Indian Contract Act

Sameet Gambhir
Introduction

 The Indian Contract Act, 1872 prescribes the law relating

to contracts in India

 key act regulating Indian contract law.

 based on the principles of English Common Law.

 determines the circumstances in which promises made by

the parties to a contract shall be legally binding.

 describes different stages of formation of contract

Meaning of Contract
 Section 2 (h) “An agreement enforceable by law”.

 contract is anything that is an agreement and

enforceable by the law of the land.

 This definition has two major elements in it viz –

 “agreement”
 “enforceable by law”.
 3 elements of a legal contract

 The three elements required to create a legal contract :

 Offer / Proposal
 Acceptance and
 Consideration, which means the exchange of something
of value.

 https://youtu.be/HrZDpDvxqJo
 Offer / Proposal
 when one person signifies to another

 his willingness to do or

 to abstain from doing anything,

 with a view to obtaining the assent of that other to such act

 said to make a offer/ proposal

Essentials of a valid Offer

 An offer to be valid and enforceable following conditions are to be satisfied

1) There must be Two parties

2) Every proposal must be communicated

3) It must create Legal Relations

4) It must be Certain and definite

5) It may be specific or Public

 https://youtu.be/N2OfiK3PqfQ

 Example

Ramesh offer to sell his house to Rama for Rs. 5,00,000.

-This is a proposal.

-Ramesh is the offeror

-Rama is the offeree.

Types of offer
 General Offer- offer to the whole world.

 Specific offer-offer made to a particular person or group of persons

 Express offer-made by words either oral or in writing.

 Implied offer-made by conduct or gesture of the parties

 Counter offer-person to whom the offer is made does not accept

the offer [as it is] -counters the condition.

 Cross offer-two offers of same terms and conditions cross each

other

 Standing offer-intended to remain open for a specified period.

 Acceptance
 When the person to whom the proposal has been made

 signifies his assent thereto,

 the offer is said to be accepted.

 Thus the proposal when accepted becomes a promise.

 Performance of the conditions of a proposal, or the acceptance

of any consideration for a reciprocal promise which may be
offered with a proposal, is an acceptance of the proposal.
Valid Acceptance

 Acceptance must be absolute and unqualified

 Acceptance must be communicated to the offeror

 Acceptance must be in the mode prescribed

 Acceptance must be given within a reasonable

amount of time

 Mere silence is not acceptance

Types of Acceptance
 Express acceptance

 Implied acceptance

 Conditional acceptance / qualified acceptance

◦ a person who has given an offer tells the person who made the offer that
he or she will agree to the offer if there are some changes made to the
terms and conditions, or in the event of something happening.
◦ A conditional acceptance is useful when you are unsure of how your
situation will turn out or if there are things that could alter your current
standing.
◦ This is also used as a counteroffer. A counteroffer has to be accepted by
the original person who offers before the contract is established. It places
expectations on the acceptance of the offer.
◦ Condition of acceptance has to be very clearly communicated in the
agreement and needs to be understood right away.
Competency
Every person is competent to
contract who is-
 of the age of majority
 is of sound mind
 not disqualified from

contracting
 Essential Elements of Contract
1. Offers and Acceptance
 For an agreement there must be a lawful offer by one and lawful acceptance of
that offer from the other party.
 The offer must be made with the intention of creating legal relations otherwise,
there will be no agreement.

 Example: A say to B that he will sell his cycle to him for Rs.2000. This is an offer.
If B accepts this offer, there is an acceptance.

2. Legal Relationship
 The parties to an agreement must create legal relationship.

 It arises when parties know that if any one of them fails to fulfil his part of the

promise, he would be liable for the failure of the contract.

 Agreements of a social or domestic nature do not create legal relations and as

such cannot give rise to a contract.

 It is presumed in commercial agreements that parties intend to create legal

relations.
 https://youtu.be/G6aY5tJjrbM

 Example: A father promises to pay his son Rs.500 every month as pocket money.
Later, he refuses to pay. The son cannot recover as it is a social agreement and
does not create legal relations.
 3. Lawful Consideration or object
 Consideration is “something in return.”
 Consideration has been defined as the price paid by one party for the promise of
the other.
 An agreement is enforceable only when both the parties get something and give
something. The something given or obtained is the price of the promise and is
called consideration.
 Example: A agrees to sell his house to B for Rs.10 Lac. A’s promise to sell the
house is the consideration for B’s promise to pay Rs.10 Lac. These are lawful
considerations.
 It is also necessary that agreement should be made for a lawful object.
 The object for which the agreement has been entered into must not be
fraudulent, illegal, immoral, or opposed to public policy or must not imply injury
to the person or property of another.
 Every agreement of which the object or consideration is unlawful is illegal and
the therefore void.
 The consideration or object of an agreement is lawful, unless and until it is:
◦ Forbidden by law: If the object or the consideration of an agreement is for doing an act
forbidden by law, such agreement are void. for example, A, B and C enter into an
agreement for the division among them of gains acquired or to be acquired, by them by
fraud. The agreement is void, as its object is unlawful
◦ If it involves injury to a person or property of another: For example, "A" borrowed
Rs.100/- from "B" and executed a bond to work for "B" without pay for a period of 2
years. In case of default, "A" owes to pay the principal sum at once and huge amount of
interest. This contract was held void as it involved injury to the person.
 If courts regards it as immoral: An agreement in which consideration or object of
which is immoral is void. For example, An agreement between husband and wife
for future separation is void.
 Is of such nature that, if permitted, it would defeat the provisions of any law:
 Is fraudulent, or involves or implies injury to the person or property of another,
or
 Is opposed to public policy. An agreement which tends to be injurious to the
public or against the public good is void. For example, agreements of trading
with foreign enemy, agreement to commit crime, agreements which interfere
with the administration of justice, agreements which interfere with the course of
justice.
 Agreements in restrained of legal proceedings: This deals with two category.
One is, agreements restraining enforcement of rights and the other deals with
agreements curtailing period of limitation.
 Trafficking in public offices and titles: agreements for sale or transfer of public
offices and title or for procurement of a public recognition like Padma
Vibhushan or Padma Shri etc. for monetary consideration is unlawful, being
opposed to public policy.
 Agreements restricting personal liberty: agreements which unduly restricts the
personal liberty of parties to it are void as being opposed by public policy.
 Marriage brokerage contact: Agreements to procure marriages for rewards are
void under the ground that marriage ought to proceed with free and voluntary
decisions of parties.
 .
 Agreements interfering marital duties: Any agreement which interfere with
performance of marital duty is void being opposed to public policy. An
agreement between husband and wife that the wife will never leave her parental
house

Consideration may take in any form - money, goods, services, a promise to

marry, a promise to forbear etc.

 Contract Opposed to Public Policy can be repudiated by the Court of law even if
that contract is beneficial for all of the parties to the contract- What
considerations and objects are lawful and what not- Newar Marble Industries
Pvt. Ltd. Vs. Rajasthan State Electricity Board, Jaipur, 1993 Cr. L.J. 1191 at 1197,
1198 [Raj.]-
◦ Agreement of which object or consideration was opposed to public policy,
unlawful and void –
◦ What better and what more can be an admission of the fact that the
consideration or object of the compounding agreement was abstention by the
board from criminally prosecuting the petitioner-company from offense under
Section 39 of the act and that the Board has converted the crime into a source
of profit or benefit to itself.
◦ This consideration or object is clearly opposed to public policy and hence the
compounding agreement is unlawful and void under Section 23 of the Act. It
is unenforceable as against the Petitioner-Company
 4. Capacity of Parties:

 An agreement is enforceable only if it is entered into by parties who possess

contractual capacity.
 It means that the parities to an agreement must be competent to contract.
 the parties must be of the age of majority and of sound mind and must not be
disqualified from contracting by any law to which they are subject.
 A contract by a person of unsound mind is void ab-initio (from the beginning).
 If one of the parties to the agreement suffers from minority, madness,
drunkenness etc., the agreement is not enforceable at law, except in some
cases.

 Example: M, a person of unsound mind, enters into an agreement with S to sell

his house for Rs.2 lac. It is not a valid contract because M is not competent
 5. Free Consent:
 Consent means that the parties must have agreed upon the same thing
in the same sense.
 For a valid contract it is necessary that the consent of parties to the
contact must be free.
 Consent is said to be free when it is not caused by— coercion, undue
influence, fraud, misrepresentation or mistake
 Elements vitiating free Consent:
◦ (a) Coercion (Section 15): "Coercion" is the committing, or threatening to
commit, any act forbidden by the Indian Penal Code under(45,1860), or the
unlawful detaining, or threatening to detain, any property, to the prejudice of
any person whatever, with the intention of causing any person to enter into an
agreement. For example, "A" threatens to shoot "B" if he doesn't release him
from a debt which he owes to "B". "B" releases "A" under threat. Since the
release has been brought about by coercion, such release is not valid.
◦ (b) Undue influence (Section 16): "Where a person who is in a position to
dominate the will of another enters into a contract with him and the transaction
appears on the face of it, or on the evidence, to be unconscionable, the burden
of proving that such contract was not induced by undue influence shall lie upon
the person in the position to dominate the will of the other".
 (Section 16(2)) States that "A person is deemed to be in a position to
dominate the will of another; Where he holds a real or apparent authority
over the other. For example, an employer may be deemed to be having
authority over his employee. an income tax authority over to the
assessee.
 Where he stands in a fiduciary relationship to other, For example, the
relationship of Solicitor with his client, spiritual advisor and devotee.
 Where he makes a contract with a person whose mental capacity is
temporarily or permanently affected by the reason of age, illness or
mental or bodily distress"
 (c) Fraud (Section 17): "Fraud" means and includes any act or
concealment of material fact or misrepresentation made knowingly by a
party to a contract, or with his connivance, or by his agent, with intent to
deceive another party thereto of his agent, or to induce him to enter into
the contract. Mere silence is not fraud. a contracting party is not obliged
to disclose each and everything to the other party. There are two
exceptions where even mere silence may be fraud, one is where there is
a duty to speak, then keeping silence is fraud. or when silence is in itself
equivalent to speech, such silence is fraud.
 (d) Misrepresentation (Section 18): "Causing, however innocently, a party
to an agreement to make a mistake as to the substance of the thing
which is the subject of the agreement".

 (e) Mistake of fact (Section 20): "Where both the parties to an agreement
are under a mistake as to a matter of fact essential to the agreement, the
agreement is void". A party cannot be allowed to get any relief on the
ground that he had done some particular act in ignorance of law.
Mistake may be bilateral mistake where both parties to an agreement are
under mistake as to the matter of fact. The mistake must relate to a
matter of fact essential to the agreement.
 6. Writing and Registration:
 a contract may be oral or in writing.
 However, a verbal contract if proved in the court will not be
considered invalid merely on the ground that it not in writing.
 It is essential for the validity of a contact that it must be in writing
signed and attested by witness and registered, if so required by the
law.

 Example: A Verbally promises to sell his book to y for Rs.200 it is a

valid contract because the law does not require it to be in writing.

7. Certainty:
 “Agreements the meaning of which are not certain or capable of
being made certain are void.”
 the terms of the agreement, must not be vague or uncertain.

 Example: A promised to sell 20 books to B. It is not clear which

books A has promised to sell. The agreement is void because the
terms are not clear.
 8. Possibility of Performance:
 “An agreement to do an act impossible in itself is void.”
 If the act is legally or physically impossible to perform, the
agreement cannot be enforced at law.

 Example: A agrees with B to discover treasure by magic, the

agreement is not enforceable.

9. Not Expressly Declared Void:

 An agreement must not be one of those, which have been expressly
declared to be void by the Act.

 An agreement in restraint of trade and an agreement by way of

wager have been expressly declared void.

 Example: A promise to close his business against the promise of B to

pay him Rs.2 lac is a void agreement because it is restraint of trade.
 Kinds of Contract
 On basis of formation

 Express Contract- where there is conversation or expression

 A person A sends a text from his phone to person B, proposing to sell

their bike for a cost of Rs. 10,000/-. The person B calls the first person
and agrees to the terms of the promise.

 Implied Contract- No given expression

 For example, you board a rickshaw and the driver starts to drive. You tell
the driver the address where he has to drop you. The driver stops and
you pay him

 Quasi Contract- No offer-No Acceptance

 For example, a bank mistakenly transfers a large amount of money into

your account. Now there is no written or oral or any sort of agreement
between you and the bank but the money doesn’t belong to you.
On the Basis of Nature of Consideration

 Bilateral Contract: This contract occurs if there is

consideration in either direction is moved after
the contract.

Example – A orders a meal at a restaurant and

pay money for it.

 Unilateral Contract: If the consideration is to be

moved in only one direction after the contract.

Example -insurance policy contract

On the Basis of Execution

 Executed Contract- An executed contract is when

a task is completed.

Example- A buys an apple and pays Rs. 50

 Executory Contract- When contractual obligations

are going to be performed at a later time

Example-lease agreement-Until the term expires,

the contract promises have not been fulfilled.
 Contracts on the Basis of Validity
 Valid: A contract that is enforceable in court is considered valid. To
be valid, the contract has to have specific features including
certainty, fulfillment of formalities, legal obligations, capacity of
parties

 Void: A contract that is not enforceable in court is considered void. If

the contract is deficient, it is voided. It includes contracts to do
anything illegal or is without proper legal components.

 Voidable: A contract that is deficient in free consent only is voidable.

This means the contract is made under some kind of pressure /
compulsion. A contract can become valid or void in the future at the
option of the party that has suffered. It is also voidable if one party
can abort the contract.

 Illegal: has any unlawful components

 Unenforceable: contract without proper legal formalities is not

enforceable.
 Agreement without consideration-void
 Agreement without consideration, void, unless it is in writing and
registered or is a promise to compensate for something done or is a
promise to pay a debt barred by limitation law

 An agreement made without consideration is void, unless-

 (1) it is expressed in writing and registered under the law and is made
on account of natural love and affection between parties standing in a
near relation to each other; or unless

 (2) it is a promise to compensate, wholly or in part, a person who has

already voluntarily done something for the promisor, or something
which the promisor was legally compellable to do; or unless

 (3) it is a promise, made in writing and signed by the person to be

charged therewith or by his agent generally or specially authorized in
that behalf, to pay wholly or in part a debt of which the creditor might
have enforced payment but for the law for the limitation of suits.

 In any of these cases, such an agreement is a contract.

 Explanation 1 : Nothing in this section shall affect the validity, as
between the donor and donee, of any gift actually made.

 Explanation 2: An agreement to which the consent of the

promisor is freely given is not void merely because the
consideration is inadequate; but the inadequacy of the
consideration may be taken into account by the Court in
determining the question whether the consent of the promisor
was freely given.

 Illustrations

 (a) A promises, for no consideration, to give to B Rs. 1,000. This.

is a void agreement.

 (b) A, for natural love and affection, promise to give his son B,
Rs. 1,000 A puts his promise to B into writing and registers it.
This is a contract.
A Void Contract Once Valid But No Longer
 Ceases to have a legal effect.

 A few ways a contract could become legally void are:

 The contract becomes impossible to fulfill due to external circumstances

 Laws change since the initial agreement, and the agreement now requires
breaking the law

 Fulfilling the contract will result in something unlawful

 The contract was contingent on circumstances that cannot come to pass

 One party failed to disclose key information or provided inaccurate

information
 Expressly Declared Void Agreement
 Agreement in Restraint of Marriage (sect-26)

 Any agreement that restrains the marriage of a major (adult) is a void

agreement.
 This does not apply to minors.
 So A agrees that if B pays him 50,000/- he will not marry such an
agreement is a void agreement.

 Agreement in Restraint of Trade (Sect-27)

 An agreement by which any person is restrained from plying a trade

or practising a legal profession or exercising a business of any kind
is an expressly void agreement.
 Such an agreement violates the constitutional rights of a person.
 However, there are a few exceptions to this rule.
 If a person sells his business along with the goodwill then the buyer
can ask the seller to refrain from practising the same business at the
local limits.
 Agreement in Restraint of Legal Proceedings (Sect-28)

 An agreement that prevents one party from enforcing his

legal rights under a contract through the legal process (of courts,
arbitration, etc) then such an agreement is expressly void
agreement.
 However, there are exceptions like, if the agreement states that any
dispute between parties will be referred to arbitration and the
amount awarded in such arbitration will be final will be a valid
contract.

 An Agreement Whose Meaning is Uncertain (sect-29)

 An agreement whose meaning is uncertain cannot be a valid

agreement, it is a void agreement. If the essential meaning of the
contract is not assured, obviously the contract cannot go ahead. But
if such uncertainty can be removed, then the contract becomes valid.
 Say for example A agrees to sell to B 100 kg of fruit. This is a void
contract since what type of fruit is not mentioned. But if A
exclusively sells only oranges then the agreement would be valid
because the meaning would now be certain.
 Wagering Agreement (sect-30)
 According to the Indian Contract Act, an agreement to wager is a void
agreement.
 The basis of a wager is that the agreement depends on the happening or
non-happening of an uncertain event.

