Month: May 2020

Different types of Contracts and Agreements

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This article is written by PRANIT BHAGAT pursuing B.A LL.B from ILS Law College, Pune. In this article, he has discussed the various types of contracts and agreements and also differentiated between them. 

INTRODUCTION 

One enters into contractual engagements daily. Every business organization, be it large or small, binds itself in bonds of the contract with customers, suppliers, or employees in the conduct of its business operations. All these involve interactions of contractual nature. We all make contracts every day and many of us spend most of our lives performing contractual obligations. One may safely say that contracts are the most frequent juridical acts and the most useful among laws governing social relationships. However, not all contracts are valid. They raise the issue of defects or vices which may render the contract susceptible to invalidation or no effect at all. It is not possible to avoid the occurrence of vitiating factors but we can always reduce the undesired effects of a defective contract. Some defects make a contract void, while others make it voidable. Most legal systems expressly define defective contracts and enumerate effects that these categories of contracts produce. There is a common origin for the terms “void” and “voidable” and are also used to show the degree of defect in a contract. Void, voidable, and unenforceable contracts denote different degrees of the ineffectiveness of contractual engagement. The counterparts of these terms are in the continental system. The contract law in India is governed by The Indian Contract Act, 1872. However, the Contract Act does not claim to codify the entire law related to contracts. The Act specifically preserves any usage or custom of the trade or any incident of any contract not inconsistent with the provisions of the Act. The laws of contract confine itself for the enforcement of voluntarily created civil obligations. The law of contracts does not take care of the whole range of agreements and therefore, many agreements remain outside the purview as they do not fulfil the requirements of a contract. Every agreement is the result of a proposal from one side and its acceptance from the other. An agreement can be regarded as a contract when it is enforceable by law. Thus, A Contract can be defined as an agreement between two or more parties to perform a service, provide a product, or commit to an act and is enforceable by law. Section 10 of this Act talks about the conditions of enforceability, According to this section, an agreement is said to be a contract if it is made for some consideration, between parties which are competent to the said contract but with free consent and for a lawful object. 

Types of contracts based on its validity

1. Valid Contracts

An agreement having all the essential elements of a contract is called a valid contract and thus, it can be enforced by law. Valid contracts are defined under The Indian Contract Act, 1872 and it also lists the Essentials of a Contract directly or through interpretations of various judgments of the judiciary. Section 10 of the act also enumerates certain points that are essential for a valid contract like free consent, Competency Of the parties, Lawful consideration, etc.

2. Void contract 

Section 2(j) of this act talks about void contracts. An agreement that is not enforceable by law is said to be void. A void contract is a contract that terminates to be enforceable by law. A contract when originally entered into may be valid and binding on the parties but may subsequently become void. 

3. Voidable contract

Section 2(i) of this act talks about a voidable contract. An agreement which is enforceable by law but at the option of one or more parties thereto, but not at the option of other or others, is a voidable contract. However, the contract is continued to be good and enforceable unless it is rejected by the aggrieved party.

4. Illegal contract 

A contract is said to illegal if it is forbidden by law; or is of such nature that, if permitted, would defeat the provisions of any law or fraudulent; or has involved into injury to a person or property or regarded as immoral by the court or is opposing to public policy. These agreements are punishable by law. Also, these contracts are void-ab-initio which means that they are void from the start itself. 

All illegal agreements are considered as void agreements but all void agreements are not illegal in nature.

5. Unenforceable contract

A contract that is good in substance but due to some technical defects cannot be enforced by law is called an unenforceable contract. These contracts are neither void nor voidable.

Void Agreements 

Void Contract is a contract that does not exist at all. It cannot be enforced by law through any legal obligation to either party especially the aggravated party because they are not entitled to any protective laws as far as contracts are concerned. An agreement which talks about carrying out an illegal act is an example of a void contract or void agreement. 

For example, an agreement between a drug dealer and its buyer is a void agreement simply because the terms of the agreement are illegal. Therefore, neither party can go to court to enforce the contract.

Section 2(g) of The Indian Contract Act, 1872 talks about an agreement being not enforceable by law and is called void. A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable as per Section 2(j) of the Act. 

Void Agreeements are of two types:-

(i) Void ab initio: void-ab-initio means “unenforceable from the very beginning.

(ii) Void due to the impossibility of its performance: A contract can also be void due to the impossibility of its performance. 

Example: If a contract has been formed between two parties B & C but when the contract is being performed, the object of the contract becomes impossible to achieve because of action by someone or something other than the contracting parties, then the contract cannot be enforced in the court of law and is considered void.

(iii) Void agreements according to the Indian Contract Act, 1872

• Any agreement with a bilateral mistake is void: Section 20 of the act talks about this where both the parties to an agreement are under a mistake as to the matter of fact essential to an agreement and thus making it void  

Example: B agrees to buy a certain horse from C but It turns out that the horse was dead at the time of the bargain, though neither party was aware of the fact. The agreement becomes void.

• Agreements having unlawful consideration or objects are void.

Section 23 & 24 of this act talk about this where either the consideration or object of an agreement is unlawful or forbidden by law or of such a nature that if permitted, it would defeat the provisions of any law or is fraudulent or involves injury to the person or property of another or it is immoral or opposed to public policy.

If any part of a single consideration for one or more objects, or anyone or any part of any one of several considerations for a single object is unlawful, the agreement becomes void. But if the legal part of an agreement is severable from the illegal one then, the former would be enforced.

• An agreements made without consideration is void: 

An agreement without the consideration is void according to Sec 25 of the act unless:

(i) Made on an account of natural love and affection and it is expressed in writing and registered under the law for the time being in force.

(ii) A promise to compensate for a person who has already done something voluntarily for the promisor.

(iii) It has made a promise to pay a time-barred debt.

• Agreement for restraint of marriage of any major person is void: 

Section 26 of the act talks about this where every agreement in restraint of the marriage of any person, other than a minor is void. The law has the policy to discourage agreements which restrains freedom of marriage. The restraint can be general or partial in nature but the party may be restrained from marrying at all or from marrying for a fixed time or from marrying a particular person or class of persons, the agreement becomes void.

Void and Illegal Agreement 

The laws of contracts draw a distinction between an agreement which is void and unlawful or illegal. An illegal agreement is forbidden by law while a void agreement may not be forbidden by the law but merely say that if it is made and the courts will not enforce it. Thus, we can say that every illegal contract is void but a void contract is not necessarily illegal. The main difference between the two is that void contracts are not punishable and its collateral transactions are not affected but on the contrary illegal contracts are punishable and its collateral transactions are also void.

