides independent judiciary with wide

powers. The highest court in India is Supreme Court. Law declared by Supreme Court is

the law of the land and is binding on all subordinate Courts, tribunals and Executive.

Our Constitution has endeavored to maintain balance among these three organs namely

legislation, administration and judiciary, to ensure proper checks and balances.-

Parliament to enact the laws, Judiciary to interpret the law and Executive to implement

the law. These three estates have tremendous influence on the public life. [Similarly,

newspapers have tremendous influence on public life and in shaping public opinion.

Hence, newspapers are often called fourth estate]

STATE GOVERNMENT ORGANIZATION- A structure similar to the one at Centre is

provided for each State. Governor (Rajyapal) is the head of the State, State Legislature

(Vidhan Sabha) which is elected body of the peoples representatives; passes various


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Acts. Some States also have Vidhan Parishad (similar to Rajya Sabha). The state

Government is administered under a Council of Ministers of which Chief Minister is the

head. Each State has a High Court having wide judicial powers.

Judicial Organ- Independent judiciary is biggest safety of a citizen.

SUPREME COURT- Supreme Court has wide powers of writ jurisdiction under Article

32 in respect of enforcement of fundamental rights. Article 136 grants discretion to

Supreme Court to grant special leave to appeal (called Special Leave Petition-SLP) from

any judgment, decree, determination, sentence or order in any cause or matter passed or

made by any court or tribunal in India. Article 141 of constitution provides that law

declared by Supreme Court is binding on all courts within India.

HIGH COURTS-Each State has a High Court. High Courts have been granted powers to

issue writs. The Writ is an order or process issued by court or judicial officers, asking

any person to perform or refrain from performing the Act. Article 226 grants powers toHigh Courts to issue writs not only in respect of fundamental rights but for any other

purpose. This is a very powerful right and is very useful in case Government or other

authorities do not give justice to a person. Application made to High Court for this

purpose is called writ petition. Since this power is given under Constitution, this cannot

be limited by any State (Act) or Government rules.

Legislative Organ- Various Laws can be passed (and amended) by Parliament within the

framework prescribed by the Constitution.

MODE OF PASSING ACT-First, a bill is presented to Parliament. The bill is a draft ofthe law proposed to be passed. Often the bill is presented on the basis of

recommendations of some Committee. Sometimes, the bill is studied by a Parliamentary

Committee after it is presented in Parliament. The bill is discussed and it is then passed

with or without amendments. After it is passed by both Houses of Parliament, it is sent to

President for his assent. The bill becomes a statute (Act) on the date on which President

gives his assent. The Act generally provides the date on which the Act comes into effect.

Sometimes, it comes into effect immediately, while sometimes powers are delegated to

Government to decide the date/s on which the Act will come into force. Often, powers

are given to bring the Act into force in parts, i.e. various provisions of the Act can be

brought into force in stages on different dates. Similar procedure is adopted to amend

(modify) an existing Act.

ORDINANCES-Act can be passed only when Parliament is in session. (General

Sessions are Budget session, Monsoon session, winter session etc.) However, need may

arise to take immediate action and it may not be possible to wait till Parliament session

starts. In such cases, President has been empowered under Article 123 of Constitution to


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issue Ordinance. Such Ordinance has the same force as Act of Parliament, except that

the Ordinance is valid only for a limited period. If Parliament approves the Bill

pertaining to the matter contained in the Ordinance, it is converted into an Act.

Otherwise, the Ordinance automatically lapses at the expiration of 6 weeks from the date

when Parliament assembles. (In case of States, the Ordinance can be issued by Governor

under Article 213 of Constitution and other provisions regarding its lapse etc. Ordinance

is really an emergency provision and is expected to be used sparingly. However, some

States (and even Central Government) have re-promulgated the same Ordinances again

and again, instead of getting them passed in Parliament/State Legislature.

DELEGATED LEGISLATION-Parliament is mainly concerned with policies of law. It

is not interested in routine procedures etc. Moreover, since the situations are constantly

changing, changes are inevitable. It is not practicable to approach Parliament and seek its

approval for every minor change. Parliament, therefore, delegates some powers to other

Authorities (Usually Government or some Board) to make rules, regulations and issue

notifications. This is called delegated legislation. Often these are required to bepublished in Official Gazette. If the rules or regulations are made or notifications are

issued under the power granted in the Act. They have the same force as the main act.