 The essentials of a wagering agreement are as follows-

1. Must contain a promise to pay money or money’s worth

2.Is conditional on the happening or non-happening of a certain event
3.The event must be uncertain. Neither party can have any control over it
4.Must be the common intention to bet at the time of making the agreement
5.Parties should have no other interest other than the stake of the bet

The following agreements are not considered wagering agreements-

1.Chit Fund
2.Commercial Transactions, i.e Transactions of the Share Market
3.Athletic Competition and Competitions involving Skills
4.Insurance Contracts
Frustration of Contracts: The Indian
Perspective
 A contract may be frustrated where there exists a change in circumstances,
after the contract was made, which is not the fault of either of the parties,
which renders the contract either impossible to perform or deprives the
contract of its commercial purpose.

 Where a contract is found to be frustrated, each party is discharged from

future obligations under the contract and neither party may sue for breach.
The compensation of the loss has also to be described by such contract.


Supreme Court in the case of Satyabrata Ghose v. Mugneeram Bangur &

Co [4].observed “This much is clear that the word ‘impossible’ has not been
used here in the sense of physical or literal impossibility. The performance of
the act may not be literally impossible but it may be impracticable and useless
from the point of view of the object and purpose which the parties had in view;
and if an untoward event or change of circumstances totally upsets the very
foundation upon which the parties rested their bargain, it can very well be said
that the promisor finds it impossible to do the act which he promises to do.”
Grounds
 Destruction of the subject matter
 Change of circumstances
 Non-occurrence of contemplated events
 Death or incapacity of the party
 Government, administration or legislation

intervention
Effects of Frustration
 Frustration should not be self-induced
 Frustration operates automatically
 Adjustment of Rights (Restitution)
When Frustration Does Not Happen
 Difficulty in performance
 Failure of third party

 Difference Between Impossibility And Frustration

 Frustration or impracticability occurs when a performance would be

deemed impractical because of an unforeseen event.
 Impossibility occurs when a party is not able to complete a contract
because of an event that happens after the contract is executed.
 The main difference is that frustration means a contract cannot be
performed because of an extreme burden to the contracting party,
while impossibility means the contract cannot physically be
performed.
 There are only certain events where frustration and impossibility can
be applied.
 Usually, these terms apply when there a risk involved in the
performance of a contract, making it impossible or frustrated through
no fault of the parties involved or the courts. When this occurs, the
parties are released from their obligation to perform the contract
automatically.
Sale of goods Act
 It is one of the special types of contract.
Initially, it was the part of the Indian Contract
Act, 1872.
 Later it was deleted and a separate sale of

Goods Act was passed in 1930.

Sale of goods Contract
 As per Section 4(i) of the Sale of Goods Act, 1930,
Contract of sale of Goods is a contract whereby the
seller transfers or agrees to transfer the property in
goods to the buyer for a price.

 Essential Elements: -
 There must be atleast two parties. (Bilateral Contracts) –
 The subject matter of the contract must be goods. –
 A price in money should be paid or promised. –
 A transfer of property in goods from seller to the buyer
must take place. –
 It must be absolute or conditional. –
 All other essentials of a valid contract must be present.
Sale of goods Contract – Risks &
Damages
 Section 26 of the Sale of Goods Act, 1930 states the goods are the
owner’s risk if the property in them has not been transferred to the
buyer. But if the property has been transferred to the buyer then the
goods are buyer’s risk.
 This provision is applicable if no specific provision has been signed by
the parties to the contract in their contract regarding this. This rule is
applicable irrespective of the fact that delivery has been made or not.
 It means that the risk is associated with ownership and not with mere
possession of the property.
 To decide whether the risk has been passed or not, we first need to find
whether the property in goods i.e. the ownership has passed or not.
 The passing of risk means the transfer of the liability for damage or loss
of the property from the seller of the immovable property to the buyer.
 The risk in the property prima facie passes with the property, but if the
parties to the contract agree to pass the risk on the property at some
other level of transaction, then that is also possible, depending upon the
terms of their contract.
Sale of goods Contract – Risks &
Damages
 Exceptions


 There are two exceptions to the general law that the risk passes
with the transfer of property in the goods. These are:
 If the delivery has been delayed due to the fault of either party,
then the liability of damage will lie on the party at fault. If the
seller has failed to deliver the goods as agreed by the parties and
the goods are damaged or lost due to that, then the seller will bear
the cost. If the buyer has failed to take delivery of goods despite
many reminders by the seller, then the buyer will bear the cost.
 In Demby Hamilton & Co. Ltd. v. Barden, the sellers agreed to
supply 30 tons of apple juice by samples. The seller crushed 30
tons of apples at once to ensure that they are according to the
samples and filled them in the casks. After some installments had
been delivered, the buyer refused to take further deliveries. The
apple juice became putrid. It was held that the property in the
goods was still with the sellers, but the loss had to be borne by
the buyer.
 “X, a seller of the goods, enters into a contract of sale of goods with Y, the
buyer, who visits X’s office to check the goods. Both the parties to the contract
agree that transfer of ownership will take place with the execution of the
contract, restricting X’s right to sell those goods to someone else. They both
agree X will bring the goods in the deliverable state in 2 days and after two
days, Y’s agent will collect the goods from X. Both the parties agree that X will
take care of Y’s goods for 5 days after the contract has been executed (if not
collected) and not beyond the period of 5 days. Hence, the agent of Y must turn
up within the stipulated time for collection of the goods. The contract regarding
payment was that Y’s bank would transfer the amount to X’s account within 3
days of execution of the contract.”
 This type of contract is perfectly valid for the Sale of Goods Act, 1930. In this
type of contract, each transaction takes place according to the will of the
parties. In this case, the property in the goods or ownership is transferred at the
same time when the contract is concluded, while the possession of the goods
passes at a later stage. If the contract had been silent about the transfer of risk,
then it would have passed with the conclusion of the contract. But in the instant
case, it has been decided by the parties that the risk will transfer after five days
of execution of contract if not collected by the parties.
 Now, as per the contract signed between the parties, if the goods are lost or
damaged within those five days after the conclusion of the contract, then the
seller will bear the cost. But if the goods are damaged after five days and the
buyer did not collect the goods, then the buyer will bear the loss. Also, if the
goods were lost after the 5th day (if not collected) but due to the negligence of
the seller, then the seller will bear the cost of damage or loss. In case the
buyer’s agent collects those goods before five days, then the risk will transfer
with it.
 Drafting of a contract :

 step-by-step inclusion of specific clauses, terms and conditions that are

expressed as per the needs and wants of the party/parties to the contract.
 consider various issues - the subject of the contract, goods to be
manufactured, amount of consideration, indemnity, dispute resolution,
 purpose of making the contract
 subject and object of the contract
 role played by the parties in achieving the desired object

 Right and duties - the parties have in relation to one another

 Each to fulfill a particular purpose that must be clearly understood

 feasibility of contract to be kept in mind –

◦ whether the terms and conditions are capable of being carried out;
◦ whether the parties are capable of executing their rights and duties;
◦ which party/parties gain most and which one takes upon most of the liability
during the tenure
◦
 Must be able to predict the issues / disputes that may arise in future scenarios
 understand what terms and clauses may give rise to a risk which may cause disputes
and/or losses between the parties in the future

 Definition clause: all the definitions to various words that are used throughout the
contract.
 definition of such word which might describe the meaning of such word specifically
in relation to said contract.
 In such cases no other meaning of the word will be accepted as the word has been
specifically stated and agreed upon by the parties to the contract and, as such, in
binding on them.

 Term of contract:
 generally made for definite period of time, no matter how long the time frame is
 once the time period expires, the contract automatically dissolves.
 In some cases, the term of the contract also depends on the achieving of a certain
goal for which the contract has been entered upon

For example: X and Y enter into a contract that will last for such time as it takes for
them to reach place ZZ, once they will reach the place ZZ the contract between them
will dissolve.


�
 Renewal Clause
 to ensure continual binding effect of the contract without incurring the
expenses of drafting and registering different contracts over and over
again.
 Such clauses are often included in the clause describing the term of the
contract.

 Consideration amount and legality:

 the consideration amount that one or more parties must pay to the other
party/ parties for service done or goods produced by the latter
 consideration to be legal in nature �
 A consideration paid through an illegal object will render the entire
contract to be void and have no legal enforceability.

 Inspection of products and goods:

 Safeguard from cases of fraud or misrepresentation- insufficient quality
 safety net to selling party – once quality is inspected and accepted, the
purchaser cannot hold the seller liable for any quality-related issues
�
 Return/refund:
 circumstances / scenarios in which parties are entitled to return the
product and/or receive refund of the consideration paid f
 used in contracts of sale of movable properties
�
 Dispute settlement and jurisdiction:
 mode of dispute resolution or legal recourse to be taken if dispute arises
 almost every contract contains this clause and most of them opt for ADR
 the jurisdiction in which any dispute will be resolved

 Cancellation:
 circumstances under which the contract shall stand cancelled.
 generally includes certain acts that the parties are barred from and in
violation of such a term, the cancellation clause will be invoked
 rights and liabilities that parties will be entitled to when cancelled
 �
 Rights and duties of the parties: the crux of every contract and violation of
these clauses generally forms the core to the disputes
 Each and every must be specifically stated with as much detail as possible
to avoid any ambiguity or vagueness whatsoever.
 Force majeure:
 all such unforeseeable and unpredictable scenarios which may stop one
from executing his duty, thereby leaving the contract unfulfilled.
 various contingencies, conditions beyond control including but not limited
to Acts of God, Government restrictions, wars, insurrections, any other
cause beyond the reasonable control
 the role of parties when such a situation may arise
 often overlooked but as important as any other - it details the sharing of
expenses and costs that are incurred during the time of contingencies

 Delegation and liability:

 Mostly in contracts related to manufacture /sale of movable products
 what kind of work can be delegated to other third parties
 who may be held liable for any dispute that may arise due to insufficiency
or inefficiency of products and/or services provided by such third party

 Payments of expenses:
 what proportion the parties may share the expenses -mode of payments
 Profit sharing: the proportion - the profit will be shared –how to be used
for other purposes as agreed
 Compensation:
 the amount with which one must compensate another
 for the actions/omissions/defaults done by the former
 which has resulted in some sort of loss (financial, physical or mental) to
the latter.

 Representations and Warranties :

 identify the assumed facts underlying the agreement
 the real heart of the deal and to be heavily negotiated.
 An example would be a representation and warranty that the goods to be
sold are in working order.

 Indemnification:
 the allocation of liability in the event that all does not go as planned
 Questions to be addressed in this portion of the contract include who will
be liable for what, and to what extent.
 Breach and Cure - the possibility must be considered when drafting
 What all constitute the breach
 What opportunity will the parties have to “cure” the breach

 Limitation of Liability:
 disclaiming all warranties other than those expressly specified
 can also limit liability by including clauses that provide:
◦ a monetary cap on damages;
◦ exclusion of certain kinds of damages (such as special, incidental, or
consequential);
◦ exclusion of certain harms (such as harms resulting from defects etc)

 Termination :
 under what circumstances the parties can terminate the agreement
 the procedures for termination
 Remedies - consequences in the event of termination
 what the parties are entitled to in the event of breach or termination.
 It may identify an amount, a formula, or simply a mechanism for
determining the appropriate remedy (such as arbitration)

 Others- Assignment • Choice of Law • Amendment and Waiver •

Integration and Severability • Notice • Authority to Sign Section

 Before writing, make sure you are clear about what parts the contract must
include and what situations the contract must cover.
 Know what the parties want
 Reconcile yourself to writing many drafts
 Use clear, simple, business like language
 Use only the technical terms you need and define them if necessary
 Make each clause do one thing, not more.
 Breaking down the whole contract into a series of small points
 Review - check for ambiguities
 used only one term for one item or person
 reread the document as a whole
 look for larger contradictions rather than wording problems
 Consult others -no one person can imagine all the pitfalls
 No one person can imagine all the ways
 First draft be creative, thorough and imperfect - Include everything you
think necessary to the piece and all things that you think might be useful
 Then use second, third, fourth etc for rewriting, revising, and polishing.
 do not revise while you write
 Ask yourself the following questions:
 Is the content accurately stated?
 Could any points be misunderstood because of ambiguity?
 Are irrelevant facts or other irrelevant information excluded?
 Are terms of art used correctly?
 Are key terms used correctly?
 Are names of parties and their status correct?
 Are sentences overly long?
 Are lists clearly structured?
 Defined terms used ?

 Don’t get carried away.

 Some concepts are simple, basic enough, and sufficiently well understood
(or vagueness may work in favor) don’t need a definition.
 Conclusion:
 each transaction is unique and of paramount importance
 Apart from what is discussed above, the nature of each contract would
decide a lot of other things
 the requirement of stamping and registration with appropriate authorities
 Consultation
Sameet Gambhir
CONTENTS
-MEANING & DEFINITION
-TYPES OF COMPANY
-HOW TO FORM A COMPANY
Meaning- The term company means association of a
group of persons who have come together for
common purpose that is to do business and earn
profit

Definition- Section 2(20) of the 2013 Act defines the

term “company” to mean “a company incorporated
under the Companies Act 2013 or any
previous company law.
Background
 The word ‘company’ is derived from the Latin word and it originally referred to
an association of persons who took their meals together

 In the leisurely past, merchants took advantage of festive gatherings, to

discuss business matters.

 Nowadays, the business matters have become more complicated and

cannot be discussed at festive gatherings.

 Therefore, the company form of organization has assumed greater

importance. In popular parlance, a company denotes an association of
likeminded persons formed for the purpose of carrying on some business or
undertaking.

 A company is a corporate body and a legal person having status and

personality distinct and separate from the members constituting it.
 The first Indian Companies Act was promulgated in 1850 by the British and was
based on British legislation.

 The Indian Companies Act was then amended periodically and the amendments
were also based on developments in British Company law.

 At the time of independence, the Indian Companies Act 1913, as amended by the
Indian Companies Bill 1936, based on the British Companies Acts 1908 and 1929

 At independence in 1947, the Indian Government chose to retain the use of a

Companies Act to regulate joint stock companies but decided to amend the
Indian Companies Act extant at independence.

 This led to the promulgation of the Companies Act 1956, which covered the
promotion and formation of companies, the control of companies by
shareholders, the position of minority shareholders, the appointment, conditions of
service, powers, duties and functions of directors and managing agents,
company accounts and audit, investigation and inspection of companies by
Government, liquidation of companies and the administration and enforcement of the
Companies Act
 The process of changing the Indian Companies Act started at
independence in 1947

 The Companies Act 1956 had to be revised due to problems in its

operation. In the diffusion phase, the process of change was started
by the Ministry of Commerce and progressed by the Ministry of
Finance.

 The process involved setting up an ad hoc committee, the Company

Law Committee 1952, to consider and report on amendments
necessary to the Indian Companies Act and promulgation of the
Companies Bill 1953 through Parliament leading to the Companies
Act 1956.

 In the reaction phase of the change, the Companies Act 1956 was
revised due to criticisms of the Act and this was also carried out by
initially constituting an ad hoc committee, the Company Law
Amendment Committee 1957 to consider the necessary
amendments to the Companies Act and then amending the
Companies Act 1956
A company has been defined through Lord Justice Lindley as follows:
Lord Justice Lindley-

A company is an association of many persons

who contribute money or monies worth to a common stock

employed in some trade or business

share the profit and loss arising there from.

common stock so contributed is denoted in money and is the capital of

the company.

The persons who contribute to it or to whom it pertains are members

 The proportion of capital to which each member is entitled is his share.

 The shares are always transferable although the right to transfer is

often more or less restricted.
CHARACTERISTICS OF A COMPANY
 Corporate personality
 A company incorporated under the Act is vested
with a corporate personality so it redundant bears
its own name, acts under name, has a seal of its
own and its assets are separate and distinct
from those of its members. It is a different
‘person’ from the members who compose it.

 The case of Salomon v. Salomon and Co. Ltd.,

(1897)
https://m.youtube.com/watch?v=FhbEMIsYkgs
 Company as an artificial person

 A Company is an artificial person created by law. It is not a

human being but it acts through human beings. It is
considered as a legal person which can enter into
contracts, possess properties in its own name, sue
and can be sued by others etc. It is called an artificial
person since it is invisible, intangible, existing only in the
contemplation of law. It is capable of enjoying rights and
being subject to duties.