Difference between Void and Voidable Agreement

A void contract can be considered as a legal contract which is invalid even from the start of signing the contract. While a voidable contract is also a legal contract but declared invalid by one of the two parties for certain legal reasons. A void contract becomes invalid at the time of its creation and a voidable contract becomes invalid only if cancelled by one of the two parties who are engaged in the contract. No performance is possible in case of a void contract but performance is possible in a voidable contract. While a void contract cannot be considered valid at face value, a voidable contract is valid, but can be declared invalid at any time. A void contract is nonexistent and cannot be upheld by any law, a voidable contract is an existing contract, and is binding to at least one party involved in the contract.

Conclusion 

The performance and enforceability of a contract can be secured if the contract is a valid contract as void contracts can’t be enforced in the court of law.

Q-FESTA: My Dream “Judiciary”

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Moot Court Competition: IMS Law College

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Students duly enrolled and pursuing 3 years or 5 years undergraduate law course from any university recognized by the Bar Council of India may apply to participate in the competition.

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A look into the Sources of Law

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This article has been written by Yash Dodani, a second-year student at NALSAR University of Law. He has explained various sources of Law.

Introduction

The word Law is a very important term today. It comes into all sectors of the society and working of people. It governs the behaviour of individuals and groups including artificial persons from their private to public life. Law has entered into all the aspects of the society. It regulate such behaviour by enacting various statutes and legislations. But are the enactments only the source of law? The answer to this question is ‘NO’. Apart from the legislations, there are various other sources of law. These sources are judicial precedents, customs, morals, equity, jurist writings and various expert opinions. These all are the founding lines for the law that we see today and will continue to see. The law can never be separated from the life of an individual ever, because the society is not ideal and people will tend to do something that may harm others. Let us now look and analyse these sources one by one. Before going into that, lets first understand what is the meaning of the term ‘sources of law’.

Meaning

The term ‘sources of law’ has different meanings differing from the schools to schools. The positivist school used the term to indicate that the sovereign is the State and it is the only authority to make the laws. The sources of law can also be used as a subject matter of the law. Fuller said that the judges are the interpreters of the law and they can decide the case on some set principles and referred those principles as the sources of law. There is no set classification of the sources of law and they are not a complete list. Various authors have defined various sources according to what they understood of the term law itself.

Keeton had classified the sources of law into two broad types

  1. The Binding Sources: these are the sources which are binding on the people and they need to follow them always. This form will include the statutes, judicial precedents, customs, jurist writings etc.
  2. The Persuasive sources: these are not binding on the courts to always follow, but when such cases come where particular jurisdiction does not have a set precedent, then the persuasive sources are used. These sources will include mostly the foreign judgments or precedents which are set by a foreign court.

Legislations

The word legislations has been formed out of a Latin term called Legislatum which means making of law. Salmond defined legislation as “Legislation is that source of law which consists in the declaration of legal rules by a competent authority.”

The positivist school of thought believes that the law is made by a sovereign authority and that law is a command which is the will of the State. The process of making a law is called as legislation. The positivist also believed that the law which is made by the Sovereign authority is only the authorised source of law. They also went on to say that the judiciary is a mere interpreter of the law and can’t take up the authority of making the law. They also rejected that the customs are a valid source of law, because of the sole reasons that they were not made by the sovereign State. However, the historic school said that the customs give rise to the legislations because the customs are the one who gave shape to the legislations and legislation are only the written form of the custom which the people have agreed upon. These two opinions are literally opposite to each other.

Salmond has classified the legislation into two subgroups:

  1. Supreme Legislations- these are the legislations which are made by the supreme sovereign body like the Parliament and the power to amend those legislations lies with the legislative body only.
  2. Subordinate Legislations- these are the legislations which are enacted by any other authority other than the sovereign State. These authorities are generally authorised by the Sovereign Body who makes the Supreme Legislations.

Judicial Precedents

Judicial precedents are one of the important sources in the field of development of the law. These are some of the principles which are used by the courts in case there is no written legislation or the statute. The courts can decide on a particular case which has a particular fact situation and if that decision is used to reach a decision in a similar facts situation, it becomes a judicial precedent. Majority of the law of torts is based on the judicial precedent. However, some of the jurists have said that the precedents can’t be said to be the valid source of law. The reason which almost all jurists have given who is against the judicial precedents have said that when the courts have the power to shift from what they have said earlier, how can the precedents can be a valid source? They have also said that the practice of different courts are different, now in this situation how can a decision by a particular court be binding on another if the practice of these courts is different? However, to contend this, other jurists like Keeton said that the judicial precedents hold a valid source of law because the courts have the authority to decide on the case where there is an absence of a written statute. However, the precedents can’t alter the existing law and can only make new rules in the absence of written rules over that area. If there is a written rule which covers that case, then the judges are bound to follow it.

Judicial precedents can be classified into various types-

  1. Authoritative and Persuasive: the former is binding on the courts of that jurisdictions and the later may be considered as a precedent or a decision but is not at all binding on the courts. These may be some foreign judgments of the courts.
  2. Absolute and Conditional: both of them are the types of Authoritative precedents. However, the former one is followed in all the cases without any question. While the later one is conditional in the sense that if the courts found at any point n time that this particular precedent is wrongly set, they can remove it by overruling it in any other future case of such kind. It may be wrong because it is contrary to the law.

Customs

Customs are those usages by the people which establish them as a rule of law. They are followed continuously by the people and due to such continuity, these occupy as a law. They are followed by a very long time. It has been decided in the Tanistry case[1] as follows “It is a jus non-sciptum and made by the people in respect of the place where the custom obtains. For where the people find any act to be good and beneficial and apt and agreeable to their nature and disposition, they use and practice it from time to time, and it is by frequent iteration and multiplication of this act that the custom is made and being used from time to which memory runneth not to the contrary obtains the force of law.”

Customs can be said as one of the oldest sources of law that was widely used as something which is alternate of law. In the ancient times, the custom was used because there were no laws made by the king. It is something that is repeated by the people and then it becomes a custom because the people followed as something in lieu of law.

