The document discusses India's legal environment and key laws governing business. It outlines the main sources of law - the constitution, statutes, and customary/case law. Several important statutes are explained in detail, including the Companies Act 1956, Industries (Development and Regulation) Act 1951, MRTP Act, SICA 1985, FERA 1973, FEMA 1999, Consumer Protection Act 1986, labor laws, and the Environmental Protection Act 1986. The document also briefly discusses the Securities Contracts (Regulation) Act 1956, SEBI Act 1992, and the Patent (Amendment) Bill 2005.

1. GOVERNMENT
AND LEGAL
ENVIRONMENT
Ref: Economic environment, S.K. Misra and V.K
Puri, 12e, 2010

2. Introduction
■ The government set the legal framework within which the company operates.
The main sources of law in the country are
■ 1. Constitution
■ 2 Statutes (legislation)
■ 3 Customary law and case law

3. ■ Statutes are the formal enactment of the legislative body that governs a state,
city or country. It commands, publishes or declare a public policy.
■ They are enacted by the parliament, state legislature and union territory
legislatures
■ Parliament –union list (List I, 100 items)
■ State legislatures –state list(List II,61 items)
■ Both- concurrent list (List III, 52 items)
■ Repugnancy- parliament

4. Laws
■ Company laws
■ Industries(development & Regulation) Act,1951
■ MRTP Act and Competition Act
■ SICA 1985& Companies Amendment Act, 2002
■ FERA 1973 and FEMA 1999
■ Consumers protection Act 1986
■ The securities Contract (Regulation Act )1956
■ Labour Laws
■ Environment protection Act 1986
■ Patent (Amendment Bill)2005

5. ■ Company Laws
■ Company is a voluntary association of the persons formed for the purpose of
doing business, Have distinct identity, can sue and could be sued on, perpetual
succession, limited liability, separate legal identity
■ Operative w.e.f. April 1, 1956. The act represent the whole body of the company
law.
■ Contains 658 sections and XV schedules
■ It provides for the formation of company, dissolution of company, powers and
responsibilities of the directors and managers. Provides for raising capital,
management and administration of company, holding company meetings,
maintaining and audit of accounts, powers, inspections and investigation of
company affairs.
■ Applies to whole of India and to all type of companies whether registered under
the act or any previous act

6. ■ Administration of Company’s Act
■ Central government
■ Department of company affairs
■ Company law board in 1964
■ Registrar of companies for each state

7. ■ Industries(Development and Regulation) Act 1951
■ Regulation of industrial development was necessary in India to ensure that such
development take place according to the plan priorities and in accordance with
the decision laid down in the industrial policy resolution. For this purpose the act
was passed in the parliament in October, 1951 known as Industrial dev and reg
act 1951.
■ Came into force on May 8,1952
■ The government assumed power under the act to issue licenses for the
establishment of new industries, for expansion of old industries, production of
new items by existing industries and for changing the location of the existing
undertaking

8. ■ MRTP ACT AND COMPETITION ACT
■ MRTP act was adopted by the government of India and MRTP commission was
formed in 1970. The act extended to the whole of India except J&K
■ Objectives
■ Prevention of concentration of power to the common detriment & control of
monopolies
■ Prohibition of monopolistic, restrictive and unfair trade practices
■ Post 1991, new liberalized economic scenario, felt the need to considerably
modify MRTP act and thus introduced Competition Act 2002
■ While the focus of the MRTP act was on controllig the concentration of
economic power, the focus of competition act was on free and fair completion in
market.

9. ■ SICA 1985 AND COMPANIES(AMENDMENT ACT) 2002
■ Sick industrial companies act 1985, defined sick Industry’s for the first time.
■ Company’s amendment act 2002 changed the definition. It further provides for
the constitution of a National Tribunal(NCLT) to solve disputes, provide for
revival and rehabilitation of sick companies and recommend winding up of
companies
■ What is a sick Industry?
■ sick industrial company” means an industrial company (being a company
registered for not less than five years) which has at the end of any financial year
accumulated losses equal to or exceeding its entire net worth.

10. ■ FERA 1973 AND FEMA 1999
■ Foreign exchange regulation Act was promulgated in 1973 and came into force
on January 1, 1973
■ The act aimed in regulating foreign exchange. Frequent complaints were heard
from the large corporate sector and foreign investors that act was excessively
restrictive.
■ Accordingly, Foreign exchange management act was formed in 1999. The
emphasis on Fema was on exchange management than exchange regulation.

11. ■ CONSUMER PROTECTION ACT 1986
■ This was enacted in 1986. the objective of the act is to provide for better
protection of interest of customers and for that purpose to make provision for the
establishment of consumer councils and other authorities for the settlement of
consumer disputes
■ The securities contracts (regulation act)1956
■ To regulate the stock exchanges in the country, the government passed the
securities contrcats (Regukations) act in 1956. The main objectives of the act
are:
■ To empower the central government to regulate the dealings and control the
functioning of stock exchanges in the country
■ To promote healthy and orderly development of stock exchanges in the country
■ To ensure reasonable uniformity regarding the rule and bye laws of different
stock exchanges in the country
■ To prevent unhealthy speculation and other undesirable practices in the stock
exchanges
■ To protect the interest of investors

12. ■ SEBI ACT 1992
■ Prior to the setting up of SEBI the capital issues in India were regulated by capital
issues (control) act 1947. The main objective of this act was to promote private
sector on a sound line, ensure that investment in private sector will not violate
priorities and objectives laid down in 5 year plans. This act was repealed in 1992
and SEBI act was formed to regulate the securities markets.
■ Labour Laws
■ Industrial dispute act 1947
■ Minimum wages act 1948
■ Industrial employment (standing order) act 1948
■ Equal remuneration Act 1976
■ Workmen compensation Act 1923
■ Employees state insurance act, 1948
■ Maternity benefit act 1952
■ Payment of gratuity act 1972

13. ■ Environmental protection act 1986
■ Central government is empowered to take measures to protect and improve the
environment
■ Chapter 3 of the act- “prevention, control and abatement of environmental
pollution”- person carrying on industry, shall not allow the emission or discharge
od environmental pollutants in excess of the prescribed standard and the person
handling hazardous substance shall comply with prescribed procedural
safeguards.
■ The discharge of any environmental pollutants in excess of the prescribed
standard occurs, the person responsible shall take the necessary steps to
prevent and mitigate such discharge and also inform the authorities about this.
■ A person empowered by the central government can inspect the premises of
any enterprise and take samples of air, water or any others substance for testing
in environmental laboratories.

14. ■ Patent (Amendment) Bill 2005
■ Patent policies in all the countries involve finding a balance between protecting
the rights of investors and ensuring access to resources at a reasonable price.
In India the patent policy was formulated in the patent act 1970 emphasised the
public interest over the monopoly rights. This policy was based on granting
process patents rather than product patents. With passing of patents
amendment bill 2005, the country has now ushered in a product patent regime.

15. Questions
■ Enumerate the legal environment with special emphasis on various enactments
■ Write short notes on
■ Company’s act 1956
■ FERA AND FEMA
■ SEBI