 Company is not a citizen

 The company, though a legal person, is not a citizen

under the Citizenship Act, 1955 or the Constitution of
India.
 Company has Nationality and Residence
 Though it is established through judicial decisions that a company cannot
be a citizen, yet it has nationality, domicile and residence

 In Tulika v. Parry and Co., (1903) I.L.R. 27 Mad. 315, Kelly C.B. observed:
“A joint stock company resides where its place of incorporation is,
where the meetings of the whole company or those who represent it are
held and where its governing body meets in bodily presence for the
purposes of the company and exercises the powers conferred upon it
by statute and by the Articles of Association.”

 Limited Liability

 “The privilege of limited liability for business debts is one of the principal
advantages of doing business under the corporate form of organisation.”
The company, being a separate person, is the owner of its assets and
bound by its liabilities. The liability of a member as shareholder,
extends to the contribution to the capital of the company up to the
nominal value of the shares held and not paid by him
 Perpetual Succession

 An incorporated company never dies, except when it is wound up as per law. A

company, being a separate legal person is unaffected by death or departure of any
member and it remains the same entity, despite total change in the membership.
Perpetual succession, means that the membership of a company may keep
changing from time to time, but that shall not affect its continuity.

 Separate Property

 A company being a legal person and entirely distinct from its members, is
capable of owning, enjoying and disposing of property in its own name. The
company is the real person in which all its property is vested, and by which it is
controlled, managed and disposed off.

 Transferability of Shares

 The capital of a company is divided into parts, called shares. The shares are said
to be movable property and, subject to certain conditions, freely transferable, so
that no shareholder is permanently or necessarily wedded to a company.
 Capacity to Sue and Be Sued

 A company being a body corporate, can sue and be sued in its own
name. To sue, means to institute legal proceedings against (a person) or
to bring a suit in a court of law. All legal proceedings against the
company are to be instituted in its name.

 Contractual Rights

 A company, being a legal entity different from its members, can enter
into contracts for the conduct of the business in its own name. A
shareholder cannot enforce a contract made by his company; he is
neither a party to the contract, nor be entitled to the benefit derived
from of it, as a company is not a trustee for its shareholders.

 Limitation of Action

 A company cannot go beyond the power stated in its Memorandum of

Association. The Memorandum of Association of the company regulates
the powers and fixes the objects of the company and provides the
edifice upon which the entire structure of the company rests.
 Separate Management

 The members may derive profits without being burdened with the
management of the company. They do not have effective and intimate
control over its working and they elect their representatives as
Directors on the Board of Directors of the company to conduct corporate
functions through managerial personnel employed by them. In other words,
the company is administered and managed by its managerial personnel.

 Termination of Existence

 A company, being an artificial juridical person, does not die a natural death.
It is created by law, carries on its affairs according to law throughout
its life and ultimately is effaced by law. Generally, the existence of a
company is terminated by means of winding up. However, to avoid
winding up, sometimes companies adopt strategies like
reorganisation, reconstruction and amalgamation.
Doctrine of ‘Lifting the Corporate Veil’,

 the law goes behind the mask or veil of incorporation

 to determine the real person or group of people behind the company.
 The Courts and Jurists have regarded the concept of ‘lifting the corporate
veil’
 The Courts can lift the veil when the corporate personality of the company is
being used :
 means to commit fraud, improper conduct or
 where the sole purpose of forming the company was to evade taxes.
 shall be regarded as an association of persons rather than a legal entity
when the very same legal entity is used to defeat public convenience, justify
wrong or to defend crime
 The two classic cases of the fraud exception are:
 Gilford motor company ltd v. Horne (1933)
 https://youtu.be/d34OTLALzU4
 Jones v. Lipman (1962)
 https://youtu.be/fj2n6MY1WYA
 In the first case, Mr. Horne was an ex-employee of The Gilford motor
company and his employment contract provided that he could not solicit the
customers of the company. In order to defeat this he incorporated a limited
company in his wife's name and solicited the customers of the company.
The company brought an action against him. The Court of appeal was of the
view that "the company was formed as a device, a stratagem, in order to
mask the effective carrying on of business of Mr. Horne" in this case it was
clear that the main purpose of incorporating the new company was to
perpetrate fraud. Thus the court of appeal regarded it as a mere sham to
cloak his wrongdoings
 In the second case of Jones v. Lipman a man contracted to sell his land
and thereafter changed his mind in order to avoid an order of specific
performance he transferred his property to a company. The judge
specifically referred to the judgments in Gilford v. Horne and held that the
company here was " a mask which (Mr. Lipman) holds before his face in an
attempt to avoid recognition by the eye of equity" he awarded specific
performance both against Mr.Lipman and the company.
On the basis of incorporation

Chartered
companies
The crown in exercise
of the royal Statutory
prerogative had power companies
to create a corporation
by the grant of a A company may be Registered
charter to persons incorporated by
assenting to be means of a special companies
incorporated. The Act of the Parliament Companies registered
powers and the nature or any state under the Companies
of business of a legislature. Act are called
chartered company registered companies.
are defined by the Eg- Reserve Bank of
charter which India, the Life
incorporates it. Insurance Corporation
of India
Eg-East India
Company, Bank of
England
On the basis of liability
Companies limited by shares- When the liability of the members of a
company is limited to the amount if any unpaid on the shares

Companies limited by guarantee-It is a registered company in which

the liability of members is limited to such amounts as they may
respectively undertake by the memorandum to contribute to the assets
of the company in the event of its being wound up.

Unlimited companies- A company not having a limit on the liability of

its members is termed as unlimited company.
On the basis of number of members

• A company having a minimum

paid-up share capital as may be
prescribed, and which by its articles
—
• restricts the right to transfer its
shares;
Private • except in case of One Person
Company Company, limits the number of its
Section 2(68) members to two hundred
• prohibits any invitation to the
public to subscribe for any
securities of the company
 • Public Company means a company
which is not a private company

• Has minimum paid up capital as

may be prescribed.
Public
Company • Provided that a company which is a
Section subsidiary of a company, not
2(71) being a private company, shall be
deemed to be public company for
the purposes of this Act even where
such subsidiary company continues
to be a private company in its
articles
Section 2(62) One Person Company

"One Person Company" means a company which

has only one person as a member
Formation of Company
A company may be formed for any lawful purpose by—

(a) seven or more persons, where the company to be formed is to be

a public company;

(b) two or more persons, where the company to be formed is to be a

private company; or

(c) one person, where the company to be formed is to be One Person

Company that is to say, a private company,

by subscribing their names or his name to a memorandum and

complying with the requirements of this Act in respect of registration:
Rule 4- Nomination by the Subscriber or Member of
One Person Company.
 (1) The subscriber to the memorandum of a One Person Company shall
nominate a person, after obtaining prior written consent of such person, who
shall, in the event of the subscriber’s death or his incapacity to contract, become
the member of that One Person Company.

 (2) The name of the person nominated shall be mentioned in the memorandum of
One Person Company and such nomination shall be filed with the Registrar at
the time of incorporation of the company along with its memorandum and articles.

 Form INC-3-

 (3) The person nominated by the subscriber or member of a One Person Company
may, withdraw his consent by giving a notice in writing to such sole member and
to the One Person Company:

 Provided that the sole member shall nominate another person as nominee within
fifteen days of the receipt of the notice of withdrawal and shall send an intimation of
such nomination in writing to the Company, along with the written consent of such
other person so nominated in Form No.INC.3.
 (4) The company shall within thirty days of receipt of the notice of withdrawal of
consent ,file with the Registrar, a notice of such withdrawal of consent and the
intimation of the name of another person nominated by the sole member.

 (5) The subscriber or member of a One Person Company may, by intimation in

writing to the company, change the name of the person nominated by him at any
time for any reason including in case of death or incapacity to contract of nominee
and nominate another person after obtaining the prior consent of such another
person

 Provided that the company shall, on the receipt of such intimation, file with the
Registrar, a notice of such change along with fee and with the written consent of
the new nominee in Form No.INC.3 within thirty days of receipt of intimation of
the change.

 (6) Where the sole member of One Person Company ceases to be the member in
the event of death or incapacity to contract and his nominee becomes the
member of such One Person Company, such new member shall nominate within
fifteen days of becoming member, a person who shall in the event of his death or
his incapacity to contract become the member of such company,
 A company formed may be either—
 a company limited by shares; or
 a company limited by guarantee; or
 an unlimited company.

Members severally liable in certain cases

If at any time the number of members of a company is reduced, in the case of
a public company, below seven, in the case of a private company, below two

and the company carries on business for more than six months while the
number of members is so reduced

every person who is a member of the company during the time that it so carries
on business after those six months and is cognisant of the fact that it is carrying
on business with less than seven members or two members

shall be severally liable for the payment of the whole debts of the company
contracted during that time, and may be severally sued
SPICE + Simplified Proforma for
Incorporating Company Electronically
1. Single form for incorporating the company

2.Various application which can be made

-Application for name
-Incorporation of company
-Registered office
-Appointment of director
-Application for PAN, TAN,
-Payment of Stamp Duty

3. Attachment
 Memorandum and articles of the company

 Declaration by professional( requirements complied)

 Declaration from subscriber to memorandum, first directors (not in default, correct

info)
 Address for correspondence
 Utility Bills

 Copy of approval in case the proposed name contains any word(s) or

expression(s) which requires approval from central government

 Approval of the owner of the trademark or the applicant of such

trademark for registration of Trademark

 In principle approval from the concerned regulator (if subscriber foreign

co)

 Copy of certificate of incorporation of the foreign body corporate and

resolution passed

 Resolution passed by promoter company (name is similar to any

existing company)

 No objection certificate by way of board resolution / resolution (director

interest)
 Details of subscriber to memorandum

 Particulars of interest of first directors in other firms or bodies corporate with

their consent

4. Filing of SPICE along with MOA, AOA

5. Filing of e forms with registrar

6. Payment of ROC fees and stamp duty

7. Verification of documents by ROC

8. Issuance of Certificate of Incorporation

MEMORANDUM OF ASSOCIATION
ARTICLES OF ASSOCIATION
Memorandum Of Association

Adobe Acrobat
Document

Reliance Industries MOA & AOA-

MEANING OF MEMORANDUM

 Memorandum of Association is the main document of the company,

which defines its:
◦ constitution and objects
◦ lays down conditions upon which alone company is allowed to be formed.
◦ governs the relationship of the company with outside world.

 Section 2(56) of the Companies Act - Memorandum means:

◦ Memorandum of Association as originally framed or as altered from time to
time in pursuance of any previous companies law or of this Act

 Any provisions contained in the Memorandum of Association will be void to

the extent to which they are repugnant to the provisions of the Companies
Act.

87
Purpose
 Anyone deal with the company shall know that contractual
relation into which he proposes to enter is one relating to its
corporate objects.”

 A public document:
 Memorandum of Association is a public document
 every person who deals with company is presumed to have
sufficient knowledge of its contents.
 It is kept open for public inspection

88
CLAUSES OF MEMORANDUM

1. Name Clause

2. Situation Clause

3. Objects Clause

4. Liability Clause

5. Capital Clause

6. Association Clause or Subscription Clause.

89
Name Clause
 A company is a legal entity and it must have a name to establish its
identity.
 A company can have any name except–
 Identical/closely resembles another company’s name to deceive or
mislead other’s customer
 a name, which in the opinion of the Central Government
◦ is undesirable or
◦ will mislead the public and
◦ its use is prohibited by Government under the Emblems and Names
(Prevention of Improper Use) Act, 1950
 Last word of name - ‘limited’ in public companies and ‘private limited’ in
private limited companies.
 word ‘company’ not necessary be part of the name.
 “One Person Company” in brackets below the name

90
Name
 without using words ‘limited’ or ‘private limited’ in case of an
association as Ltd Co:
◦ for promoting commerce, art, science, religion, charity or any other useful
object
◦ does not propose to pay dividends to its members but apply its profits or
income, if any, in promoting its objects (Sec. 8).
 A body in respect of which a license under this section is in force shall
not alter objects without the approval of the Central Government
 Name, Regd office address, CIN - outside the business – additionally
telephone number, fax number, e-mail, website address on all letters,
negotiable instruments, orders, receipts
 Name together with regd office address to be engraved on its seal, if
any,

91
Situation Clause
 Name of the State of registered office of the company

 must have a registered office either from the day it begins to carry on
business or within 15 day of its incorporation, whichever is earlier

 furnish to the Registrar verifications of its registered office

 place of its residence for the purposes of delivering or addressing any

communications, service of any notice or process of Court of Law

 All statutory books and registers of the company shall be maintained

 Address need not be mentioned in the Memorandum of Association.

92
Objects Clause
 Most important clause in the Memorandum of Association
 usually drafted in the widest possible terms with extreme care.
 It defines and limits the scope of the operations of the company.
 scope of the activity of company where their capital will be employed.
 protection to shareholders funds raised not at risk
 public dealing with company is informed of the extent of the powers
 company can exercise only such powers as are either expressly stated
therein or as may fairly be implied therefrom,
 including matters incidental or consequential to the powers so
conferred.
 The words “incidental or consequential to the powers conferred” do not
add any more but cover operations of a similar nature

93
Lawful Objects
 The objects of the company must be lawful and well defined

 Memorandum should state objects and not its powers

 Words should be affirmative and not negative

 Section 4(1) (c) the Memorandum of Association of every company

must state the following :
◦ The objects for which the company is proposed to be incorporated and
◦ any matter considered necessary in furtherance thereof.

94
Liability Clause
 Clause that the liability of the members is limited

 shareholder not liable to pay more than unpaid portion of shares

 company limited by guarantee - each member undertakes to contribute

to the assets of the company if wound up:
◦ while he is a member or
◦ within one year after he ceases to be so
◦ towards the debts and liabilities of the company
◦ the costs and expenses of winding up
◦ the adjustment of right of the contributories among themselves not
exceeding a specified amount [Sec. 4(1) (d)].

95
Capital Clause
 Memorandum of a company limited by shares must also state

 the amount of share capital with which the company is to be

registered and its division into shares of a fixed amount.

 Each subscriber must take at least one share and write opposite
his name the number of shares he takes.

 The capital is not the debt of the company even to its

shareholders.

96
Association Clause
 the persons subscribing their signatures at the end of the Memorandum
are desirous of forming themselves into an association in pursuance of
the Memorandum.
 Memorandum of Association must be signed by seven or more persons
in the case of a public company and by two or more persons in the case
of a private company.
 Signatures shall be attested by witnesses.
 There may be one witness for all the signatures but one subscriber
cannot be a witness to the signatures of another.
 Full description, address, occupation, etc. of the subscribers and
witnesses must be written
 One Person Company (OPC), the name of the person, who in the event
of death of the subscriber, shall become member of the company, has
also to be mentioned

97
ALTERATION OF MEMORANDUM

 constitution of the company - hence many restrictions on change

 alteration includes additions, omissions or substitutions

 wide scope is available for making alterations to Memorandum

 separate requirements for alteration of each clause

 alteration to be noted on every copy issued after the alteration

 normal practice is to paste the changed pages

 If the changes are many, it may be advisable to get fresh copies printed

98
Alteration of Name Clause

 Name of the company can be changed any time by passing a special

resolution and getting approval of Central Government. [Section 13(2)]

 The approval of Central Government to be filed with RoC who will issue
a new Certificate of Incorporation. [Section 13(6)]
 Permission of Central Government is not necessary for merely addition
or deletion of words ‘private’ in the name, when public company is
converted to private company vice versa – [Section 13(2)]
 former name should also be painted, affixed or printed for two years
 no change in constitution of the company by change of name
 company continues distinct legal entity- suits in earlier name continue

99
Rectification of Name
 Direction to Rectify Its Name
 When name similar with name of other company which may be possible
through inadvertence or otherwise,
 Central Government can direct to change the name, within three
months by an ordinary resolution [Section 16(1) (a)]
 Application to CG by registered proprietor of a trade mark stating name
is identical /resembles his registered trade mark and should be changed
 Application can be made only within three years from incorporation
 Central Government can direct the company to change the name.
 On issue of such directions, name should be changed within six months
by passing an ordinary resolution – [Section 16(1) (b)].