A custom can be said as a valid custom only when it fulfils the following requirements:

  • It must exist for a long period of time.
  • It should be reasonable.
  • It must be continuously used by the people.
  • It must not be contrary to any statute.
  • Must not be opposed to any public policy or principles of justice.

Professional Opinion

It is not something which is a popular source of law. Still, it is used to shape the law and decide upon the new laws. The professionals and the jurists’ comment/give their opinions on some aspects of law, and if that comment comes to be useful while making a law then it can be said as a source of law. 

Conclusion

Hence the study of sources of law play a very significant role because it many times gives the judges a framework to know how to interpret that particular law, it can be done by understanding the sources and accordingly using it. 

References

  • [1] 30 ER 516.

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Economic and Legal Relief to Assist Low-wage Workers

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Abstract

This article is written by Shashvat Pant pursuing BBA-LLB from Centre for Legal Studies, Gitarattan International Business School, GGSIPU. This article specifically analyses the position of low-wage workers in India, their hardships, lifestyle and also mentions legal as well as economic assistance which is provided to them by the Government to ensure their survival and well-being.

Legal Relief

  1. The Minimum Wage Act, 1948 came into force in India upon gaining its freedom, the earlier labour laws made by the British Government were highly exploitive. It came to bring equality and justice to the blue-collar workers.
  2. The EWS Quota Bill, 2019 came into force in India to protect the rights of Economically Weaker Section of the society and also aid them. Amendment to article-15 (Reservation in Educational Institutions) as well as article-16(Reservation in Jobs) concerning this Bill.

Economic Relief

  1. The Income Tax Act, 1961 – Chapter-III of this Act contain provisions for income tax exemption. There are a few types of specified incomes which are exempted from paying taxes.
  2. Prime Minister’s Awaaz Yojna launched in 2015 intending to provide Housing for all by 2022, EWS households are defined as households having an annual income of up to Rs.3,00,000
  3. Antodya Anna Yojna was launched in December 2000, under which Ration cards were issued to BPL families.

Introduction

Majority of people around the world live in poverty. According to World Bank’s “around two-thirds of the world population lives on less than $2.50 a day and one-sixth of the world population live in extreme poverty”. Poverty is one of the biggest problems around the world. Recently, due to COVID-19 crisis, there has been discrepancies and adverse impact on the poor, through job loss, loss of wage, rise in prices of commodities, inability to pay rents, etc.

Similarly, two-thirds of people in India live in poverty. Around 69% of the Indian population lives on less than $2 a day. Over 30% are extremely poor. India is the second-most populous country after China and is the seventh-largest country in the world. After gaining Independence India has risen and become one of the largest economies in the world. But, only a small percentage of the Indian population has been benefited from this economic growth, Whereas, the majority of people in India are still living below the poverty line.

Low-wage Employment

The population living Below the Poverty Line (BPL) is known as the Economically Weaker Section (EWS) of the society. This population, to feed their family two square meals a day and to keep a roof over their head, work a list of menial jobs. Someone who earns less than two-thirds of the median hourly wage for full-time workers is termed as ‘Low-wage worker’.

In India, a low-wage worker earns between 1.5-3$ a day, depending upon the nature of employment, employment activity and geographical location. This low-wage has not been able to match pace with prices of essential of commodities and services. As a result of which, this section of the society is unable to fulfil their basic needs.

Turning Point For Low-wage Workers

The Government over the past few decades has implemented a list of legal provisions as well as economic policies to support the economically weaker section of the society. All these laws and policies have formulated with the sole aim of providing assistance and uplifting the deprived section of the society.

LEGAL PROVISIONS AIDING E.W.S 

  1. Minimum Wage Act, 1948;

This act came into force in India upon gaining its freedom, the earlier labour laws made by the British Government were highly exploitive. It came to bring equality and justice to the blue-collar workers.

Experts who fixed the pay amount were guided by the recommendations made by the Fair Wage Committee. Fair Wage Committee’s recommendations were based on factors such as Physical and Health requirements of the labours.

It is also contained within MWA,1948 that though the Central Government fixes minimum wage on its part. Yet, the State Government may fix the minimum wage as they deem fit. Such Government shall be termed as Appropriate Government in that case. 

Objectives of the Minimum Wages Act;

  1. To ensure labour has a basic physical necessity and proper health.
  2. Ensure that the labour is paid fair wages.
  3. To ensure that labour leads a decent and respectable name in society.

2. EWS Quota Bill, 2019;

Economically Weaker Section (EWS) in India is a category of people belonging to General Category having an annual income less than the prescribed limit.

If an individual doesn’t fall under castes SC/ ST/ OBC & doesn’t avail any form of reservations (except horizontal reservation such as ECS, PwD, etc.) & his family annual income is less than prescribed limit, then he may avail this reservation.

According to EWS Quota Bill, 2019, people belonging to Economically Weaker Section, Since 1 February 2019 now get 10% reservation in education (supernumerary seats created for EWS category) and government jobs of India (vertical reservations) similarly like OBC, SC, ST.

Objectives of Economically Weaker Section Quota Act

  1. To ensure upliftment of Economically Weaker Section of the society.
  2. This act ensures that individuals belonging to General Category should also be provided with reservation in public services in addition to the existing quota for SC/ ST/ OBC.

Economic Policies aiding E.W.S

  1. The Income Tax Act, 1961;

Income Tax is a very important element for growth and betterment of the Indian Economy. By paying taxes on a timely basis, an individual automatically becomes responsible for the growth of his nation. The amount collected by the government as tax is used for the infrastructure development and other such uses as sought important by the government for the betterment of the nation. Hence, it’s the duty of every individual to pay legal taxes regularly.

The Government of India has levied certain rules and tax laws to make sure that justice could be done to people belonging to different income groups. While middle or higher-income groups pay taxes as per their economic status, the lower-income groups who earn less than a prescribed limit are exempted from the burden of paying taxes.

The exemptions provided in taxation laws are as followed:

  1. Citizens below the age of 60 years: (Made specifically for EWS) Individuals earning an annual income of less than Rs.250000 are exempted from tax rules and need not pay any kind of taxes to the Govt.
  2. For senior citizens (lying between the age group of 60-80 years) Senior Citizen earning an income of less than Rs.3,00,000 per year is free from paying any kind of tax to the Govt.
  3. For super-senior citizens (lying above the age of 80 years) Individuals aged 80 years and above is exempted from tax laws and need not pay any kind of tax to the govt if he/she earns less than Rs 5,00,000 annually.

