Introduction to business law

PROF. SYED BILAL IRFAN
WHAT IS “LAW”?
The Great Greek Thinker Aristotle said –
“At his best, man is the noblest of all animals; separated from
Law And Justice, he is the worst”.
The law is a system of rules that a society or government develops in order to
regulate the behaviour of people and deal with crime, business agreements, and
social relationships.
Justice and Control are the two important objectives of law.

WHAT IS “BUSINESS LAW”?
• Business Law consists of those legal rules, which govern and regulate the
business activities, transactions and trade.
• Business Law is a wide term and embraces all legal principles concerning
business transactions. It is also known as the ‘Commercial Law’ or
‘Mercantile Law’.
• According to S R Davar, business law “means that branch of law which is
applicable to or concerned with trade and commerce in connection with
various mercantile or business transactions”.

Scope of Business Law
• The Indian Contract Act, 1872.
• The Negotiable Instruments Act, 1881.
• The Sale of Goods Act, 1930.
• The Indian Partnership Act, 1932.
• The Insurance Act, 1972.
• The Arbitration & Conciliation Act, 1996.
• The Law of Insolvency.
• Law Relating to Carriage of Goods.

Sources of Business Law
• The English Mercantile Law - The English law is the most important source of Indian
mercantile law. Many rules of English law have been incorporated into Indian law through statutes and
judicial decisions.
• Statutes of the Indian Legislature - Statute law is one, which is laid down in the Acts of
Parliament. Hence, it acts as the most superior and powerful source of law.
• Judicial Decisions & Precedents - Judicial decisions are also called as case laws. This is a source
of law based upon previous judicial decisions which have to be followed in similar future cases. The Courts
in deciding cases involving similar points of law also follow them.
• Customs and Usage - Customs and usage plays an important role in regulating business
transactions. Most of the business customs and usage have been already codified and given legal sanctions in
India. Some of them have been ratified by the decisions of the competent Courts of law. When a custom is
accepted by a court and is incorporated in a judicial decision, it becomes a legally recognized custom.

Fundamental Rights

Right to Equality
• Which includes equality before law,prohibition of discrimination
on grounds of religion, race, caste, gender or place of birth, and
equality of opportunity in matters of employment, abolition of
untouchability and abolition of titles.
• Right to equality is provided from Article 14 to Article 18 of Indian
constitution.

Right to Freedom
The right to freedom guarantees freedom for citizens to live a life of dignity
among other things.
These are given in Articles 19, 20, 21A and 22 of the Indian Constitution.

Right to Freedom (Contd.)
Article 19
•Freedom of speech and expression
•Freedom to assemble
•Freedom to form associations/unions/cooperative societies
•Freedom to move freely
•Freedom of residence
•Freedom of profession

Article 20
Deals with the protection of citizens in respect of conviction for offences.
This provides for three types of protection of the individual against the State.
• Retrospective criminal legislation: This is also known as ex-post facto criminal legislation. Under this, a person
cannot be convicted for an act that was committed at a time when the act had not been declared by law as an
offence.
• Double jeopardy: This indicates that a person cannot be convicted for the same offence more than once.
• Prohibition against self-incrimination: This implies that no person accused of an offence shall be compelled by
the State to bear witness against himself.

Article 21
• Article 21 states that no person shall be deprived of his life and personal liberty by
the State except as per the procedure established by law. This article has a wide
scope and its interpretation has undergone many changes over the decades.
• The Supreme Court has interpreted the right to life as the right to a dignified life.
• This is the most important right in one sense, because, without this right to life, all
other fundamental rights would be meaningless.
• It is this article that differentiates between a police state and a constitutional state.

Article 21(A)
• This article was introduced by the 86th Constitutional Amendment in 2002.
• It provides that the State shall provide free and compulsory education to all
children between the ages of 6 and 14.

Right against Exploitation
There are two articles of the Constitution which guarantee the right against
exploitation. They are described below:
• Article 23 – Prohibition of traffic in human beings and forced labour.
• Article 24 – Prohibition of employment of children in factories, etc.

Right against Exploitation (Contd.)
Article 23 – Prohibition of traffic in human beings and forced labour
• Traffic in human beings and the beggar and other similar forms of forced labour are prohibited and
any contravention of this provision shall be an offence punishable in accordance with the law.
• Exploitation implies the misuse of others’ services by force and/or labour without payment.
• This article also makes ‘Bonded Labour’ unconstitutional.
• Bonded labour is when a person is forced to offer services out of a loan/debt that cannot be repaid.
• The Article also makes trafficking unconstitutional.
• Trafficking involves the buying and selling of men and women for illegal and immoral activities.