10
0
Alteration of Situation Clause

 Change of registered office

 within same village, town or city simply BoD resolution

 within same State by special resolution at general meeting of members

 Change from jurisdiction of one ROC to another within same State:

◦ to be confirmed by Regional Director on an application by the Company
◦ RD to give confirmation in 30 days from date of receipt of application
◦ After confirmation, certified copy of confirmation to new RoC 60 days
◦ Fresh registration certificate within 30 days by new RoC [Section 12(6)]

10
1
One state to another
 from one State/Union territory to another State/Union territory:
 special resolution by shareholders and approval of CG [Section 13(4)]
 disposed of by Central Government within 60 days [Section 13(5)]
 RoC to register for alteration becomes effective[Section 13(10)]
 not be allowed if any inquiry, inspection or investigation initiated
against company or any prosecution is pending against the company
 CG order be filed to ROC within 30 days.
 Before granting approval the Central Government may satisfy itself that
◦ the alteration has the consent of the creditors, debenture holders and other
persons concerned with the company
◦ the sufficient provision for the due discharge of debts and obligations or that
adequate security has been provided [Section 13(5)]
 Loss of Revenue to State is not sufficient cause for refusal

10
2
Alteration of Objects Clause

 by passing a special resolution in general meeting [Section 13(1)].

 special resolution to be filed with ROC within prescribed period
 The Registrar will register the document and then only the alteration
becomes effective [Section 13(10)].
 Voting by Postal ballot in specified cases – In case of company having
more than 200 members, the resolution is required to be passed
through Postal Ballot – [Section 110(1) (a)].
 If the listed company unutilized amount out of money raised, object
clause shall not be changed unless:
◦ Advertisement in English and vernacular newspaper
◦ website of company giving justification for such change and
◦ dissenting shareholders are given opportunity to exit in accordance with
regulations specified by SEBI [Section 13(8)]

10
3
Alteration in Capital Clause

 Alterations in the capital clause of the Memorandum may be following type :

◦ (a) Alteration proper (Sec. 61).
◦ (b) Reduction of capital (Sec. 66).
◦ (c) Variation of the rights of the shareholders (Sec. 48).
◦ (d) Creation of Reserve Capital (Sec. 65).
 Alteration Proper:
◦ company increases its authorised share capital by amount as it thinks expedient.
◦ consolidates or sub-divides the existing shares into shares of larger or smaller
denominations;
◦ When the company decides to cancel its unissued shares .
 an ordinary resolution if it is authorised by the Articles of Association to do so.
It does not require sanction of the National Company Law Tribunal.
 copy of the resolution to be filed with the Registrar within thirty days

10
4
Reduction of Capital
 Reduction of capital by forfeiture or surrender of shares, by
cancellation of unissued capital or by redemption of redeemable
preference shares needs no sanction of the National Company Law
Tribunal (NCLT).
 Subject to the authority of the articles of association capital in these
cases, may be reduced by a resolution of the Board of Directors.
 But reduction of capital by any of the following methods needs
elaborate procedure along with the sanction of the Tribunal.
 (i) By writing off the lost capital.
 (ii) By refunding surplus of the paid up capital.
 (iii) By reducing the liability of the members for the uncalled capital.
 (iv) By any other method approved by the company.

10
5
Reduction of Capital
 A company can reduce its share capital by any of the above mentioned
methods when each of the following conditions is fulfilled :
 The Articles of Association of the company authorises such reduction
 Power to reduce capital contained only in the Memorandum of Association will
not be sufficient.
 The company passes a special resolution referred to “as a resolution for
reducing share capital.”
 The company also obtains confirmation of the resolution by the NCLT.
 NCLT before sanctioning look to the protection of the interests of the creditors
and minority group of the shareholders.
 Creditors can object to the reduction of share capital when
◦ it is likely to diminish the liability of shareholders to pay the uncalled capital,
◦ proposed reduction is likely to involve refund of the paid up share capital
◦ Interests of all those who object to the reduction will either be secured or they shall
be paid off.

10
6
 Reduction of the capital will not be effective until a copy of the
resolution and sanction of the court is filed and registered with the
Registrar within 30 days of the receipt of copy of NCLT order.
 The certificate of the Registrar about the registration of the order will
be conclusive evidence of the validity of the reduction,
 The Tribunal may also require the company to publish the reasons for
the reduction of capital for the information of the public.
 The Tribunal may pass an order for the purchase of some of its shares
by the company and for the consequent reduction of its share capital on
an application of a member for redress, complaining either of the
mismanagement of the company or oppression of the interests of the
minority members.

10
7
DOCTRINE OF ULTRA-VIRES

 Memorandum of Association defines and confines the powers of a company.

 Any act done contrary or in excess to the scope of the activity of the company
will be ultra-vires the company, i.e., beyond the legal powers and authority of
the company, and shall be wholly void and not binding on the company.
 Acts ultra-vires the company can neither be legalised nor ratified even with the
unanimous consent of all the members of the company.
 This doctrine tries to protect the interest of the investors and creditors.
 Acts of a company may also be ultra-vires the Articles or ultra-vires the powers
of the directors.
 Acts ultra-vires the Articles can be ratified and made binding upon the
company by altering the Articles by a special resolution at a general meeting.
 Alteration of Articles with retrospective effect, if to the benefit of the company,
shall be valid.
 If an act is beyond the scope of the powers of the directors, i.e., ultra-vires the
directors, it can be ratified by the general body of the shareholders.

10
8
Case Law
 The application of the Doctrine of Ultra-vires was explained in details by
the House of Lords in Ashbury Railway Carriage Co. Ltd. v. Riche.
 The Memorandum of Association of this company defined its objects as
“to make and sell, or lend on hire railway carriages and wagons and all
kinds of railway plants etc...to carry on the business of mechanical
engineers and general contractors...”.
 The company entered into a contract with M/s. Riche, a firm of railway
contractors, to finance the construction of a railway line in Belgium.
 On repudiation of his contract by the company on the ground of its
being ultra-vires, Riche brought an action for damages for breach of
contract on the ground that the words “general contractors” gave power
to the company to enter into such a contract and, therefore, it was well
within the powers of the company.

10
9
 The House of Lords held the contract as ultra vires the company and,
therefore, declared it null and void.
 Lord Cairns, L.C. observed : “The term ‘general contractors’ must be
taken to indicate the making generally of such contracts as are
connected, with the business of mechanical engineers.
 If the term ‘general contractors’ is not so interpreted, it would
authorise the making of contracts of any and every description, such as
for instance of fire and marine insurance and the memorandum in place
of specifying the particular kind of business would virtually point to the
carrying on the business of any kind whatsoever and would, therefore,
be altogether unmeaning.
 Hence the contract was entirely beyond the objects in the
“memorandum of association.”

11
0
Re.German Date Coffee Co. Case
 The doctrine was further confirmed in the case of Re. German Date Coffee Co.
 The memorandum of this company stated that it was formed for working a
German patent which would be granted for manufacturing coffee from dates;
for obtaining other patents for improvements and extensions of the said
invention; and to acquire and purchase any other invention for similar
purposes.
 The company could not get the intended German patent but purchased a
Swedish patent and started making and selling coffee from dates. On a petition
by the two shareholders the court held that it would be just and equitable to
wind up the company since the main object for which the company was
established had become impossible.
 However, the doctrine of ultra-vires should not be unreasonably understood
and applied. It does not restrain a company from doing such things which are
reasonably fair and incidental to its objects or which it is authorised to do
under the Companies Act

11
1
Effects of ultra-vires transactions
 Injunction: Any member of the company can bring injunction against the
company to restrain it from doing ultra-vires acts.
 Personal liability of directors: The directors of the company are personally
liable to make good those funds of the company which have been used for
ultra-vires purposes.
 The directors in their turn can recover the money from persons who have
received the payment with the knowledge that the payments to them were
ultra-vires.
 Contracts void: Any contract which is ultra vires the company will be void and
of no effect whatsoever.
 However, if the contract is only ultra-vires the powers of the directors but not
ultra-vires the company, it may ratify such a contract in the general meeting
and thereby be bound by it.
 In case the company does not ratify the contract, the director can be held
personally liable by the third parties for breach of implied warranty of
authority.
11
2
Indirect effects
 Ultra-vires acquisition of assets:
 If a company acquires some property on account of an ultra-vires transaction
and uses the property to pay its own debts, the supplier of the property will,
on account of principle of subrogation, step into the shoes of the creditors
whose claims have been paid off by the company and acquire their rights
against the company.
 Restitution and subrogation: If the property acquired by the company on
account of an ultra-vires transaction exists in specie or if it can be traced, the
person handing it over can recover it from the company.
 Ultra-vires lending of money:
 If the money has been lent on behalf of the company, and
 the lending is ultravires, the company can sue for the recovery of the money
since “the only objection to his loan is that it was made without authority.

11
3
Articles of Association
 The AoA of a company are its by-laws or rules and regulations
which govern the management of its internal affairs and the
conduct of its business.

 They are framed with the object of carrying out the aims and
objects as set out in the Memorandum of Association.

 ‘Articles’ means the articles of association of a company as

originally framed or as altered from time to time in pursuance of
any previous companies laws or of the present Act,

11
4
 The Articles regulate the internal management of the company.
They define the powers of its officers.

 In Naresh Chandra Sanyal vs Calcutta Stock exchange association

Ltd (AIR 1971 SC 422), the SC said that the articles of association
also establish a contract between the company and the members
and between the members inter se.
 This contract governs the ordinary rights and obligations
incidental to membership

 Articles are like the partnership deed in a partnership. They set

out provisions for the manner in which the company is to be
administered.
 In particular, they provide for matters like the making of calls,
forfeiture of shares, directors’ qualifications, appointment,
powers and duties of auditors, procedure for transfer and
transmission of shares and debentures.
11
5
Contents Of Articles Of Association

 Articles usually contain provisions relating to the following

matters-


1. Share capital including sub division thereof, rights of various

shareholders, the relationship of these rights, payment of
commission, share certificates
 2. Lien of shares
3. Calls on shares
4. Transfer of shares
5. Transmission of shares
6. Forfeiture of shares
7. Surrender of shares
8. Conversion of shares into stock
9. Share warrant

11
6
Contents Of Articles Of Association

 10. Alteration of capital

11. General meetings and proceedings thereat
12. Voting rights of members, voting by poll, proxies
13. Directors, including first directors or directors for life, their
appointment, remuneration, qualifications, powers and
proceedings of Board of directors’ meetings
14. Dividends and reserves
15. Accounts and audits
16. Borrowing powers
17. Winding up

11
7
 Utmost care must be taken to prepare the articles of association
of the proposed company.

 They are certain matters in respect of which powers can be

exercised by the company only if the articles so provide and in
the manner provided therein.

 Therefore, the articles must contain provisions in respect of all

matters which are required to be contained therein so as not to
hamper the working of the company later.

 It cannot, for example, provide for expulsion of a member, as

such a power is opposed to the fundamental principal of
company jurisprudence and, therefore, ultra vires the company.

11
8
 The articles shall be signed by the subscribers of the
Memorandum and registered along with the Memorandum.

 A public company may have its own Articles of association. If it

does not have its own Articles, it may adopt Table A given in
Schedule I to the Act
 In case of private company having a share capital, the articles
shall contain provisions which

 Restrict the right to transfer shares

 Limit the number of its members to 200 (not including

employee-members),

 Prohibit any invitation to the public to subscribe for any shares

in, or debentures of, the company.
11
9
Form And Signature Of Articles

 The articles shall

a) be printed;

b) be divided into paragraphs numbered consecutively; and

c) be signed by each subscriber of the memorandum of

association (who shall add his address, description and
occupation, if any,)
 in the presence of at least one witness who shall attest the
signature and shall likewise add his address, description and
occupation, if any.

12
0
Alteration Of Articles

 A company may by passing a special resolution, alter regulations

contained in its Articles any time subject to

a) the provisions of the Companies Act and

b) Conditions contained in the Memorandum of Association

 The alteration must not exceed the powers given by the

Memorandum of Association of the company or conflict with the
provisions thereof.

 It must not be inconsistent with any provisions of Companies Act

or any other statute

12
1
 It must not be illegal or against public policies
the alteration must be bona fide for the benefit of the company
as a whole

 It should not be a fraud on minority, or inflict a hardship on

minority without any corresponding benefits to the company

 alternation must not be inconsistent with an order of the court.

 The alteration cannot have retrospective effect.

 It can operate only from the date of amendment. [Pyarelal Sharma

v. Managing Director, J & K Industries Ltd. [1989] 3 comp. L.J. (SL)
70].

12
2
Procedures For Alteration Of Articles Of Association
 For effecting alteration to the articles of association, the
following procedures is required to be followed-

1. Take the necessary decision by convening a Board Meeting to

change all or any of the existing Articles of Association and fix up
the day, time, place and agenda for a general meeting for passing
special resolution to effect the change.

2. See that any such change in the Articles of the company

conforms to the provisions of the companies Act and the
conditions contained in the Memorandum of Association of the
company.

3. See that any such change does not increase the liability of any
member who has become so before the alteration to contribute
to the share capital of or otherwise to pay money to, the
company.
12
3
 4. See that any such change does not have the effect of
converting a public company into a private company. If such is
the case, then make an application to the Central Government for
such alteration.

5. See that any such change does not provide for expulsion of a
member by the company.

6. Issue notices for the General Meeting proposing the Special

resolution and explaining inter alia, in the explanatory Statement
the implication and reasons of the changes being proposed.

7. If the shares of the company are enlisted with any recognised

Stock Exchange, then forward copies of all notices sent to the
shareholders with respect to change in the Articles of Association
to the Stock Exchange.

12
4
 8. Hold the General Meeting and pass the special resolution.

9. File with the stock exchange with which your company is

enlisted six copies of such amendments as soon as the company
adopts it in General Meeting. Out of the six copies, one copy
must be a certified true copy.

10. File the Special resolution with the concerned Registrar of

companies with explanatory statement

12
5
Effect Of Articles Of Association
 The memorandum and articles, when registered, bind the
company and its members to the same extent as if they have
been signed by the company and by each member and contain
covenants on its and his part to observe all the provisions of the
memorandum and of the articles.
 Thus the company is bound to its members, the members are
bound to the company and the members are bound to other
members by whatever is contained in these documents. But in
relation to articles, neither a company nor its members are bound
to outsiders
 The articles of association merely govern the internal
management, business or administration of a company. They may
be binding between the members affected by them but do not
have the force of statute- Irrigation Development Employees’
Association vs Government of Andhra Pradesh [2005]55 SCL 459
(AP).

12
6
Sameet Gambhir
Directors
Read with Appointment and
Qualification of Director Rules,
2014
Directors
 Section 2(34) "director" means a director appointed to the Board of a
company
 part of the collective body known as the Board of Directors, that is
responsible for controlling, managing and directing the affairs of a
company
 trustees of company’s property and money,
 also act as the agents in transactions which are entered into by them on
behalf of the company
 expected to perform their duties and obligations as a rationally diligent
person with skill, knowledge, and experience
 Hence, a director plays several roles in a company, as an agent, as an
employee, as an officer and as a trustee of the company.
 Additional Director
◦ Board can appoint additional director who occupies office until next
Annual General Meeting.
 Alternate Director
◦ appointed by the Board, to fill in for a director who might be absent
from the country, for more than 3 months.
 Independent Director
◦ Independent and non-executive directors required to be appointed in
certain classes of companies - to improve corporate credibility and
enhance the governance standards
 Women Director
◦ Listed Companies and public company (satisfying certain criteria),
would be required to appoint minimum one woman director
 Nominee Director
◦ could be appointed by a specific class of shareholders, banks or lending
financial institutions etc.
Director Identification Number (DIN)
 Every individual intending to be appointed as director of
a company shall make an application for allotment
of Director Identification Number to the Central
Government in such form and manner and along with
fees

 an electronic system to facilitate submission of

application for the allotment of DIN through the
portal on the website of the Ministry of Corporate
Affairs.
Section-149 Company to have Board
of Directors
 Every company shall have a Board of Directors consisting of individuals as directors
and shall have—
(a) a minimum number of three directors in the case of a public company, two
directors in the case of a private company, and one director in the case of a One
Person Company; and
 (b) a maximum of fifteen directors:
 Provided that a company may appoint more than fifteen directors after passing a
special resolution

Rule 3 Woman Director on the Board.

 The following class of companies shall appoint at least one woman director-
 (i) every listed company;
 (ii) every other public company having -
 (a) paid–up share capital of one hundred crore rupees or more; or
 (b) turnover of three hundred crore rupees or more:

 Provided further that any intermittent vacancy of a woman director shall be filled-up by
the Board at the earliest but not later than immediate next Board meeting or three
months from the date of such vacancy whichever is later.
 Rule 4 Number of Independent Directors

 Every listed public company shall have at least one-third of the total number
of directors as independent directors and the Central Government
may prescribe the minimum number of independent directors in case of any
class or classes of public companies.