2. Prime Minister’s Awaaz Yojna

This scheme was launched by the Government of India to increase the affordability of houses against an inflated real estate sector. The mission of this scheme is “Housing for All” by 150th birth anniversary year of Mahatma Gandhi, by constructing 20 million houses across the nation.

This scheme was launched with the motive of uplifting the economically weaker sections of the society. This scheme provided loans at excellent rates so that these sections could have their own houses.

3. Antodya Anna Yojna

This was a step in the direction of making the Targeted Public Distribution System, aimed at reducing hunger among the poorest segments of the E.W.S population. To make TPDS more focused towards this category of population, the “Antyodaya Anna Yojana” (AAY) was launched in December 2000 for poorest of the poor families.

AAY involved identification of poorest of the poor families from amongst the number of EWS families covered under TPDS within the States and providing them food grains at a highly subsidized rate of Rs.2/- per kg. for wheat and Rs.3/- per kg for rice. The States/UTs were required to bear the distribution cost, including margin to dealers and retailers as well as the transportation cost. Thus, the entire food subsidy was passed on to the consumers under the scheme.

Conclusion

The Government over the decades have been implementing numerous laws and policies for the benefit and well-being of the society. Among these laws and policies, a significant portion is made for upliftment of socially and economically backward sections of the society. As of now, all these provisions have proved to be boon for lower-income groups and have uplifted them over the time.

References

  • https://nhb.org.in/rajiv-rinn-yojana/
  • https://www.soschildrensvillages.ca/news/poverty-in-india-602
  • https://workingfordignity.ucsc.edu/what-is-low-wage-work/
  • https://en.wikipedia.org/wiki/Economically_Weaker_Section
  • https://dfpd.gov.in/pds-aay.html
  • https://www.incometaxindia.gov.in/pages/acts/income-tax-act.aspx
  • https://pmaymis.gov.in/

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Independence of Judiciary

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 This article is written by Deepika, pursuing BA-LLB from IIMT & School of Law, GGSIPU, Delhi. In this article, he has discussed the importance of judiciary as the third pillar of democracy and independence of the judiciary.

Introduction

Judiciary is considered as the third pillar of democracy, as the role of the judiciary is indispensable in a democratic system of governance. Judiciary plays a vital role in order to maintain a balance between individual interest and society and also ensures that the law of land is implemented in its true sense. Merely mentioning of fundamental rights in the Constitution without any provision of their proper safeguards them, serves no purpose. Obviously the very existence of a right depends upon the remedy for its enforcement. For this purpose, an independent and impartial judiciary with a power of Judicial review has been established under the Constitution of India. It is the custodian of the rights of citizens. Besides, in a federal constitution, it plays another significant role of determining the limits of power of the centre and states and also checks the misuse of power by legislature or executive by the instrument of Judicial review. The judicial system in a country is central to the protection of human rights and freedoms. Independence of judiciary is a pre-requisite for the realization of a democratic society based on the principle of rule of law.

Independence of Judiciary

The independence of judiciary is a sine qua non for the very existence of democracy.  judicial independence means the freedom of judges to exercise judicial power without any interference or influence. It requires that judges should not subject to control by political or executive branches of government and they should get protection from any kind of threats, interference or manipulation which may force them to unjustly favour someone. Only an independent and impartial judiciary can protect the rights of the people and provide equal justice without fear or favour. The judiciary in addition to maintaining the supremacy of the constitution is also the guardian of the fundamental rights of the people. So whenever there is unreasonable interference in these fundamental rights of any individual the judiciary comes to take action.. Judicial independence is a significant component of government culture in every country. It is shaped by relations between the branches of government and is one of the basic values which lie at the foundation of the administration of justice. The culture of Judicial independence can only exist in a system which is based on the doctrine of separation of powers. Though in India separation of power is not in its true sense, there is both structural and functional overlapping at many instances but at the same time within this type of arrangement in our country sufficient independence is given to judiciary to promote a society based on the principle of rule of law and for realising the ideals of social, economic and political justice given in the preamble of our constitution.

Nature and scope of independence of judiciary

The nature and idea of independence of the judiciary is of modern origin, It got recognition after the evolution of the concept of separation of powers. The dictionary meaning of independence is ‘the state of being not dependent on another person or things for support or supplies’. In a literal sense, independence means the absence of external control or support. In legal point of view independence of judiciary mean the power of upholding without fear or favour, the rule of law, personal freedom and liberty,  equality before the law and impartial and effective judicial control over various actions of the government. independence of judiciary means a fair and unbiased judicial system of a country which can afford to take its decision without any interference of the executive or legislative branch of government.

Rationale of Judicial independence

In a civil society, we want some of our relations with each other and with our government to be regulated by reasonably well define laws setting out mutual rights and duties and whenever disputes arise about these legal rights and duties, we want a mutually accepted third party adjudicator to settle the dispute.

Necessity for independence of Judicial

In democratic countries judiciary is given a very place this is because the courts settle disputes and deliver justice not only in disputes between one citizen and another but also resolve disputes between any citizen and state or the various organs of the state. The need for an independent judiciary is indispensable in a country having written constitution as the constitution is considered as the basic law of the land and it requires some impartial authority to interpret it. In the absence of such authority, the constitution would create a disorder in the society by having thousands of interpretation of a single provision. So the judiciary plays a significant role of interpreting the law in the case of any ambiguity and applying the law and further adjudicating upon the controversies between one citizen and another and between a citizen and the state. The architects of the Indian constitution were conscious of the very significant and special role of Judicial review and acting as a guardian of fundamental rights assigned to our judiciary so the salient feature of independence of judiciary which is also one of the basic features of the constitution was incorporated in our constitution so that the judiciary can function without fear or favour.

The primary need for the independence of the judiciary rests upon the following points:

  • To check the functioning of all the organs of the state

Judiciary acts as a watchdog as it has to ensure that all the organs of the state function within their respective areas and according to the provisions of the constitution.

  • Interpreting the provisions of the constitution

Any ambiguity regarding the provisions of the constitution is interpreted by the judiciary. So for unbiased interpretation, we need an independent judiciary.

  • Disputes referred to the judiciary

All the disputes are adjudicated by the judiciary. It is expected of the judiciary to deliver judicial justice and act in a fair and unbiased manner. This can only be done by an independent judiciary

So, for the maintenance of the rule of law and fair judicial administration, an independent judiciary is of utmost importance.