Right against Exploitation (Contd.)
Article 24 – Prohibition of employment of children in factories, etc.
• Article 24 says that “No child below the age of fourteen years shall be employed to work in any factory
or mine or engaged in any other hazardous employment.”
• This Article forbids the employment of children below the age of 14 in any hazardous industry or
factories or mines, without exception.
• However, the employment of children in non-hazardous work is allowed.

Right to Freedom of Religion
The Constitution of India guarantees the right to freedom of religion also known as
SECULARISM to not only individuals but also religious groups in India.
This is enshrined in Articles 25 to 30.
• Article 25 (Freedom of conscience and free profession, practice, and propagation of religion)
• Article 26 (Freedom to manage religious affairs)
• Article 27 (Freedom as to payment of taxes for promotion of any particular religion)
• Article 28 (Freedom as to attendance at religious instruction or religious worship in certain educational
institutions)
• Article 29 and Article 30 provides cultural and educational rights to the minorities.

Right to Freedom of Religion(Contd.)
Article 25 (Freedom of conscience and free profession, practice, and
propagation of religion)
• Article 25 states that every individual is “equally entitled to freedom of conscience”
and has the right “to profess, practice and propagate religion” of one’s choice.
• According to Article 25, the gates of Hindu religious institutions should be opened
to every section of Hindus. Here the term ‘Hindus’ also includes individuals who
profess Sikh, Jain or Buddhist religion. The same holds true for the term ‘Hindu
religious institutions.’
• People of the Sikh faith wearing & carrying the kirpan shall be considered as
included in the profession of the Sikh religion.

Article 26 (Freedom to manage religious affairs)
• The right to form and maintain institutions for religious and charitable
intents.
• The right to manage its own affairs in the matter of religion.
• The right to acquire the immovable and movable property.
• The right to administer such property according to the law.

Article 27 (Freedom as to payment of taxes for promotion of any
particular religion)
• The state shall not compel any citizen to pay any taxes for the promotion or
maintenance of any particular religion or religious institution.
• In Indian history kings often collected a special tax to support a particular
religion; this use of public tax money had no place in secular India.

Article 28 (Freedom as to attendance at religious instruction or religious
worship in certain educational institutions)
• The crux of Article 28 is that no religious instruction shall be provided in any
educational institution wholly maintained out of State funds.
• In short, in state or central schools/colleges/universities, no one should promulgate
religious education in schools. We have temples, churches & masjid for that.
• We should have secular education system where in which any person from any
religious background can come and study without any uneasiness.

Article 29 and Article 30 provides cultural and educational rights to the
minorities.
And also Article 51A i.e., Fundamental Duties obliges all the citizens to
promote harmony and the spirit of common brotherhood and to value and
preserve the rich heritage of our composite culture.

Cultural and Educational Rights
Cultural and Educational Rights safeguards the rights of linguistic, cultural, and
religious minorities.
Preserving culture and heritage is vital in this scenario. To ensure that education
is provided for everyone without any kind of discrimination, Education Rights
was formulated.
Article 29 and Article 30 of the Indian Constitution deals with the cultural and
educational rights of Indian citizens.

Cultural and Educational Rights (Contd.)
Article 29 – Protection of Interests of Minorities
• Article 29(1): This provides all citizen groups that reside in India having a distinct
culture, language, and script, the right to conserve their culture and language.
• Article 29(2): The State shall not deny admission into educational institutes
maintained by it or those that receive aids from it to any person based on race,
religion, caste, language, etc. This right is given to individuals and not any
community.

Cultural and Educational Rights (Contd.)
Article 30 – Right of Minorities to Establish and Administer
Educational Institutions
• Article 30(1): All religious and linguistic minorities have the right to establish and
administer educational institutions of their choice.
• Article 30(2): The State should not, when granting aid to educational institutions,
discriminate against any educational institution on the ground that it is under the
management of a minority, whether based on religion or language.

Right to Constitutional Remedies
• There is a right in India which states that a person can move to Supreme
court if he/she wants to get their fundamental rights protected.
• This right comes under Article 32 for Supreme Court and Article 226 for
the High Court. It is known as the right to Constitutional Remedies.
• In this right, the Supreme court, as well as high court, is given the power to
instill the fundamental rights.
• It basically mean Right to Obtain Remedy in case of violation of
Fundamental or Constitutional Rights.