 (1) The following class or classes of companies shall have at least two directors
as independent directors –
 (i) the Public Companies having paid up share capital of ten crore rupees or
more; or
 (ii) the Public Companies having turnover of one hundred crore rupees or
more; or
 (iii) the Public Companies which have, in aggregate, outstanding loans,
debentures and deposits, exceeding fifty crore rupees:
 An independent director in relation to a company, means a director other than a managing director or a whole-time
director or a nominee director,—


in the opinion of the Board, is a person of integrity and possesses relevant expertise and experience;
 is or was not a promoter of the company or its holding, subsidiary or associate company;
 not related to promoters or directors in the company, its holding, subsidiary or associate company;
 has or had no pecuniary relationship, other than remuneration as such director or having transaction not exceeding
ten per cent. of his total income or such amount as may be prescribed, with the company, its holding, subsidiary or
associate company, or their promoters, or directors, during the two immediately preceding financial years or during
the current financial year;
 none of whose relatives—
 is holding any security of or interest in the company, its holding, subsidiary or associate company during the two
immediately preceding financial years or during the current financial year:
 Provided that the relative may hold security or interest in the company of face value not exceeding fifty lakh rupees
or two per cent. of the paid-up capital of the company, its holding, subsidiary or associate company or such higher sum
as may be prescribed;
 Is indebted to the company, its holding, subsidiary or associate company or their promoters, or directors, in excess of
such amount as may be prescribed during the two immediately preceding financial years or during the current financial
year;
 has given a guarantee or provided any security in connection with the indebtedness of any third person to the
company, its holding, subsidiary or associate company or their promoters, or directors of such holding company, for
such amount as may be prescribed during the two immediately preceding financial years or during the current
financial year; or
 has any other pecuniary transaction or relationship with the company, or its subsidiary, or its holding or
associate company amounting to two per cent. or more of its gross turnover or total income singly or in
combination with the transactions
 who, neither himself nor any of his relatives—
holds or has held the position of a key managerial personnel or is or has been employee of the company or its
holding, subsidiary or associate company in any of the three financial years immediately preceding the
financial year in which he is proposed to be appointed;
 Provided that in case of a relative who is an employee, the restriction under this clause shall not apply for his
employment during preceding three financial years.

 is or has been an employee or proprietor or a partner, in any of the three financial years immediately
preceding the financial year in which he is proposed to be appointed, of—
(A) a firm of auditors or company secretaries in practice or cost auditors of the company or its holding,
subsidiary or associate company; or
(B) any legal or a consulting firm that has or had any transaction with the company, its holding, subsidiary or
associate company amounting to ten per cent. or more of the gross turnover of such firm;

 holds together with his relatives two per cent. or more of the total voting power of the company; or

 is a Chief Executive or director, by whatever name called, of any nonprofit organisation that receives twenty-
five per cent. or more of its receipts from the company, any of its promoters, directors or its holding, subsidiary
or associate company or that holds two per cent. or more of the total voting power of the company; or


(f) who possesses such other qualifications as may be prescribed. (Rule 5)

 An independent director shall not be entitled to any stock option and may receive remuneration by
way of fee, reimbursement of expenses for participation in the Board and other meetings and profit related
commission as may be approved by the members.

 An independent director shall hold office for a term up to five consecutive years on the Board of a
company, but shall be eligible for reappointment on passing of a special resolution by the company and
disclosure of such appointment in the Board's report.

 No independent director shall hold office for more than two consecutive terms, but such independent
director shall be eligible for appointment after the expiration of three years of ceasing to become an
independent director:

 Provided that an independent director shall not, during the said period of three years, be appointed in
or be associated with the company in any other capacity, either directly or indirectly.

Notwithstanding anything contained in this Act,—

(i) an independent director;&
 (ii) a non-executive director not being promoter or key managerial personnel, shall be held liable, only in
respect of such acts of omission or commission by a company which had occurred with his
knowledge, attributable through Board processes, and with his consent or connivance or where he had not
acted diligently.
Section 152-Appointment of Directors
 (1) Where no provision is made in the articles of a company for the appointment of the first director,
the subscribers to the memorandum who are individuals shall be deemed to be the first directors of the
company until the directors are duly appointed and in case of a One Person Company an individual being
member shall be deemed to be its first director until the director or directors are duly appointed by the
member in accordance with the provisions of this section.
(2) Save as otherwise expressly provided in this Act, every director shall be appointed by the company in
general meeting.

 (3) No person shall be appointed as a director of a company unless he has been allotted the Director
Identification number

 (4) Every person proposed to be appointed as a director by the company in general meeting or
otherwise, shall furnish his Director Identification Number or such other number as may be prescribed
and a declaration that he is not disqualified to become a director under this Act.

 (5) A person appointed as a director shall not act as a director unless he gives his consent to hold the
office as director and such consent has been filed with the Registrar within thirty days of his
appointment in such manner as may be prescribed Rule 8)

 Provided that in the case of appointment of an independent director in the general meeting, an
explanatory statement for such appointment, annexed to the notice for the general meeting, shall
include a statement that in the opinion of the Board, he fulfils the conditions specified in this Act for such
an appointment.]
Section 161- Appointment of Additional Director,
Alternate Director and Nominee Director
 (1) The articles of a company may confer on its Board of Directors the power to appoint any
person, other than a person who fails to get appointed as a director in a general meeting, as
an additional director at any time who shall hold office up to the date of the next annual
general meeting or the last date on which the annual general meeting should have been
held, whichever is earlier.

 (2) The Board of Directors of a company may, if so authorised by its articles or by a

resolution passed by the company in general meeting, appoint a person, not being a person
holding any alternate directorship for any other director in the company , to act as an
alternate director for a director during his absence for a period of not less than three
months from India:
 Provided that no person shall be appointed as an alternate director for an independent
director unless he is qualified to be appointed as an independent director

 Provided further that an alternate director shall not hold office for a period longer than that
permissible to the director in whose place he has been appointed and shall vacate the
office if and when the director in whose place he has been appointed returns to India
 (3) The Board may appoint any person as a director nominated by any
institution in pursuance of the provisions of any law for the time being in
force or of any agreement or by the Central Government or the State
Government by virtue of its shareholding in a Government company.

 (4) If the office of any director appointed by the company in general

meeting is vacated before his term of office expires in the normal course,
the resulting casual vacancy may, in default of and subject to any
regulations in the articles of the company, be filled by the Board of
Directors at a meeting of the Board which shall be subsequently approved
by members in the immediate next general meeting

 Provided that any person so appointed shall hold office only up to the
date up to which the director in whose place he is appointed would have
held office if it had not been vacated.
Section 164- Disqualifications for Appointment of
Director
 (1) A person shall not be eligible for appointment as a director of a company, if —
(a) he is of unsound mind and stands so declared by a competent court;
(b) he is an undischarged insolvent;
(c) he has applied to be adjudicated as an insolvent and his application is pending;
(d) he has been convicted by a court of any offence, whether involving moral turpitude or
otherwise, and sentenced in respect thereof to imprisonment for not less than six
months and a period of five years has not elapsed from the date of expiry of the
sentence:
 Provided that if a person has been convicted of any offence and sentenced in respect
thereof to imprisonment for a period of seven years or more, he shall not be eligible to
be appointed
 (e) an order disqualifying him for appointment as a director has been passed by a court or
Tribunal and the order is in force;
 (f) he has not paid any calls in respect of any shares of the company held by him, whether
alone or jointly with others, and six months have elapsed from the last day fixed for the
payment of the call;
 (g) he has been convicted of the offence dealing with related party transactions under
section 188 at any time during the last preceding five years; or
 (h) he has not complied section 152.& section 165
 (2) No person who is or has been a director of a company which—
(a) has not filed financial statements or annual returns for any continuous period
of three financial years; or
(b) has failed to repay the deposits accepted by it or pay interest thereon or to
redeem any debentures on the due date or pay interest due thereon or pay any
dividend declared and such failure to pay or redeem continues for one year or
more, shall be eligible to be re-appointed as a director of that company or
appointed in other company for a period of five years from the date on which the
said company fails to do so.
 (3) A private company may by its articles provide for any disqualifications for
appointment as a director in addition to those specified

 No person, after the commencement of this Act, shall hold office as a director, including any
alternate directorship, in more than twenty companies at the same time:

 Provided that the maximum number of public companies in which a person can be
appointed as a director shall not exceed ten.
Section 166-Duties of Directors
(1) Subject to the provisions of this Act, a director of a company shall act in accordance with the articles of
the company.

(2)A director of a company shall act in good faith in order to promote the objects of the company for the
benefit of its members as a whole, and in the best interests of the company, its employees, the shareholders,
the community and for the protection of environment.

(3) A director of a company shall exercise his duties with due and reasonable care, skill and diligence and
shall exercise independent judgment.

(4) A director of a company shall not involve in a situation in which he may have a direct or indirect interest
that conflicts, or possibly may conflict, with the interest of the company.

(5) A director of a company shall not achieve or attempt to achieve any undue gain or advantage either to
himself or to his relatives, partners, or associates and if such director is found guilty of making any undue
gain, he shall be liable to pay an amount equal to that gain to the company.

(6) A director of a company shall not assign his office and any assignment so made shall be void.

(7) If a director of the company contravenes the provisions of this section such director shall be punishable
with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees.
Section 167-Vacation of Office of Director
(1) The office of a director shall become vacant in case—
(a) he incurs any of the disqualifications specified in section 164;
Provided that where he incurs disqualification under section 164, the office of the director shall become
vacant in all the companies, other than the company which is in default under that sub-section.

(b) he absents himself from all the meetings of the Board of Directors held during a period of twelve
months with or without seeking leave of absence of the Board;
(c) he acts in contravention of the provisions of section 184 relating to entering into contracts or
arrangements in which he is directly or indirectly interested;
(d) he fails to disclose his interest in any contract or arrangement in which he is directly or indirectly
interested, in contravention of the provisions ofsection 184;

(e) he becomes disqualified by an order of a court or the Tribunal;

(f) he is convicted by a court of any offence, whether involving moral turpitude or otherwise and sentenced
in respect thereof to imprisonment for not less than six months:

(g) he is removed in pursuance of the provisions of this Act;

Section 168-Resignation of Director
(1) A director may resign from his office by giving a notice in writing to the company
and the Board shall on receipt of such notice take note of the same and the company
shall intimate the RoC

The resignation of a director shall take effect from the date on which the notice is
received by the company or the date, if any, specified by the director in the notice,
whichever is later: Provided that the director who has resigned shall be liable even
after his resignation for the offences which occurred during his tenure .

(3) Where all the directors of a company resign from their offices, or vacate their
offices under section 167, the promoter or, in his absence, the Central Government
shall appoint the required number of directors who shall hold office till the directors
are appointed by the company in general meeting.
Removal of Directors
 (1) A company may, by ordinary resolution, remove a director, not being a director appointed
by the Tribunal under section 242, before the expiry of the period of his office after giving
him a reasonable opportunity of being heard:

 (2) A special notice shall be required of any resolution, to remove a director under this
section, or to appoint somebody in place of a director so removed, at the meeting at which
he is removed.

 (3) On receipt of notice of a resolution to remove a director under this section, the company
shall forthwith send a copy thereof to the director concerned, and the director, whether or
not he is a member of the company, shall be entitled to be heard on the resolution at the
meeting.

 (4) A vacancy created by the removal of a director under this section may, if he had been
appointed by the company in general meeting or by the Board, be filled by the appointment
of another director in his place at the meeting at which he is removed, provided special
notice of the intended appointment has been given

 (5) A director so appointed shall hold office till the date up to which his predecessor would
have held office if he had not been removed.
 Meetings of Board
 Every company shall hold the first meeting of the Board of Directors within thirty days of
the date of its incorporation

 Thereafter hold a minimum number of four meetings of its Board of Directors

 Not more than one hundred and twenty days shall intervene between two consecutive
meetings of the Board

 The participation of directors in a meeting of the Board may be either in person or through
video conferencing or other audio visual means, which are capable of recording and
recognising the participation of the directors and of recording and storing the proceedings of
such meetings along with date and time

 A meeting of the Board shall be called by giving not less than seven days’ notice in writing to
every director at his address registered with the company and such notice shall be sent by
hand delivery or by post or by electronic means

 Provided that a meeting of the Board may be called at shorter notice to transact urgent
business subject to the condition that at least one independent director, if any, shall be
present at the meeting

 (The quorum for a meeting of the Board of Directors of a company shall be one third of its total
strength or two directors, whichever is higher, and the participation of the directors by video
conferencing or by other audio visual means shall also be counted for the purposes of
quorum under this sub-section.
Power of Board

 The Board of Directors of a company shall be entitled to exercise all such powers, and to do all such acts and
things, as the company is authorised to exercise and do
 Provided that in exercising such power or doing such act or thing, the Board shall be subject to the provisions
contained in that behalf in this Act, or in the memorandum or articles, or in any regulations not inconsistent
therewith and duly made thereunder, including regulations made by the company in general meeting:

 Provided further that the Board shall not exercise any power or do any act or thing which is directed or required
to be exercised or done by the company in general meeting.

 The Board of Directors of a company shall exercise the following powers on behalf of the company by means of
resolutions passed at meetings of the Board, namely:—
(a) to make calls on shareholders in respect of money unpaid on their shares;
(b) to authorise buy-back of securities under section 68;(c) to issue securities, including debentures, whether in
or outside India;
(d) to borrow monies;
(e) to invest the funds of the company;
(f) to grant loans or give guarantee or provide security in respect of loans;]
 (g) to approve financial statement and the Board’s report;
(h) to diversify the business of the company;
(i) to approve amalgamation, merger or reconstruction;
(j) to take over a company or acquire a controlling or substantial stake in another company;
(k) any other matter which may be prescribed:
Restriction on power of Board
 (1) The Board of Directors of a company shall exercise the following powers only with the
consent of the company by a special resolution, namely:—
 (a) to sell, lease or otherwise dispose of the whole or substantially the whole of the
undertaking of the company or where the company owns more than one undertaking, of the
whole or substantially the whole of any of such undertakings.
 Explanation.—
(i) “undertaking” shall mean an undertaking in which the investment of the company exceeds
twenty per cent. of its net worth as per the audited balance sheet of the preceding financial
year or an undertaking which generates twenty per cent. of the total income of the company
during the previous financial year;
 (ii) the expression “substantially the whole of the undertaking” in any financial year shall mean
twenty per cent. or more of the value of the undertaking as per the audited balance sheet of
the preceding financial year;
 (b) to invest otherwise in trust securities the amount of compensation received by it as a
result of any merger or amalgamation;
 (c) to borrow money, where the money to be borrowed, together with the money already
borrowed by the company will exceed aggregate of its paid-up share capital, free
reserves and securities premium], apart from temporary loans obtained from the company’s
bankers in the ordinary course of business:
 (d) to remit, or give time for the repayment of, any debt due from a director.
 Appointment of Key Managerial Personnel
 (1) Every company belonging to such class or classes of companies as may be prescribed in Rule 8 shall
have the following whole-time key managerial personnel,—Rule 8- (Every listed company and every
other public company having a paid-up share capital of ten crore rupees or more shall have whole-time
key managerial personnel)
 (i) managing director, or Chief Executive Officer or manager and in their absence, a whole-time director;
(ii) company secretary; and
(iii) Chief Financial Officer :
 Provided that an individual shall not be appointed or reappointed as the chairperson of the company, in
pursuance of the articles of the company, as well as the managing director or Chief Executive Officer of
the company at the same time after the date of commencement of this Act unless,—
(a) the articles of such a company provide otherwise; or
(b) the company does not carry multiple businesses:

(2) Every whole-time key managerial personnel of a company shall be appointed by means of a
resolution of the Board containing the terms and conditions of the appointment including the
remuneration.

 (3) A whole-time key managerial personnel shall not hold office in more than one company except in its
subsidiary company at the same time:
Sameet Gambhir
 General Meetings, Board
Report, Auditors’

Indian Oil’s AGM Video clip- https://m.youtube.com/watch?v=AKbre77ZoVk

Annual General Meeting (AGM)

 an interaction between management and the shareholders of the Company

 Mandatory - to discuss yearly results, Auditor’s appointment and others

 Very First AGM – within 9 months from end of first FY after its incorporation

 Subsequently within 6 months from the end of Financial Year (extension 3M)

 To be held during business hours on any day except national holiday

 To be held either at registered office or any place within the city, town or
village where such registered office is situated

 Unlisted company - any place in India if consent of all members is given to

company in advance either by written or through electronic mode.
15
3
Procedure - AGM

 Clear 21 days notice to its members, notice to mention place, day, date, time

 To be sent to :
◦ all members, legal rep. of deceased members, assignee of insolvent member
◦ all Directors of the Company.
◦ the Statutory auditor(s) of the Company.