Constitutional Provision

The framers of the constitution enshrined various provision in our constitution to secure the independence of the judiciary

  • Separation of Judiciary from executive

Article 50  provided under directive principles of states policy directs the state to take steps to separate the judiciary from the executive in the public services of the state. It emphasises the need for securing the judiciary from the interference by the executive.

  • Security of tenure

They can’t be removed from office except by an order of the president and that also only on the ground of proved misbehaviour or incapacity, supported by a resolution adopted by a majority of the total membership of each house and also by a majority of not less than 2/3 of the member of the house present and voting.

  • Salary of judges fixed, not subject to the will of the legislature

The salaries and allowances of the judges of the  Supreme court and High court are not subject to the will of the legislature. They are fixed by the constitution and charged on the consolidated fund of India and state respectively.  They are not subject to the vote of the legislature. During the term of their office, their salaries and allowances cannot be altered to their disadvantage except in grave financial emergency.

  • No discussion in the legislature on the conduct of the judges

Neither in the parliament nor in the state legislature a discussion can take place with respect to the conduct of a judge of Supreme court or High court in the discharge of his duties.

  • Power to punish for its contempt

The Supreme court and the High court have the power to punish any person for its contempt(Article 129 and 215).

  • Judges of the supreme court are appointed by the Executive after the consultation of legal experts

The constitution doesn’t leave the appointment of the judges of Supreme court and High Court to the unguided discretion of the executive. The executive is required to consult judges of the Supreme court and High court in the appointment of the judges.

  • Prohibition on practice after retirement

Article 124(7)  doesn’t allow a retired judge of the Supreme court to appear and plead in any court or before any authority within the territory of India.

  • Freedom in recruitment of staff

The supreme court and High courts are given authority to recruit their staff and frame their own rules.

Cases on independence of judiciary

The independence of judiciary is adequately guaranteed. However in judges transfer case I (S. P. Gupta v. Union of India) The supreme court held that the word ‘consultation’ under Article 124& 217  did not mean concurrence and the executive was not bound by the advice given by the judges. Thus the power of appointment big the judges of the supreme court and the transfer of  High court judges was solely vested in the executive from whose dominance the executive was expected to be free.

The Judges transfer case II (S. C. Advocate On Record Association v. Union Of India) led  to judicial supremacy from the supremacy of executive

The Supreme court by a 7:2  majority overruled S. P. Gupta’s case and held that the opinion of the chief justice of India must be given weight in the selection of the judges of the Supreme court and High court and transfer of High court judges. The selection of judges should be made as a result of a participatory consultative process. The Chief Justice was required to consult two senior-most judges of the Supreme court before sending his recommendations to the Government.

Thus the executive element in the appointment process was reduced to a minimum and any political influence is eliminated.

In Transfer of judges case III, ( In Re Presidential Reference)a nine judges bench of the Supreme court has unanimously held that the recommendations made by the chief justice of India on the appointment of the judges to the Supreme court without following Consultation process are not binding on the Government. The court held that the “ The process of consultation which is to be adopted by the CJI requires consultation of plurality of judges  “. The court held that the recommendations made by the CJI without complying with the norms and guidelines regarding the consultation process are not binding on the government. This case led to the expansion of collegium as the CJI is required to consult four senior-most judges of the supreme court.

Conclusion

The constitution of India provides for a judiciary which is independent. Independence of judiciary is important for the purpose of fair justice as judiciary acts as a watchdog by ensuring all the organs of the state function within their respective area according to the provision of the constitution.  Interference of legislature or the executive in the proceedings of the judiciary can bring an element of bias, threat, fear and manipulation which can pose a great danger for a democratic society wedded with rule of law. A judiciary acting under fear or pressure can shake the roots of democracy. So an independent judiciary is of paramount importance for upholding ideals of a democratic state.

References:

  • Dr J. N. Pandey, 56th edition
  • MP Jain, 8th edition
  • Sodhganga.inflibnet.ac.in

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Distinction between Law of Tort, Contract, Quasi-Contract and Crime

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This article is written by Sharat Gopal, studying BA LLB in 2nd year at Delhi metropolitan Education. Here it discusses short intro of tort law of tort, contract law, criminal law and concept of quasi-contract and difference between them.  

Introduction 

Law is a system of rules and regulations, which were created for the betterment and well being of human beings. It is a rule of conduct developed for a certain territory for proper governance of that territory. There is no specific definition for law.

Law of Tort

 Tort in simple terms means Civil Wrong. It roots back to the common law and word “Tort” itself was first used in 1580s. The word “Tort” is derived from a Latin word “tortum” which in simple terms means twisted or crooked.  

Definition 

 According to Salmond, tort is a civil wrong for which the remedy is charging unliquidated damages (an amount that cannot be foreseen by a fixed formula)  caused to the person. But this is very much different from breach of contract or breach of trust or other merely equitable obligations.    

On the other hand, Winfield states that the tortious liability arises from the breach of duty which is primarily fixed by law. And the duty is towards the general public and the breach of this duty is redressable by an action for unliquidated damages.

Both these views are contrary to each other. Salmond’s definition is accepted more by people as it is more practical in nature. On the other hand, Winfield’s definition is more theoretical in nature.    

Law of tort

Law of tort is not codified in India. It was adopted from the English Common Law. In India, unlike other countries, moral wrong is not punishable. In countries like Canada, who follow common law, have moral value laws known as Samaritan Law. In these countries the moral wrong is punishable. Example-  Not giving water to a thirsty man, when you are carrying water with you, is morally wrong. This is punishable in countries like Canada, but not in India. 

Law of torts had a slow development in India with respect to other countries and has its own reasons for this-

  1. Low Illiteracy rate in India.
  2. Poverty in India.
  3. Very little knowledge about the judiciary in common people. 
  4. High expenses on legal services.

Torts law in India mainly deals with the violation of legal rights and duties. It usually believes in compensation more than punishment. Its focus is on bringing the victim back to the position he was before the commission of the tort.

Law of Contract

Law of Contract is a codified law in India dealt under the Indian Contract Act, 1872.  Now, when we think of the word ‘contract’ all that comes to mind is paperwork and a lot of complications through provisions. But under Indian contract act, 1872, it is as simple as difficult it sounds.