Directive Principles of State Policy
• The SAPRU Committee in 1945 suggested two categories of individual rights.
• One being justiciable and the other being non-justiciable rights.
• The justiciable rights, as we know, are the Fundamental rights, whereas the non-justiciable ones are the Directive Principles of State
Policy.
• DPSP are ideals which are meant to be kept in mind by the state when it formulates policies and enacts laws.
• They are an ‘Instrument of Instructions’ which are enumerated in the Government of India Act, 1935.
• They seek to establish economic and social democracy in the country.
• Indian Constitution has not originally classified DPSPs but on the basis of their content and direction, they are usually classified
into three types-
 Socialistic Principles,
 Gandhian Principles and,
 Liberal-Intellectual Principles.

Directive Principles of State Policy (Contd.)
Socialistic Principles
• This part contains the directives for securing
 Adequate means of livelihood for all citizen irrespective of men and women
 Equal pay for equal work for both men and women
 Equal distribution of wealth and resources among all classes.
 Just and humane conditions of work, a decent standard of living, full employment, social and
cultural opportunities.
 Participation of workers in the management of undertakings and establishments.

Gandhian Principles
• These principles are based on Gandhian ideology used to represent the programme of reconstruction
enunciated by Gandhi during the national movement. Under various articles, they direct the state to
organising village Panchayat, prohibition of intoxicating drinks and cow-slaughter, secure
living wage, decent standard of life, and to promote cottage industries, to provide free and compulsory
education to all children up to 14 years of ageetc.

Liberal-Intellectual Principles
• These principles reflect the ideology of liberalism. Under various articles, they direct the state to
 Secure for all citizens a uniform civil code throughout the country
 Provide early childhood care and education for all children until they complete the age of six years
 Organize agriculture and animal husbandry on modern and scientific lines
 Protect monuments, places and objects of artistic or historic interest which are declared to be of national
importance
 Promote international peace and security and maintain just and honourable relations between nations

Directive Principles Having a Bearing On
Business
• (Article 41) – Provision by the state to secure the right to work to education and to
public assistance in cases of unemployment, old age, sickness and disablement.
• (Article 42) - Provision for just and humane conditions of work and maternity
relief.
• (Article 43) - Provision of a living wage for workers.
• (Article 43-A) - Participation of workers in management of industries.
• (Article 47) - Duty of the state to raise the level of nutrition and standard of living
and to improve public health.

Economic Significance of Directive Principles
• The taxation commission 1953-54 was asked to examine the tax structure and to
suggest measures to reduce the inequalities of income and wealth.
• Established The industrial development and regulation Act 1954 and the
Monopolies Inquiry Commission in 1965 to achieve the objectives outlined by the
taxation Inquiry Commission.
• Land Reforms Legislation was enacted to abolish intermediaries and Zamindari
system, as result both rural and urban, is subject to ceilings and surplus land has
gone to the weaker sections of the community.
• A large number of laws have been enacted to implement organization of village
panchayat as a unit of self-govt.

• Article 4o has enacted the historic 73rd and 74th constitution amendment Act 1992 to
build Panchayat Raj Institutions as an administrative unit.
• The Government has established All India handicrafts Board, All India handloom
Board, The Small Scale Industries Board, The Silk Board, The Coir Board etc.
• The National Small Industries Corporation, The Khadi and Village Industries Commission,
have been set up for the development of the Khadi and Village Industries .
• Various measures and employment generation scheme have been taken to promote and
uplift of SCs, STs and Other backward classes.
• Legislation for compulsory primary education Article 45 has been enacted.
(Contd.)

• Most of the States enacted legislation and imposes some restrictions on prohibition of
intoxicating drinks and drugs(Article 47)
• Legislation have been enacted to protect places and monuments of national importance.
• Lastly, the Government of India has enacted the National Rural Employment Guarantee
Act(NREGA) to ensure hundred days work assistance to rural people which is in
conformity to the Right to work enshrined in the Directive Principles of State Policy of
the Indian Constitution.
• For raising standard of living Article 47 the Government of India adopted the large scale
program Community Development Project in for rural reconstruction in the field of
communication, transport, housing facilities, sanitation, agriculture, education etc.
(Contd.)

Overview of Business Law in India
• India’s laws are derived from English common law and seem recognizable to
American, Canadian,British, Australian and New Zealand attorney and
others familiar with the heritage of English legal practices.
• Employees are offered many protections by business laws in India, which is
a member of the International Labour Organisation. These include the
Payment of Wages Act of 1936, the Industrial Employment Act of 1946,
the Industrial Disputes act of 1947,the Payment of Bonus Act of 1965 and
the 1972 Payment of Gratuity Act.

Introduction to business law

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