 In writing through speed post / registered post / electronic mode to address of

member /e-mail id in records

 should also be placed on the website of the company

 can be called at shorter notice if at least 95% members entitled to vote in the
meeting give their approval in writing / email

15
4
Quorum of an AGM

 Private Company - two members present at the meeting

 Public Company:
◦ Five members present - if the number of members is within 1000
◦ Fifteen members present - if the number of members is more than 1000 but within
5000
◦ Thirty members present- if the number of members is more than 5000

 In case quorum is not present within half an hour from the scheduled time,
meeting will be adjourned to the same day in the following week for the same
time and at the same place

15
5
Agenda of AGM

 Ordinary Business:
◦ Consideration and Adoption of the Audited Financial Statements
◦ Consideration of the Director’s Report and Auditor’s Report
◦ Dividend declaration to shareholders
◦ Appointment of Directors /replacement of retiring Directors
◦ Appointment of Auditors and deciding the Auditor’s Remuneration

 Special Business - Apart from above ordinary business, any other business

 Ordinary business - ordinary resolution (Majority decision)

 Special business - may be ordinary or special depending on applicable legal

provisions (If Special resolution - at least 75% votes in favor of the Resolution)

15
6
Power of Tribunal to Call AGM
 If default in holding AGM:
◦ Tribunal may,
◦ on application of any member of company,
◦ call, or direct the calling of AGM and
◦ give consequential directions as the Tribunal thinks expedient

 Such directions may include

◦ a direction that one member of the company
◦ present in person or by proxy
◦ shall be deemed to constitute a meeting

15
7
Extraordinary General Meeting (EGM)
 The Board may, whenever it deems fit, call an extraordinary general meeting

 The Board shall, at the requisition made by

◦ Members holding not less than one-tenth of paid-up share capital
◦ Members having not less than one-tenth of the total voting power
◦ call an extraordinary general meeting of the company

 The requisition shall

◦ set out matters for consideration of which meeting is to be called
◦ be signed by the requisitionists and
◦ be sent to the registered office of the company

 If Board does not proceed to call

◦ within 21 days from date of receipt of valid requisition
◦ on a day not later than forty-five days from the date of receipt of such requisition,
◦ meeting may be called and held by the requisitionists themselves within 3 months

15
8
EXPLANATORY STATEMENT
 Statement setting out following material facts concerning each item of
special business to be transacted at general meeting, shall be annexed
to the notice:
◦ the nature of concern or interest, financial or otherwise of:
 every director and the manager, if any
every other key managerial personnel, and
 relatives of the persons mentioned above
◦ any other information and facts that may enable members to understand
the meaning, scope and implications of the items of business
 in the case of an AGM all business to be transacted thereat shall be deemed
special, other than 4 Ordinary (discussed earlier)
 in the case of any other meeting, all business shall be deemed to be special
 special business - if relates to or affects any other company, the extent of
shareholding interest (if 2% or more) of promoter / director/ KMP in that other
company also be set out in the statement

16
0
CHAIRMAN
 Unless the articles of the company otherwise provide:
◦ the members personally present at the meeting shall
◦ elect one of themselves to be the Chairman thereof on a show of hands

 If a poll is demanded on the election of the Chairman:

◦ it shall be taken forthwith
◦ the Chairman elected on a show of hands shall continue to be the Chairman
until some other person is elected as Chairman as a result of the poll
◦ and such other person shall be the Chairman for the rest of the meeting

16
1
PROXY
 Any member entitled to attend and vote at meeting shall be entitled to
appoint another person as a proxy to attend and vote at the meeting on his
behalf
 proxy shall not have right to speak & not be entitled to vote except on a poll
 a person appointed as proxy may act on behalf of such member or number of
members not exceeding fifty
 statement that a member entitled to attend and vote is entitled to appoint a
proxy and that a proxy need not be a member.

 The instrument appointing a proxy shall—

◦ be in writing; and
◦ be signed by the appointer or his attorney / Authorized rep.

 The appointment of proxy shall be in the Form No. MGT.11

16
2
ELECTRONIC VOTING
 Listed company and company with 1000 & more members - facility to exercise
their right to vote on resolutions by electronic means
 The notice shall clearly state:
◦ that the company is providing facility for voting by electronic means and the business
may be transacted through such voting
◦ that the facility for voting, either through electronic voting system or ballot or polling
paper shall also be made available at the meeting and
◦ members attending the meeting who have not already cast their vote by remote e-
voting shall be able to exercise their right at the meeting;
◦ that the members who have cast their vote by remote-voting prior to the meeting
may also attend the meeting but shall not be entitled to cast their vote again
 The notice shall –
indicate the process and manner for voting by electronic means;
indicate the time schedule including the time period during which the votes may be cast
by remote e-voting;
provide the details about the login lD;
specify process & manner generating/receiving password & casting in secure manner.

16
4
POSTAL BALLOT
 A Company may, in respect of any item of business, other than ordinary
business and any business in respect of which directors or auditors have a right
to be heard at any meeting, transact by means of postal ballot

 instead of transacting such business at a general meeting

 any item of business required to be transacted by means of postal ballot, may

be transacted at a general meeting by a company which is required to provide
the facility to members to vote by electronic means

 If a resolution is assented to by the requisite majority of the shareholders by

means of postal ballot, it shall be deemed to have been duly passed at a
general meeting convened in that behalf.

16
5
POSTAL BALLOT
 The following items of business shall be transacted only by means of voting
through a postal ballot:
 (a) alteration of the objects clause of the memorandum
 (b) alteration of articles of association in relation to insertion or removal of
provisions which are required to be included in the articles of a company in
order to constitute it a private company;
 (c) change in place of registered office outside the local limits of any city, town
or village
 (d) change in objects for which a company has raised money from public
through prospectus and still has any unutilized amount out of the money so
raised
 (e) issue of shares with differential rights as to voting or dividend or otherwise
 (f) variation in the rights attached to a class of shares or debentures or other

16
6
POSTAL BALLOT
 g) buy-back of shares by a company
 (h) election of a director
 (i) sale of the whole or substantially the whole of an undertaking of a company
as specified
 (j) giving loans or extending guarantee or providing security in excess of the
limit specified

 any aforesaid items of business required to be transacted by means of postal

ballot, may be transacted at a general meeting by a company which is required
to provide the facility to members to vote by electronic means

16
7
REPORT ON AGM
 Every listed public company shall prepare a report on each annual general
meeting including the confirmation to the effect that the meeting was
convened, held and conducted as per the provisions of this Act and the rules
made thereunder.
 The company shall file with the Registrar a copy of the report within thirty days
of the conclusion of the annual general meeting
 The report shall be prepared in addition to the minutes of the general meeting;
 shall be signed and dated by the Chairman of the meeting
 the report shall contain the details in respect of the following:
◦ the day, date, hour and venue of the annual general meeting;
◦ confirmation with respect to appointment of Chairman of the meeting;
◦ number of members attending the meeting;
◦ confirmation of quorum;
◦ business transacted at the meeting and result thereof;
◦ any other points relevant for inclusion in the report.
◦ the Report shall contain fair and correct summary of the proceedings
16
8
ANNUAL RETURN
 Every company to prepare a return containing the particulars as they stood on
the close of the financial year regarding—
◦ (a) its registered office, principal business activities, particulars of its holding,
subsidiary and associate companies;
◦ (b) its shares, debentures and other securities and shareholding pattern;
◦ (c) its members and debenture-holders along with changes therein since the close of
the previous financial year;
◦ (d) its promoters, directors, key managerial personnel along with changes therein
since the close of the previous financial year;
◦ (g) remuneration of directors and key managerial personnel;
◦ (i) matters relating to certification of compliances, disclosures as may be prescribed;
◦ (j) details, as may be prescribed, in respect of shares held by or on behalf of the
Foreign Institutional Investors; and
◦ (k) such other matters as may be prescribed,
 and signed by a director and the company secretary

16
9
FINANCIALS & BOARD REPORT
 The financial statement, including consolidated financial statement, if any, shall
be approved by the Board of Directors before they are signed for submission to
the auditor for his report thereon
 The auditors’ report shall be attached to every financial statement
 There shall be attached to statements laid before a company in general
meeting, a report by its Board of Directors, which shall include—
 number of meetings of the Board;
Directors’ Responsibility Statement;
 details in respect of frauds reported by auditors other than those which are
reportable to the Central Government;
 a statement on declaration given by independent directors;
Company’s policy on directors’ appointment and remuneration including
criteria for determining qualifications, positive attributes, independence of a
director
 explanations or comments by the Board on every qualification, reservation or
adverse remark or disclaimer made by the Auditors
17
0
FINANCIALS & BOARD REPORT
 the state of the company’s affairs
 the amounts, if any, which it proposes to carry to any reserves
 the amount, if any, which it recommends should be paid by way of dividend;
 material changes and commitments, if any, affecting the financial position of
the company which have occurred between the end of the financial year of the
company to which the financial statements relate and the date of the report
 the conservation of energy, technology absorption, foreign exchange earnings
and outgo
 a statement indicating development and implementation of a risk
management policy for the company
 details about the policy developed and implemented by the company on
corporate social responsibility initiatives taken during the year
 such other matters as may be prescribed.

17
1
ANNUAL REPORT OF DCM SHRIRAM LIMITED FOR THE YEAR 18-19
Audit
 Statutory audit is an independent, objective evaluation of an organization's
financial reports and financial reporting processes.
-purpose is to give regulators, investors, directors, and managers reasonable
assurance that financial statements are accurate and complete.

 Internal Audit is a Compliance test mandated by Section 138 upon the

Companies which come under the purview of prescribed thresholds.

 Secretarial Audit -compliance audit,helps detect noncompliance & take

corrective measures.

 Cost Audit -the class of companies, engaged in the production of specified goods
or providing services
-having an overall turnover of rupees thirty five crore or more during the
immediately preceding F.Y., shall include cost records n their books of account

17
3
Image source / credit - https://img.jagranjosh.com/imported/images/E/GK/CONSUMER-PROTECTION-BILL-2019-FEATURES.jpg

The Consumer Protection Act 2019

17
5
The Consumer Protection Act 2019

 Objective of a consumer protection law

 (a) Providing better and all round protection to consumer
 (b) Providing machinery for the speedy redressal of the grievances.
 (c) Creating framework for consumers to seek redressal.
 (d) Providing rights to consumers.
 (e) Safeguarding rights of Consumers.
 https://www.youtube.com/watch?v=R-eCBuWzL_8

 The new Act was notified on August 9th 2019.

 came into effect from July 20th 2020.

 Main features
 While retaining certain old provisions,
 New Act has certain new provisions that tightens the existing rules to further
safeguard consumer rights and create exhaustive consumer protection law.
17
6
Who is a consumer ?

 A person who buys any goods or services for a consideration,

 which has been paid or promised or partly paid and partly promised, or under
any system of deferred payment
 also includes the user with approval of such goods or beneficiary of services.

 “buys any goods” and ‘hires or avails any services” includes offline or online
transactions through electronic means or by teleshopping or direct selling or
multi-level marketing

 What are goods

 every kind of movable property and includes food

17
7
Who is a not a consumer?
 A person who;
◦ obtains goods free of charge
◦ avails services free of charge
◦ obtains goods for resale or for any commercial purposes
◦ avails services for any commercial purposes
◦ avails services under contract of service

 Commercial purpose does not include use by a person of goods bought and
used by him exclusively for the purposes of earning his livelihood by means of
self-employment.

17
8
New Provisions
 New provisions under Consumer Protection Act 2019
◦ inclusion of E- commerce, Direct selling Establishment of Central Consumer
Protection Authority (CCPA)
◦ Strict Norms for Misleading Advertisement
◦ Strict Norms for product liability
◦ Changes in the Pecuniary Jurisdiction
◦ Greater ease to dispute resolution

 Addition in the clause of “Unfair Trade Practice

◦ Unfair Contract
◦ Alternate Dispute Resolution through mediation

17
9
Guaranteed Consumers Rights
 Right to Safety
 Right to be Informed
 Right to Choose
 Right to be heard
 Right to seek Redressal
 Right to Consumer Awareness

 https://youtu.be/KAGWjGzo-28

18
0
Who can make complaint
 a consumer
 any voluntary consumer association registered under any law for the time
being in force
 the Central Government or any State Government
 the Central Authority
 one or more consumers, where there are numerous consumers having the
same interest
 in case of death of a consumer, his legal heir or legal representative
 in case of a consumer being a minor, his parent or legal guardian;

 No person buying goods or hiring services for business purpose can make a
complaint

18
1
Deficiency
 any fault, imperfection, shortcoming or inadequacy in the quality, nature and
manner of performance which
 is required to be maintained by or under any law for the time being in force or
 has been undertaken to be performed by a person in pursuance of a contract
or otherwise in relation to any service

 and includes—
 any act of negligence or omission or commission by such person which causes
loss or injury to the consumer; and
 deliberate withholding of relevant information by such person to the
consumer;

18
2
Unfair Trade Practice
 In the CPA of 1986, a complaint could be filed only if

◦ an unfair trade practice or

◦ a restrictive trade practice was adopted by any trader or service

provide.”

 In the new act, i.e. CPA of 2019, we see that the term
◦ ‘unfair contract’
has been added to the definitions to broaden the scope for grounds for
filling complaints.

18
3
Unfair Trade Practice
 manufacturing or offering spurious goods for sale or adopting
deceptive practices for providing service,
 not issuing proper cash memo or bill for the services rendered
and the good sold,
 refusing to withdraw, take back or discontinue defective goods
and services and refund the consideration taken thereof within
the time period stipulated in the bill or within 30 days if there is
no such provision in the bill,
 disclosing personal information of the consumer to any other
person not in accordance with the prevailing laws.

18
4
Unfair contract
 a contract between a manufacturer or trader or service provider on one hand,
and a consumer on the other,
 having such terms which cause significant change in the rights of such
consumer, including the following:
 requiring manifestly excessive security deposits to be given by a consumer for
the performance of contractual obligations;
 imposing any penalty on the consumer, for the breach of contract thereof
which is wholly disproportionate to the loss occurred due to such breach to
the other party to the contract;
 refusing to accept early repayment of debts on payment of applicable penalty;
 entitling a party to the contract to terminate such contract unilaterally, without
reasonable cause;
 permitting or has the effect of permitting one party to assign the contract to
the detriment of the other party who is a consumer, without his consent;
 imposing on the consumer any unreasonable charge, obligation or condition
which puts such consumer to disadvantage
18
5
Misleading advertisement
 in relation to any product or service:
 falsely describes such product or service; or
 gives a false guarantee to, or
 is likely to mislead the consumers as to the nature, substance,
quantity or quality of such product or service; or
 conveys an express or implied representation which, if made by
the manufacturer or seller or service provider thereof, would
constitute an unfair trade practice; or
 deliberately conceals important information

18
6
e-Commerce
 buying or selling of goods or services Including digital products
over digital or electronic network
 e commerce entity
 any person who owns, operates or manages digital or electronic
facility or platform for electronic commerce, but does not include
a seller offering his goods or services for sale on a marketplace

 Scope and Applicability of Rules. –

 (a) all goods and services bought or sold over digital or electronic
network including digital products;
 (b) all models of e-commerce, including marketplace and
inventory models of e-commerce;
 (c) all e-commerce retail, including multi-channel single brand
retailers and single brand retailers in single or multiple formats;
and

18
7
e-Commerce
 d) all forms of unfair trade practices across all models of e-commerce
 Rules shall not apply to any activity of a natural person carried out in a
personal capacity not being part of any professional or commercial
activity undertaken on a regular or systematic basis.
 shall apply to a e-commerce entity which is not established in India, but
systematically offers goods or services to consumers in India.
 “e-commerce entity” means any person who owns, operates or manages
digital or electronic facility or platform for electronic commerce, but does
not include a seller offering his goods or services for sale on a
marketplace e-commerce entity;
 “inventory e-commerce entity means an e-commerce entity which owns
the inventory of goods or services and sells such goods or services
directly to the consumers and shall include single brand retailers and
multi-channel single brand retailers;
 “marketplace e-commerce entity” means an e-commerce entity which
provides an information technology platform on a digital or electronic
network to facilitate transactions between buyers and sellers;

18
8
e-Commerce
 Every e-commerce entity appoint a nodal person of contact or an
alternate senior designated functionary who is resident in India,
to ensure compliance
 Every e-commerce entity shall provide the following information
in a clear and accessible manner on its platform, displayed
prominently to its users, namely:--
 legal name of the e-commerce entity;
 principal geographic address of its headquarters and all
branches;
 name and details of its website; and
 contact details like e-mail address, fax, landline and mobile
numbers of customer care as well as of grievance officer.
 No e-commerce entity shall adopt any unfair trade practice,
whether in the course of business on its platform or otherwise.