 Basically, it follows through some steps. Starting with the first step that is a person making an offer/proposal to other person attached with some consideration, which is communicated to another person through some means, now it can be expressed as well implied under Indian Contract Act. Then, that offer or proposal is accepted by the other person to whom that offer or proposal is made. When that acceptance gets communicated to the person making the offer/ proposal, there is a formation of promise. That formed promise is called an agreement. Now, that agreement becomes legally enforceable by law, is called a Contract. Hence, all contracts are agreements but all agreements are not contracts. Only those agreements which are enforceable by law are called contracts.

Now, when it comes to breach of contract, parties to a contract can sue the person breaching the contract in the civil court and can claim remedy to it which is liquidated damage.

QUASI-CONTRACT

This at very first was recognised by English law as a quasi-contractual obligation which later the framers of the Indian constitution modified and placed it in the Indian contract act. Hence, it is almost similar to that of English quasi-contract. 

Though in India, Quasi-contract has not been specifically defined and is said to be as resembling those of contracts.

Quasi-contract is basically an obligation created not by the parties mutually but by a court for the sake of justice. It is an obligation imposed by law on the parties because of the previous relationship between the parties or due to the fact that one of them might have enriched some profits from the loss of the other. And such obligations are termed as quasi-contractual obligations.

Law of crime

Now criminal laws by the term are clear i.e., it is the law governing crimes.  It is generally referred to the offences that are either against the state or acts which are prohibited by law or can be both. In India, criminal laws are governed according to the codified law i.e., Indian Penal Code, 1860 drafted by Macaulay. 

Under IPC, it deals with almost all types of crimes and establishes its punishment that shall be reasonable for those types of crimes. Crimes are mostly categorized as felonies based on their nature and the maximum punishment imposed on them. These crimes are prosecuted in the criminal courts.  

Difference between tort and contract law

                TORT LAW                   CONTRACT LAW
Tort is an uncodified law

Contract law is a codified law as Indian contract law, 1872.
In tort, there is a duty fixed by law In contract law, duty is not fixed by law but is mutually given by parties to each other.
In tort, duty is towards every person. Which is also known as “right in rem”.
Under contract law, duty is only for the parties to that specific contract. This is also known as “right in personam”.
In tort law remedy given is unliquidated damages.While in contract law remedy provided for a breach of contract is liquidated damages.
Tort is committed without consentContracts are totally based on the free consent of the parties.
Motive is often taken into consideration in case of tort.
Motive is completely irrelevant in cases of breaches of contract.
Measures of damages in the case of tort are not predictable.
Measures of damages are generally more or less predictable.

Difference between tort and crime

              Tort law                        Criminal law 
Tort is a civil wrong or a private wrong.

Crime is said to be done against a state and it harms not just the victim of that crime but the whole society. Hence it is a public wrong.
And hence is dealt under civil courts. And therefore is dealt under criminal courts.
As a result of tort, the remedy given is a compensation which is unliquidated damage. As a result of crime, a convict is provided with a punishment given under IPC and also fine as per the case may be.
The suit of tort is against a person.The suit of crime is against the state.
It is private law.
It is public law.

Difference between tort and quasi-contract

                  Tort law                     Quasi -contract
Damages are not fixed in the tort law i.e., also known as unliquidated damages.Damages to the quasi-contractual obligation are fixed and specified by the court itself.
Duty is imposed toward all people generally and not to a definite person.Duty is towards a definite person from whom the person has enriched wrongful benefits.

Difference between contract and quasi-contract

          Contract law             Quasi-contract
In contract, there is always an agreement between the parties.
In Quasi-Contract, there is not actually an agreement because it is not a real contract but more specifically is a constructive contract.
Here, free consent of both parties is essential.
Consent of the parties is not material in the quasi-contracts, because it is an obligation imposed by courts.
Here liabilities exist by the terms of the parties.Here liabilities exist independent of the agreement and are based on justice, equity and good conscience.
It is in right in rem as well as right in personam.It is only right in personam, as strictly available only against a person and not against the entire society.
If the law in force is required, it must be registered. It is raised through legal fiction.

Difference between contract and crime

        Contract                 Crime 
The injured party has only right for liquidated damages or actual damages caused to him.
the injured party cannot sue for damages as this is a crime against society, the accused will be put to imprisonment or imposed fine or both.
The object of contract law is to protect the rights of parties to a contractThe Objective behind criminal law is to provide peace and harmony in society.
Mens rea for breach of contract is totally irrelevant.Mens rea is an important element in crime
It is dealt under civil court
 It is dealt under criminal court.

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Unlawful Consideration and Unlawful Object under Contract Law

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This article is authored by Pankhuri Pankaj, a 3rd-year student pursuing BA-LLB (Hons.) from Vivekananda Institute of Professional Studies, affiliated to GGSIPU. She is currently interning with Lexpeeps. This article summarises certain key provisions of “unlawful consideration and unlawful object” under the Contract Law and is qualified in its entirety by reference to the Indian Contract Act, 1872.

INTRODUCTION

In India it is said that for a contract to be understood as a valid contract two things are a must: a lawful object and a lawful consideration. To ensure the regulation of such valid contracts in the country naturally legal provisions have been implemented. Under Section 23 of the Indian Contract Act, 1872 certain restrictions have been imposed on an individual while indulging into any agreement and limits the freedom of that individual and his said privileges by drawing a parallel with the contemplations of public policies and various other provisions that have been articulated under this section. 

Under Section 23 the term ¨object” indicates “purpose” of that contract does not really imply importance in a similar sense as the term ¨consideration¨. It is understood that even if the consideration of the contract is purely legally valid but the object of that contract is found to be unlawful in nature, then the contract would be termed an invalid contract. Similarly, if consideration, which has been defined under Section 2(d) of the Act, is found to be unlawful, then even if the object of the contract is legally valid, the contract would be considered an unlawful contract.