TRADE CIRCULARS AND TRADE NOTICES-It is normal for Government to issue

trade circulars, trade notices and clarifications from time to time. These are issued to

clarify the view of the Government in respect of any Act, rules or notifications or to give

some information, etc. Such trade circulars/trade notices do not have any legal force and

they are not binding on taxpayers. If such trade circular or trade notice is beyond the

provisions of Act or Rules, such trade notice cannot be binding on Government also, as

there are no estoppels against a statute. The circulars/trade notices are not binding on

quasi-judicial authorities or courts.Administrative Organ-Administration is looked after by Government for which Council

of Minister is at its head. The Council of Ministers is headed by Prime Minister. Prime

Minister can head the administration till he enjoys the confidence of Parliament. Each

minister is assigned a particular ministry. Government deals with the matters through

various departments and generally head of the department who is a senior Govt. officer is

called Secretary. Further, various senior and junior officers are appointed by

Government (additional Secretary, Joint Secretary, Deputy Secretary, Commissioner,

Assistant Commissioners etc.) for administration. Powers are delegated to these officers

for execution of Government orders/ policies.

Business Law- Business law also known as mercantile or commercial laws are civil laws that

cover the rights, duties, compliances, procedures, conduct of person or entities in business

carrying the work of trade, commerce including transactions of sale, services, formations of

separate legal entities and their mandate as per the statutory provisions. A study of business law

covers following Acts:-


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The Indian Contract Act 1872

Special Contracts

The Sale of Goods Act, 1930

The Negotiable Instruments Act, 1881

The Indian Partnership Act, 1932

The Companies Act, 1956 The Consumer Protection Act, 1986

The Information Technology Act, 2000

Corporate and Commercial legislation under Constitution-In the basis scheme of

constitution, broadly, aspects of law and order, agriculture, public health etc. are looked

after by State Governments.

Article 246 of our Constitution indicates bifurcation of powers to make laws, between

Union Government and State Governments. Parliament has exclusive powers to makelaws in respect of matters given in list I of the Seventh Schedule to the Constitution

(Called Union List). List II (State List) contains items under jurisdiction of States.

List III (concurrent list) contains items where both Unions and State Governments can

exercise power.

UNION LIST- List I, called Union List, contains items like Defense of India, Foreign

affairs, War and Peace, Banking etc. Items in this relevant to topics covered in this book

are as follows:

ENTRY 43-Incorporation, regulation and winding up of trading corporations, including

banking, insurance and financial corporations but not including cooperative societies

ENTRY 44 Incorporation, regulation and winding up of corporations, weather trading or

not, with objects not confined to one State, but not including Universities

ENTRY 45-Banking

ENTRY 46- Bills of Exchange, cheques, promissory notes and other like instruments

ENTRY 48-Stock exchanges and future market.

ENTRY 97 Any other matter not included in List II, list III and any tax not mentioned in

list II or list III.(These are called Residual Powers.)

STATE LIST-State Government has exclusive powers to make laws in respect of matters

in list II of Seventh Schedule to our Constitution. These items include Police, Public

Health, Agriculture, Land etc. Relevant entries are as follows-ENTRY 32- Incorporation, regulation and winding up of corporations, other than those

specified in List I, and universities; unincorporated trading, literary, scientific, religious

and other societies and associations; cooperative societies.

CONCURRENT LIST-List III of Seventh Schedule, called concurrent list, includes

matters where both Central Government and State Governments can make laws. This list


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includes items like Criminal law and Procedure, Trust and Trustees, Civil procedures,

economic and social planning trade unions, charitable institutions, price control, factories,

etc. Important entries for our discussion are as follows-

ENTRY 7-Contracts including partnership, agency, contracts of carriage, and other

special forms of contracts, but not including contracts relating to agricultural land.

ENTRY 24- Welfare of labour including condition of work, provident funds, employers

liability, workmens compensation, invalidity and old age pensions and maternity

benefits.

lab chapter 1

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