18
9
e-Commerce
 Every e-commerce entity shall establish an adequate grievance
redressal mechanism having regard to the number of grievances
ordinarily received by such entity from India, and shall appoint a
grievance officer for consumer grievance redressal, and shall
display the name, contact details, and designation of such officer
on its platform
 Where an e-commerce entity offers imported goods or services
for sale, it shall mention the name and details of any importer
from whom it has purchased such goods or services, or who may
be a seller on its platform.
 No e-commerce entity shall impose cancellation charges on
consumers cancelling after confirming purchase unless similar
charges are also borne by the e- commerce entity, if they cancel
the purchase order unilaterally for any reason.

19
0
e-Commerce
 Every e-commerce entity shall effect all payments towards
accepted refund requests of the consumers as prescribed by the
Reserve Bank of India or any other competent authority under any
law for the time being in force, within a reasonable period of
time, or as prescribed under applicable laws.
 No e-commerce entity shall-- (a) manipulate the price of the
goods or services offered on its platform in such a manner as to
gain unreasonable profit by imposing on consumers any
unjustified price having regard to the prevailing market
conditions, the essential nature of the good or service, any
extraordinary circumstances under which the good or service is
offered, and any other relevant consideration in determining
whether the price charged is justified;
 (b) discriminate between consumers of the same class or make
any arbitrary classification of consumers affecting their rights
under the Act

19
1
 The Consumer Protection Act, 2019 aims to provide a strong legal
framework for consumer protection and empower consumers to seek
redressal against unfair trade practices.

 The act defines a consumer as a person who buys goods or services for
personal use or for commercial purposes.

 It recognizes six basic consumer rights:

 the right to be protected against marketing of goods and services that
are hazardous to life and property,
 the right to be informed about the quality, quantity, potency, purity,
standard, and price of goods and services,
 the right to seek redressal against unfair trade practices and restrictive
trade practices,
 the right to be heard and to be assured that consumer’s interests will
receive due consideration,
 the right to consumer education, and the right to a healthy environment.
 The act establishes a CCPA to promote, protect, and enforce consumer rights.
 The CCPA has the power to investigate, recall, and impose penalties on companies
that violate consumer rights.
 the concept of product liability, which means that manufacturers, sellers, and
service providers will be held liable for any harm caused to consumers due to
defective products or services.
 Consumers can seek compensation for damages caused by such products or
services.
 The new act promotes mediation as a dispute resolution mechanism. Consumers
can approach mediation cells to resolve disputes with companies.
 The act specifically addresses issues related to e-commerce, such as misleading
advertisements, unfair trade practices, and the obligation of e-commerce
companies to provide complete and accurate information about products and
services.
 The act introduces higher penalties for manufacturers and sellers who violate
consumer rights. The penalties can range from a fine of up to Rs. Ten lakhs to
imprisonment for up to seven years.
Consumer Disputes Redressal Agencies
 Quasi-judicial bodies established under the Act to provide simple, speedy and
inexpensive redressal to the grievances of the consumers

 Established at three levels: District, State and National known as:

◦ District Consumer Disputes Redressal Commission or District Commission
◦ State Consumer Disputes Redressal Commission or State Commission
◦ National Consumer Disputes Redressal Commission or National Commission

Pecuniary jurisdiction
 District Commission: Upto 1 Crore
 State Commission: more than 1 Crore – 10 Crores
 National Commission: above 10 cr

Filing of Complaint –in District Commission local limits of jurisdiction

• Place of business or residence of opposite parties, or
• Place of business or residence of complainant, or
• where the cause of action, wholly or in part, arises
19
4
CCPA
 Power to Central Government to establish Central Consumer Protection
Authority (CCPA) to regulate matters relating to violation of rights of
Consumers, unfair trade practices and false or misleading advertisements
which are prejudicial to the interests of public and Consumer and to promote,
protect and enforce the rights of Consumer as a Class.

 Constitution of the Central Authority:

 a Chief Commissioner and such number of other Commissioner to be
appointed by the Central Government.
 shall have an Investigation Wing headed by a Director General for the purpose
of conducting inquiry or investigation.
 shall protect, promote and enforce the rights of the consumers as a class, and
prevent violation of Consumers Rights under the Act
 https://pib.gov.in/PressReleasePage.aspx?PRID=1642422

19
5
Powers of CCPA
 the Central Authority may inquire or cause an inquiry or
investigation to be made into violations of Consumer Rights,
either Suo motu or on a complaint received or on the directions
from the Central Government

 the Central Authority can also file complaints before the District
Commission, the State Commission or the National Commission
as the case may be

 A person aggrieved by any order passed by the Central Authority

may file an appeal to the National Commission within a period of
thirty days from the date of receipt of such order.

19
6
Product seller
 a person who, in the course of business, imports, sells, distributes, leases, installs,
prepares, packages, labels, markets, repairs, maintains, or otherwise is involved in
placing such product for commercial purpose and includes—
 a manufacturer who is also a product seller; or
 a service provider,

 but does not include—

 a seller of immovable property, unless such person is engaged in the sale of constructed
house or in the construction of homes or flats;
 a provider of professional services in any transaction in which, the sale or use of a
product is only incidental thereto, but furnishing of opinion, skill or services being the
essence of such transaction;
 a person who—
 acts only in a financial capacity with respect to the sale of the product
 is not a manufacturer, wholesaler, distributor, retailer, direct seller or an electronic
service provider;
 leases a product, without having a reasonable opportunity to inspect and discover
defects in the product, under a lease arrangement in which the selection, possession,
maintenance, and operation of the product are controlled by a person other than the 19
7
Product liability
 the responsibility of a product manufacturer or product seller, of any product
or service, to compensate for any harm caused to a consumer by such
defective product manufactured or sold or by deficiency in services relating
thereto;

 "product liability action“:

 a complaint filed by a person before a District Commission or State
Commission or National Commission, as the case may be, for claiming
compensation for the harm caused to him;
 "harm", in relation to a product liability includes—
 damage to any property, other than the product itself;
 personal injury, illness or death;
 mental agony or emotional distress attendant to personal injury or illness or
damage to property; or

19
8
Compensation Claim
 Who all can be liable in a product liability action:
 Manufacturer or a product service provider or a product seller,

 Grounds of claim compensation for product manufacturer:

 A product manufacturer shall be liable in a product liability action, if—
 the product contains a manufacturing defect; or
 the product is defective in design; or
 there is a deviation from manufacturing specifications; or
 the product does not conform to the express warranty; or
 the product fails to contain adequate instructions of correct usage to prevent
any harm or any warning regarding improper or incorrect usage.

19
9
Compensation claim
 A product service provider shall be liable in a product liability action, if—
 the service provided by him was faulty or imperfect or deficient
 or inadequate in quality, nature or manner of performance which is required
to be provided by or under any law for the time being in force, or pursuant to
any contract or otherwise; or
 there was an act of omission or commission or negligence or conscious
withholding any information which caused harm; or
 the service provider did not issue adequate instructions or warnings to prevent
any harm; or
 the service did not conform to express warranty or the terms and conditions of
the contract.

20
0
Compensation claim
 A product seller who is not a product manufacturer shall be liable in a product
liability action,
 if he has exercised substantial control over the designing, testing, manufacturing,
packaging or labelling of a product that caused harm; or
 he has altered or modified the product and such alteration or modification was
the substantial factor in causing the harm; or
 he has made an express warranty of a product independent of any express
warranty made by a manufacturer and such product failed to conform to the
express warranty made by the product seller which caused the harm; or
 the product has been sold by him and the identity of product manufacturer of
such product is not known, or if known, the service of notice or process or
warrant cannot be effected on him or he is not subject to the law which is in
force in India or the order, if any, passed or to be passed cannot be enforced
against him; or
 he failed to exercise reasonable care in assembling, inspecting or maintaining
such product or he did not pass on the warnings or instructions of the product
manufacturer regarding the dangers involved or proper usage of the product
while selling such product and such failure was the proximate cause of the harm.
20
1
Defence in a product liability action
 The product was misused, altered, or modified.
 A danger which is obvious or commonly known to the user or consumer of such
product or which, such user or consumer, ought to have known, taking into
account the characteristics of such product.
 The product was purchased and the product manufacturer had provided
warnings or instructions to such employer;
 The product was sold as a component of an end product and necessary warnings
or instructions were given by the product manufacturer but the harm was caused
to the complainant by use of the end product in which such component or
material was used;
 The product was legally meant to be used or dispensed only by or under the
supervision of an expert and the product manufacturer had employed
reasonable means to give the warnings or instructions for usage of such product
to such expert or class of experts; or
 The complainant, while using such product, was under the influence of alcohol or
any prescription drug which had not been prescribed by a medical practitioner

20
2
procedure for filing the complaint
 A complaint:
 Should be in writing
 Can be filed in a regular way (offline)
 Can be filed online – http://edaakhil.nic.in
 A complaint can be presented by the complainant in person or by his agent.
 It can even be sent by registered post
 Normally three copies of the complaint are required to be submitted out of
which
 one retained for the official purpose,
 one is forwarded to the opposite party and
 one is the for the complainant.
 In case the number of opposite parties is more correspondingly more copies of
the complaint are required.

20
3
Mediation
 Consumer complaint can also be resolved through mediation
 Either at the first hearing after admission, or at later stage if the District
Commission is of the view that, there exists an element of settlement, can refer
the complaint to Mediation with the consent of the parties.
 Also, parties at any stage of the complaint can opt for settlement through
mediation.
 No fee to be paid for Mediation
 No appeal lies after the settlement of dispute through mediation.

20
4
Mediation (Rules)
 Mediation Cell.---Every Mediation Cell set up in a Commission,
shall have a panel of mediators on the recommendation of a
selection committee consisting of the President and a member of
that Commission.
 Matters not to be referred to mediation.---The following matters
shall not be referred to mediation, namely:—
 (a) the matters relating to proceedings in respect of medical
negligence resulting in grievous injury or death;
 (b) matters which relate to defaults or offences for which
applications for compounding of offences have been made by one
or more parties;
 (c) cases involving serious and specific allegations of fraud,
fabrication of documents, forgery, impersonation, coercion;
 (d) cases relating to prosecution for criminal and non-
compoundable offences;

20
5
Mediation (Rules)
 Refund of fee.
 Where the Commission refers the parties to mediation, the
complainant shall be entitled to receive full amount of application
fee paid in respect of such complaint, if a settlement is reached
between such parties.
 Resort to arbitral or judicial proceedings.—The parties shall not
initiate any arbitral or judicial proceedings in respect of a matter
which is the subject-matter of the mediation and also when such
parties have expressly undertaken not to initiate any such
proceeding.
 A settlement agreement shall not be discharged by the death of any
party thereto and shall be enforceable by or against the legal
representative of the deceased party
 .

20
6
Representation
 Consumer Commissions are quasi-judicial bodies to provide simple and speedy
justice.
 These have been kept free from the complicated judicial procedures.
 The manner is quite informal and free from the shackles of the Civil Court.
 There is no need for an advocate or any other pleader and consumer can himself
or through his representative file and represent his complaint.

 Particulars to be furnished in the complaint:

 Name, description and address of the complainant;
 Name, description and address of the opposite party or parties;
 Facts relating the complaint and when and where it arose;
 Documents, if any in support of allegations

20
7
Limitation period
 The complaint shall be filed within two years from the date on which the cause of
action has arisen.
 This would mean two years from the day the deficiency in service or defect in
goods has arisen/detected.
 This is known as the limitation period for filing the complaint.

 How to make the payment of the Court fee:

 Every complaint filed before District Commission/ State Commission/ National
Commission shall be accompanied by a fee as specified, in the form of crossed
Demand Draft drawn on a nationalized bank or through a crossed Indian Postal
Order drawn in favour of the Registrar of the State Commission and payable at
the respective place where the State Commission or the National Commission is
situated.

20
8
Reliefs
 Removal of defects from the goods;
 Replacement of the goods;
 Refund of the price paid;
 Removal of defects or deficiencies in the services;
 Award of compensation for the loss or injury suffered;
 Discontinue and not to repeat unfair trade practice or restrictive trade practice;
 Withdraw hazardous goods from being offered for sale;
 To cease manufacture of hazardous goods and desist from offering services which
are hazardous in nature;
 If the loss or injury has been suffered by a large number of consumers who are
not identifiable conveniently, to pay such sum (not less than 25% of the value of
such defective goods or services provided) which shall be determined by the
Commission;
 To issue corrective advertisement to neutralize the effect of misleading
advertisement;
 To provide adequate costs to parties

20
9
Appeal
 Any consumer who is aggrieved by the order of a commission can prefer an
appeal in the higher commission within a period of thirty days from the date of
the order.
 The appeal can be preferred
 against order of the District Commission before the State Commission
 against order of the State Commission before the National Commission
 against order of the National Commission before the Supreme Court

21
0
Case Laws
 Manjeet Singh Vs. National Insurance Company Ltd. & Anr: In this case, the
appellant had purchased a second - hand truck under a Hire Purchase
agreement. The vehicle was insured by the respondent insurance company. One
day when he was driving the truck, a passenger asked him to stop the truck and
give him a lift. When he stopped the truck, the passenger brutally assaulted the
driver and fled with the vehicle. An FIR was lodged and the respondent finance
company was intimated about the theft. However, the insurance company
rejected the claim on the ground of breach of terms of the policy. The
complainant approached District Consumer Disputes Forum, State Commission
and National Commission to compensate him for the loss. All of them had
rejected the case. So, finally he approached the Supreme Court.
 Judgment: The Supreme Court held that the appellant was not at all in fault. It
can be considered as a breach of the policy, but not a fundamental breach to
bring the insurance policy to an end and terminate the insurance policy. The two
- judge bench of Supreme Court directed the respondent insurance company to
pay 75% of the insured amount along with 9% interest p.a. from the date of filing
the claim. The court also directed the insurance company to pay sum of Rs. 1, 00,
000 as compensation.
21
1
Case Laws
 Karnataka Power Transmission Corporation (KPTC) Vs. Ashok Iron Works Private Limited
 Ashok Iron Works, a private company which manufactures iron had applied for obtaining
electricity from the state’s power generation company - the Karnataka Power Transmission
Corporation (hereinafter KTPC) for commencing its iron production. Inspite of paying
charges and obtaining confirmation for the supply of 1500 KVA energy in February 1991,
the actual supply did not begin until ten months later, in November 1991. This delay
incurred a huge loss for Ashok Iron Works. This company had filed a complaint to the
Belgaum Consumer Dispute Forum and later Karnataka High Court. The legal argument by
KTPC was that the complaint was not maintainable as the consumer Protection Act 1986
excludes commercial supply of goods. It also made an argument that the company in
engaged in manufacturing iron and intended to use it for commercial consumption which
is excluded under the Act. He also said that, the complainant is not a `person’
under Section 2(1)(m) of the Act, 1986.
 Judgment: In this case, Supreme Court gave his rulings. The Supreme Court mentioned the
General Clause Act that includes a private company within the purview of the definition of
a “Person.” It was also held that the supply of electricity by the KPTC to a consumer would
be covered under Section 2(1)(o) being ‘service.’ Also, if the electrical energy consumer is
not provided to a consumer in time as is agreed upon, then under Section (2)(1)(g), then
there can be a case for deficiency in service. Therefore, the clause stating “supply” of
goods for commercial purpose would not be applied. The Supreme Court sent this case
back to District Forum for retrial on these grounds. 21
2
 https://youtu.be/kbNSS-DJSGs
 https://
www.youtube.com/watch?v=eyPqLidvu7I
https://consumeraffairs.nic.in/sites/de
fault/files/file-uploads/latestnews/FA
Q.pdf
IPR Laws in India
Intellectual Property Rights in India
 Legal rights governing the use of creations of the human mind

 The laws which recognize and protect the rights

◦ The Trade Marks Act, 1999,
◦ The Copyright Act, 1957
◦ The Patent Act, 1970 (amended by Amendment Acts of 1999 and 2002
and 2005)
◦ The Designs Act of 2000
◦ The following laws have been enacted to protect newly recognized
species of intellectual property in India:
◦ The Geographical Indications of Goods (Registration and protection)
Act, 1999
◦ The Semiconductor Integrated Circuits Layout Design Act, 2000
◦ The Protection of Plants & Varieties and Farmers Rights Act, 2001;
◦ The Biological Diversity Act, 2002


21
6
Trade Mark
 Protection to owner of mark by ensuring exclusive right to use it,
 or to authorize another to use the same in return for payment
 promote initiative by rewarding owners with recognition and
financial profit
 hinders the efforts of unfair competitors, such as
◦ counterfeiters
◦ use similar distinctive signs to market
◦ inferior or different products or services.
 visual symbol which may be
◦ a word to indicate the source of the goods or service
◦ a signature, name, device, label, numerals
◦ combination of colours used
◦ other articles of commerce to distinguish it from other similar goods
or services

21
7
Example of Trade Marks
image source:
https://www.google.com/url?sa=i&url=https%3A%2F%2Fsiteproxy.ruqli.workers.dev%3A443%2Fhttps%2Fblog.ipleaders.in%2Ftrademark-law-in-india
%2F&psig=AOvVaw2PBVg3i_SnQpB_rHeQC5C4&ust=1617519341321000&source=images&cd=vfe&ved=2ahUKEwi2uqmfv-HvAhWdnUsFHRIFCxsQr4kDegUIARC2AQ
 Protection to owner of mark by ensuring exclusive right to use it,
 or to authorize another to use the same in return for payment
 promote initiative by rewarding owners with recognition and
financial profit
 hinders the efforts of unfair competitors, such as
◦ counterfeiters
◦ use similar distinctive signs to market
◦ inferior or different products or services.
 visual symbol which may be
◦ a word to indicate the source of the goods or service
◦ a signature, name, device, label, numerals
◦ combination of colours used
◦ other articles of commerce to distinguish it from other similar goods
or services

21
8
Object of trade mark law

 As explained by the Supreme Court in Dau Dayal v. State of Utttar

Pradesh AIR 1959 SC 433:
 “The object of trade mark law is to protect the rights of persons
who manufacture and sell goods with distinct trade marks against
invasion by other persons passing off their goods fraudulently
and with counterfeit trade marks as those of the manufacturers.
 Normally, the remedy for such infringement will be by action in
Civil Courts.
 But in view of the delay which is incidental to civil proceedings
and the great injustice which might result if the rights of
manufacturers are not promptly protected, the law gives them the
right to take the matter before the Criminal Courts, and
prosecute the offenders, so as to enable them to effectively and
speedily vindicate their rights”.