UNLAWFUL CONSIDERATION IN A CONTRACT

As discussed under section 23 of the Indian Contract Act, 1872, the legality of a consideration is only valid if:

  1. The Consideration Is Not Forbidden By Law: It is understood that if the consideration in a contract is prohibited by law then it is considered to be an unlawful consideration and the contract is said to become invalid. It is important to note that for an act forbidden by law to account as an unlawful consideration it would generally include acts that are explicitly punishable by the law and it can also include those acts that are prohibited through the medium of either rules or regulations. 
  2. The Consideration Is Not Immoral In Nature: A consideration in a contract is considered to be an unlawful one if it has been regarded as an immoral act by the honourable court. In case of an immoral consideration the contract would end up being invalid and void.
  3. In Case The Consideration Is Not Fraudulent In Nature: A contract becomes invalid or void by nature if the consideration of the contract is fraudulent in nature. Here, it is important to understand what may fall under a fraudulent act. To understand the term fraud better Section 17 of the Indian Contract Act, 1872, can be referred to which states that any act committed by a party to a contract with the intent to deceive another party or to induce that party into entering into the contract.
  4. The Consideration Does Not Defeat the Provisions Set Under The Law Of The Country:  A consideration is termed as an unlawful consideration of a contract, and end up making the contract an invalid and void contract, when the said consideration aims at defeating the provision of law or the intentions of law. In case the court finds the consideration to be in contradiction with the provisions of the law then it can discard the contract as void.
  5. The Consideration Does Not Involve Harm Or Injury To Any Other Person Or Property: A Consideration is denied to be considered a lawful consideration of a contract if the consideration includes an act which involves causing harm to any other person or property. It can be understood with the simple example of a person taking money as an object and in return as a consideration killing a third person or vandalising a third party’s property.  This type of consideration can be broadly included under an act forbidden by law as well since the consideration includes an unlawful act. 
  6. The Consideration Does Not Defeat Any Rules Already In Effect: A Contract is said to become invalid or void in nature if the consideration of that contract is against the essence of any rules already implemented in the country or if it intends to defeat the intention of any rules in effect in the country at that time. Such a consideration is also termed as an unlawful consideration.
  7. The Consideration Does Not Oppose The Public Policies: The ultimate motive of the Indian judiciary is to maintain the essence of natural justice in the community. In case the consideration of a contract is oppressive of the public policy then such a consideration is said to be an unlawful consideration and the contract becomes an invalid contract or void by nature.

It is important to understand what would fall under the term ¨public policy¨ here. Public Policy can be understood as a very broad concept but for the purpose of consideration of a contract it is not referred to in the wider sense but in general terms- for the good community. If the act included in the consideration is not particularly in the favour of the good of the community but rather brings inconvenience then such an act makes the consideration unlawful. 

Various examples can be discussed under this heading to further illustrate this field, like:  Trading with the enemy of the country, or interfering with the courts, or stifling a prosecution by removing evidence or witness and multiple other things, etcetera.

UNLAWFUL OBJECT IN A CONTRACT

As discussed under Section 23 of the Indian Contract Act, 1872, an object of a contract is not considered to be legally valid if:

  1. The Object Of The Contract Is Forbidden By The Law: It is understood that if the object in a contract is prohibited by law then it is considered to be an unlawful object and the contract is said to become invalid and void by nature. It is important to note that for an act forbidden by law to be counted as an unlawful object it would generally include acts that are explicitly punishable by the law and it can also include those acts that are prohibited through the medium of either rules or regulations in the country.
  2. The Object Of The Contract Is Immoral In Nature: An object of a contract is considered to be an unlawful one if it has been regarded as an immoral act by the honourable court. In the case of an immoral object, the contract would end up being invalid and void. An immoral object would generally include acts which are frowned upon in our society, like taking money to file for divorce. Here, the party cannot file a case in case the consideration for the immoral object is not received.
  3. The Object Of The Contract Is Fraudulent In Nature: A contract becomes invalid or void by nature if the object of the contract is understood to be fraudulent in nature. Here, it is important to define what may fall under a fraudulent act. To understand the term fraud better one can refer to Section 17 of the Indian Contract Act, 1872, or the definition given above under ¨unlawful consideration of a contract¨.
  4. The Object Of The Contract Defeats The Provisions Of The Law: An object of a contract is termed as an unlawful object if the said act under the object aims at defeating the provision of law or the intentions of the law. In case the court finds the consideration to be in contradiction with the provisions of the law then it can discard the contract as void.
  5. The Object Of The Contract Involves Harm Or Injury To Another Person Or Property: Just as discussed under unlawful consideration an object of a contract will be denied the status of a lawful object of a contract if the object includes an act which involves causing harm to another person or property. It can be understood with the simple example of a person taking money as a consideration for the act of killing another person, which would make it the object.  This type of an object can be broadly included under an act forbidden by law as well since the object here includes an unlawful act.
  6. The Object Of The Contract Defeats Any Rules In Effect: A Contract is said to become invalid or void in nature if the object of that contract is found to be against the essence of any rules already implemented in the country or if it intends to defeat the intention of any rules in effect in the country at that time. Such an object is also understood as an unlawful object.

CONCLUSION

For a contract to be considered as a valid contract it is important to have a lawful object and a lawful consideration. If either of the two is found to be missing, the contract is to be found as invalid in total. To maintain fairness in the society it is important to follow the norms and in case of an unlawful object or unlawful consideration, which in turn would affect the society, this purpose cannot be pursued.

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1st Online Quiz Competition: Lexstructor

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ABOUT THE ORGANIZATION

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Lexstructor Legal News & Publication is organizing ‘1st National Online Quiz Competition on Constitutional Law’ on June 5, 2020.

TIMELINES

Last date of the Registration: May 31, 2020

Date of the Quiz Competition: June 5, 2020 (6 pm)

Date of the Result: June 12, 2020

REGISTRATION

Registration fee – Rs. 100/- per participant

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WINDING UP OF COMPANY

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The following article has been submitted by Aaditya Kapoor, a law-aspiring student of Vivekananda Institute of Professional Studies. Through his research, Aaditya strived to shed light upon the process of Winding-Up of a Company, and the various types of said process.

In a world that quickly pokes itself further and further towards industrialization, the corporate world is maybe the most fundamental component of what holds together a country’s economy – and India is no special case. As indicated by the Indian Companies Act, 2013, a company can be characterized as an affiliation enrolled with the Registrar of Companies, where the affiliation itself is an artificially but legitimate individual having an autonomous, lawful substance and a typical capital containing transferable offers. 

A company can be all the more distinctively depicted as a business element going about as a legitimate individual, shaped by a solitary or a gathering of lawful people to commence business. There is no prerequisite of need for there to be a gathering of people associated with the arrangement of a company, as it is conceivable for one individual to do likewise – as long as the previously mentioned legitimate individual is perceived by law as somebody with certain lawful rights and commitments.

The Companies Act, 2013 provides insight into what qualifies as a company, and the different classifications of the same; a detailed description of which can be referred to here. The act also prescribes provisions regarding the process of Winding Up of a company.

Winding up is a process through which a company dissolves itself, ceasing to exist as a legal entity thereby. The aforementioned process involves selling off stock, paying back creditors and after resolving all debts, the remaining monetary or non-monetary funds are paid back to the members, as per their contribution to the company’s capital. According to Section 2(94A) of the Companies Act, winding up also means “liquidation” in the Insolvency and Bankruptcy Code, 2016. Once the necessary prerequisites are met with, the company undergoing this process is dissolved; however, it doesn’t lose its legal identity until after the dissolution is achieved. Therefore, it can be ruled out that the winding up of a company is the final stage of that company’s existence. 

WHY DOES A COMPANY LEAD TO WINDING UP?

A number of reasons can contribute to winding up of a company. These reasons may include failure to commence a proper business, bankruptcy, and even voluntary interests of members in dissolving the company. At certain instances, death of promoters can also cause the company into undertaking the winding-up process. The courts can order such process to be ensured on a particular company as well, depending upon circumstances that may contribute to breach of law on any grounds prescribed by the courts. 

MODES OF WINDING UP


There are a number of ways by which a company can launch itself into the winding-up process, and said ways include both voluntary actions as well as a judicial sanction.

  1. Compulsory Winding Up of Company: The felicitation of the winding-up process by a tribunal constitutes compulsory winding up of the company; the guidelines for which are contained under Section 272 of Companies Act. A Court can commence winding up of company through the following scenarios
  2. Special Resolution: If the company itself has maintained for it to be dissolved by the court through a special resolution, such company is deemed to achieve dissolution through compulsory winding up.
  3. Company’s Default: If a default is made by the company in the delivery of the statutory report to Registrar of Companies, or if the same is made in holding the statutory meeting of the company, the court has the authority to initiate compulsory winding up of a company. This rule shall also apply if the company fails to file its financial statements or annual returns for five consecutively preceding financial years.
  4. Non-commencement or Suspending of business: In case the company, even after registering itself and following due process for its formation, fails to commence business within a year from its inception, a winding-up proceeding can be initiated by the court – wherein the same effect can be achieved if the company after commencing business suspends the same for over a year.
  5. Reduction of Members: One of the prerequisites that need to be followed in order to formulate a viable company is for it to contain a certain minimum number of members – which is set at seven for a public company and 2 for a private company. However, if the number of members of the company goes below that required figure, the court has the authority to commence the winding-up process.
  6. Failure in paying debts: If a company renders itself unable to pay off its debts, it becomes prone to compulsorily winding up by order of the court.
  7. Indulging Fraudulent Acts: The court can order winding up of a company if said company is found to be indulging or partaking in fraudulent acts or other unlawful business. The same effect, based on principles of public benefit, can be achieved in case a member of management connected with the formation of company is found guilty of any kind of misconduct. 
  8. Just & Equitable Clause of Court: Lastly, a court can initiate a process of compulsory winding up of a company if it deems the same to be a just and equitable action and one that furthers the public interest. 

A petition to initiate compulsory winding up of a company has to be filed in the Tribunal. Such a petition can be furthered by anyone of the following persons/entities:

  1. The Company itself: As conferred earlier, a company can be compulsorily wound-up by passing a Special Resolution to achieve the aforementioned result; wherein this resolution is brought about members of the company itself.
  2. The Contributories: A contributory of the company is also entitled to file a petition for winding up of a company by the court, regardless of whether or not such contributory has tangible interests in the shares or assets of the company.
  3. The Registrar: The registrar, in consonance with the sanction of Central Government, can file a petition for winding up of the company to the tribunal only in a few exceptional cases. They are: (i) in case the company defaults in filing its financial statements with the registrar; (ii) If the company happens to act against public interest or interests of the nation itself; and (iii) if, based on an application made by the Registrar, the tribunal is led to believe that the company was formed for fraudulent or unlawful behaviour. 
  4. The Central or State Government: The governing bodies themselves can file a petition of winding up of a company if there’s proof of said company acting against interests of the nation and public welfare.  

2. Voluntary Winding-Up of Company: Not much different from the passing of the special resolution, the members of the company also hold the authority to trigger winding up of company in certain scenarios. According to Section 484 of the Companies Act, a company can be wound-up voluntarily under the following circumstances: 

  1. By an Ordinary Resolution: In case the duration of the company was fixed by its articles since its inception, and the same has expired, a company can be led into the process of winding itself up. 
  2. By a special resolution: To recall once again, a company can move into the winding-up proceeding bypassing of a special resolution – one that must be notified to the public via an advertisement in the Official Gazette, as well as in a local newspaper. 

A company can be voluntarily wound-up through three different processes.

  1. In case the company has not arrived at a status of insolvency at the time of winding up, such that upon dissolution it is able to pay off its debts and settle other payments, it is considered to be a Members’ Voluntary Wind-up. The director(s) of the company must make a declaration to that effect, and the same must be verified by means of an affidavit. This individual process involves the following steps in succession: 
    1. Declaration of solvency;
    2. Legal declaration to Registrar of Companies;
    3. Passing or issuing of resolution in the company’s general meeting within five weeks of the declaration of solvency;
    4. Liquidator’s appointment;
    5. Paying off all liabilities of the company post collection of its assets.
  2. In hindsight, if there is no declaration of solvency, it is presumed that the company has arrived to a point of insolvency. This process is called Creditors’ Voluntary Winding-up. In most cases, a situation of initiating voluntary winding up arises when the creditors realize that the particular company has turned insolvent; in which case, the shareholders arbitrarily decide to commence the company’s winding up. By default, the company is required to hold a meeting with its creditors in order to pass the resolution for winding up. This process also involves a few steps that need to be followed in succession:
    1. Proposing resolution for winding up of company in its general meeting.
    2. On the same day as the aforementioned proposal, there is a requirement of a meeting amongst creditors, and there is a requirement of formulating a list of creditors by the company’s Director(s).
    3. Appointment of Liquidator by the meeting of members and creditors.
    4. Appointment of a committee of inspection to reassure the status of insolvency.
    5. Commencement of winding-up according to the statute. 
  3. After passing of the resolution for winding up of company, a court order can subject the process to supervision by the Court itself. Such order is ruled for protection of creditors and contributories of the company, so as to prevent them from incurring any loss. 

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