21
9
Definition under Trade Marks Act
 A trade mark is a word, phrase, symbol or design, or combination
of words, phrases, symbols or designs used in the course of
trade which identifies and distinguishes the source of the goods
or services of one enterprise from those of others

 “Mark” includes a device, brand, heading, label, ticket, name,

signature, word, letter, numeral, shape of goods, packaging or
combination of colours or any combination thereof”

 Being an inclusive definition it will thus include any mark within

the definition of trade mark so long as the mark is
◦ capable of being represented graphically;
◦ capable of distinguishing the goods or services of one person from
those of others.
◦ https://
www.theipmatters.com/post/colgate-palmolive-india-ltd-anr-v-anchor-health-and-be
auty-care-pvt-ltd
22
0
Service Mark
 A service mark is the same as a trade mark except that
it identifies and distinguishes the source of a service
rather than a product

 Normally, a mark for goods appears on the product or

on its packaging, while a service mark appears in
advertising for the services

22
1
Trade Description
 any description, statement or other indication, direct or indirect :
 (i) as to the number, quantity, measure, gauge or weight of any
goods; or
 (ii) as to the standard of quality of any goods or services
according to a classification commonly used or recognized in the
trade; or
 (iii) as to fitness for the purpose, strength, performance or
behaviour of any goods, being “drug”, as defined in the Drugs
and Cosmetics Act, 1940 or “food”, as defined in the Prevention
of Food Adulteration Act, 1954; or
 (iv) as to the place or country in which or the time at which any
goods or services were made, produced or provided, as the case
may be; or
 (v) as to the name and address or other indication of the identity
of the manufacturer or of the person providing the services or of
the person for whom the goods are manufactured or services are
provided; or
22
2
Trade Description
 (vi) as to the mode of manufacture or producing any goods or
providing services; or
 (vii) as to the material of which any goods are composed; or
 (viii) as to any goods being the subject of an existing patent,
privilege or copyright, and includes –
 (a) any description as to the use of any mark which according to
the custom of the trade is commonly taken to be an indication of
any of the above matters;
 (b) the description as to any imported goods contained in any bill
of entry or shipping bill;
 (c) any other description which is likely to be misunderstood or
mistaken for all or any of the said matters;

22
3
REGISTRATION OF TRADE MARKS
 The process whereby a trade mark is entered on the
register of the trade marks is referred to as
registration.

 Any person, claiming to be the proprietor of a trade

mark used or proposed to be used by him, can apply
for registration of a trade mark to the Trade Mark
Registry

 In case of a company about to be formed, anyone may

apply in his name for subsequent assignment of the
registration in the company's favour.

22
4
Registration Procedure & Search
 The registration procedure in India is based on the ‘first to file’
system.
 It is therefore important that the rights holder applies for the
registration of its mark as soon as possible.
 The registration of a trade mark in India typically takes about 2 to
3 years, subject to the trade mark not being opposed by a third
party.

 Trade Mark Search Before making an application for registration,

 it is prudent to make an inspection of the already registered trade
marks to ensure that registration may not be denied in view of
resemblance of the proposed mark to an existing one or
prohibited one.

22
5
Who May Apply for Trade Mark
 Any person “claiming to be the proprietor” of the trade mark
‘used’ or ‘proposed to be used’ by him may make an application
in the prescribed manner for registration of his trade mark.
 “Any person” is wide enough to include any individual, company,
or association of persons or body of individuals, society, HUF,
partnership firm, whether registered or not, Government, trust
etc. [
 A company may make an application for registration of a trade
mark in its own corporate name.
 A partnership firm shall make the application in the names of all
trading within the firm partner.

22
6
Filing and Prosecuting Trade Mark
Applications
 An application for registration of a trade mark may be made on
Prescribed Form with prescribed fee as provided in Schedule – I of
Trade Mark Rules, 2017

 Furthermore, trade mark applications can be filed electronically

through the website www.ipindiaonline.gov.in

 https://youtu.be/W9_oCnFvj8o

22
7
Review by the Trade Marks Office
 After the application has been filed, the Trade Marks Office
reviews it to ensure that it is complete in all respects and
thereafter allots an application number to the applications.
 If the trade mark is registered, the application number becomes
the registration number.
 Preliminary Approval and Publication, Show Cause Hearing or
Rejection of the Application During the process of examination,
the Trade Marks Office determines if the trade mark is barred for
registration either under absolute grounds for refusal and/or
relative grounds for refusal as prescribed in the Trade Marks Act,
1999.
 Accordingly, they issue an examination report and the Applicant
must respond to the objections that have been raised in the
examination report within a period of one month from the
issuance of the examination report.

22
8
Review by the Trade Marks Office
 Thereafter and based on the response to the examination report
that has been filed by the Applicant,
 the Registrar of Trade Marks determines if the application should
be refused, accepted for advertisement, accepted subject to
certain limitations or put up for a “show cause” hearing,
 Should the application be rejected, the Applicant can approach
the Intellectual Property Appellate Board to appeal the order of
the Registrar of Trade Marks.

22
9
Duration and Renewal of Trade Mark
Registration
 Trade mark protection in India is perpetual subject to renewal of
the registration after every 10 years.
 The application for renewal can be filed six months before the
expiry of the validity period of the trade mark.
 Section 25 of the Act allows registration of a trade mark for a
period of 10 years.
 In keeping with the generally accepted international practice and
to reduce the work-load of the Trade Marks Office, Section 25
allows renewal of registration for successive periods of 10 years,
from the date of the original registration or the last renewal.
 Should the rights holder of a trade mark come across a trade
mark that is deceptively similar to their mark and which has been
published in the Trade Marks Journal, they can oppose the
impugned mark within three months of the publication of the
journal.

23
0
OPPOSITION TO REGISTRATION
 Any person may give a Notice of Opposition to the application for
registration of a trade mark whether he has or has not any
commercial or personal interest in the matter.
 The person need not be a prior registered trade mark owner.
 He can be a customer, a purchaser or member of the public likely
to use the goods.
 The question of bona fides of the opponent does not arise.
 Essential requirements for filing Notice of Opposition:
 The Notice of Opposition should contain
 (a) in respect of an application against which opposition is
entered-
 (i) the application number against which opposition is entered;
 (ii) an indication of the goods or services listed in the trade mark
application against which opposition is entered; and
 (iii) the name of the applicant for the trade mark
23
1
 in respect of the opposing party-
 (i) where the opposition is entered by the proprietor of the earlier
mark or of the earlier right, his name and address and an
indication that he is the proprietor of such mark or right;
 (ii) where opposition is entered by a licensee not being a
registered user, the name of the licensee and his address and an
indication that he has been authorized to enter the opposition.
 (iii) where the opposition is entered by the successor in title to
the registered proprietor of a trade mark who has not yet been
registered as new proprietor, an indication to that effect, the
name and address of the opposing party and an indication of the
date on which the application for registration of the new
proprietor was received by the appropriate office or, where this
information is not available, was sent to the appropriate office;
and
 (iv) where the opposing party has no place of business in India,
the name of the opponents and his address for service in India.
23
2
Grounds of Opposition
 The opponent is at liberty to set up any ground which may
support his opposition against the registration of the trade mark
under any of the provisions of the Trade Marks Act, 1999 and the
Rules prescribed there under.
 However, under section 11(5), a trade mark shall not be refused
registration unless objection on any one or more of those
grounds is raised in opposition proceedings by the proprietor of
the earlier trade mark.

23
3
list of possible grounds for opposition
 That the trade mark advertised is not registrable in that it is
neither distinctive nor capable of distinguishing or that it does
not satisfy the requirements of the Act as to registrability;

 The essential part of the said trade mark is a word in ordinary

use, descriptive of the character or quality of the goods and the
applicant is not entitled to acquire an exclusive right therein by
registration;

 That the trade mark is not capable of being represented

graphically;

 That the trade mark is devoid of distinctive character, that is to

say, not capable of distinguishing the goods, or services of one
person from those of another person;

23
4
list of possible grounds for opposition
 That the trade mark consists exclusively of marks or indications
which have become in the current language or in the bona fide
and established practice of the trade (may refer to generic names
or marks common to the trade);

 That the trade mark is of such a nature as to deceive the public

or cause confusion

 That the trade mark contains or comprises of any matter likely to

hurt the religious susceptibilities of any class or section of the
citizens of India

 That the trade mark comprises or contains scandalous or

obscene matter;

23
5
list of possible grounds for opposition
 That the trade mark is:
 (a) identical with or similar to an earlier trade mark, and
 (b) to be registered for goods or services which are not similar to
those for which the earlier trade mark is registered in the name of a
different proprietor, and the earlier trade mark is a well known
trade mark in India and the use of the later mark without due cause
would take unfair advantage of or be detrimental to the distinctive
character or repute of the earlier trade mark;

 That the use of the applicant’s mark would be an infringement of

the opponent’s registration which could be restrained

 That the user claimed in the application for registration is not true;

23
6
Case Law
 In Ambalal Sarbhai Enterprises Limited v. Tata Oil Mills Company
Limited 1988 OTC 73 Bom, it was held that the word PROMIX was
distinctive

 The Court held that even though there are many trade marks in the
register with the prefix PRO which is common to the trade,

 the applicants have particularly coined the word PROMIX and the
same was not known earlier


 Applicants are the proprietors of a series of trade marks having

prefixed PRO as a leading distinguishing feature

 Their trade mark is distinctive and so can be registered under the

Act.

23
7
 (Anglo-French Drug Co. v. Brihans Laboratories, 1995 IPLR 7).

 The medical preparations sold at the prescription by doctors and

supplied by qualified pharmacists have been considered a special
case for determining deceptive similarity

 The test was not of the ordinary customers but whether the
pharmacists or doctors would be confused.

 Therefore, in the field of drugs and chemicals, the names with

small variations are allowed

23
8
RIGHTS CONFERRED BY REGISTRATION
 The registration of a trade mark confers on the registered
 While registration of a trade mark is not compulsory, it offers
better legal protection for an action for infringement

 As per Section 17 of the Act, the registration of a trade mark

confers the following rights on the registered proprietor:
◦ confers on registered proprietor the exclusive right to the use of the trade mark in
relation to the goods or services in respect of which the trade mark is registered.
◦ If the trade mark consists of several matters, there is an exclusive right to the use
of the trade mark taken as a whole. If the trade mark contains matter common to
trade or is not of a distinctive character, there shall be no exclusive right in such
parts.
◦ entitles the registered proprietor to obtain relief in respect of infringement in the
manner provided by the Act, when a similar mark is used on (a) same goods or
services, (b) similar goods or services, (c) in respect of dissimilar goods or
services.
◦ (iv) Registration of a trade mark forbids every other person (except the registered
or unregistered permitted user) to use or to obtain the registration of the same
trade mark or a confusingly similar mark in relation to the same goods or services
or the same description of goods or services in relation to which the trade mark is
registered.
23
9
◦ After registration of the trade mark for goods or services, there shall not be
registered the same or confusingly similar trade mark not only for the same goods
or services but also in respect of similar goods or services by virtue of Section
11(1) of Trade Marks Act, 1999.
◦ Moreover, after registration of the trade mark for goods or services, there shall
not be registered the same or confusingly similar trade mark even in respect of
dissimilar goods or services by virtue of Section 11(2) in case of well-known trade
marks.
◦ Registered trade mark shall not be used by any one else in business papers and in
advertising. Use in comparative advertising should not take undue advantage of
the trade mark. Such advertising should not be contrary to honest practices in
industrial or commercial matters. The advertising should not be detrimental to the
distinctive character or reputation of the trade mark.
◦ There is a right to restrict the import of goods or services marked with a trade
mark similar to one’s trade mark.
◦ There is a right to restrain use of the trade mark as trade name or part of trade
name or name of business concern dealing in the same goods or services.
◦ The registered trade mark continues to enjoy all the rights which vest in an
unregistered trade mark.
◦ By registration the proprietor of an unregistered trade mark is converted into
proprietor of the registered trade mark.

24
0
INFRINGEMENT OF REGISTERED TRADE MARKS
 Infringement, very broadly means
◦ taking unfair advantage or being detrimental to the distinctive character
or reputation of a trade mark.
 when a registered trade mark is used by a person who is not
entitled to use such a trade mark under the law, it constitutes
infringement.
 a registered trade mark is infringed, if
◦ the mark is identical and is used in respect of similar goods or services;
or
◦ the mark is deceptively similar to the registered trade mark and there is
an identity or similarity of the goods or services covered by the trade
mark; or
◦ the trade mark is identical and is used in relation to identical goods or
services; and that such use is likely to cause confusion on the part of the
public or is likely to be taken to have an association with the registered
trade mark.

24
1
 a person shall be deemed to have infringed a registered trade
mark, if he uses a mark which is identical with or similar to the
trade mark, and is used in relation to goods or services which are
not similar to those for which trade mark is registered; and
 the registered trade mark has a reputation in India and the use of
the mark without due cause would take unfair advantage of or is
detrimental to the distinctive character or repute of the registered
trade mark.

 Sub-section (5) prohibits a person from using someone else’s trade

mark, as his trade name or name of his business concern or part of
the name of his business concern dealing with goods or services in
respect of which trade mark is registered.

24
2
 A person shall be deemed to have used a registered trade mark in
circumstances which include affixing the mark to goods or
packaging, offering or exposing the goods for sale or supply of
services, importing or exporting the goods, using the trade mark as
trade name or trade mark on business paper or in advertising

 A person shall also be deemed to have infringed a registered trade

mark if he applies such registered trade mark to a material intented
to be used for labelling or packaging goods as a business paper, or
 for advertising goods or services knowing that the application of
such mark is not authorised by the proprietor or licensee.

 Advertising of a trade mark to take unfair advantage of, or against

the honest industrial or commercial practices or which is
detrimental to the distinctive character or is against the reputation
of the trade mark shall constitute an infringement under Section
29(8) of the Act.

24
3
Statutory remedy
 An infringement action is available to the registered proprietor or
registered user to enforce his exclusive right over the trade mark in
relation to the goods in respect of which it is registered.
 If at the time of registration of trade mark, certain limitations or
conditions have been imposed, then, the exclusive right has to be
evaluated within the terms of such registration.
 In M/s J K Oil Mills v. M/s Adani Wilmar Ltd., 2010 (42) PTC 639
(Del.), the Delhi High Court held that in order to constitute
infringement under the provisions of Section 29 of the Trade Marks
Act, it would be necessary to show that impugned trade mark
(label) is identical or deceptively similar to the registered trade
mark.
 And once the plaintiff is able to establish that the impugned trade
mark (label) is identical or deceptively similar to the registered
trade mark (label) then, it matters little whether the defendant is
using the impugned mark/label in respect of the goods and
services which are not similar to those in respect of which the trade
mark is registered.
24
4
ASSIGNMENT AND TRANSMISSION
 “assignment” as assignment in writing by act of the parties
concerned.
 transmission” means transmission by operation of law, devaluation
on the personal representative of a deceased person and any other
mode of transfer, not being assignment.
 Assignment of trade mark involves transfer of ownership of the
trade mark to another person or entity.
 Section 37 entitles the registered proprietor of a trade mark to
assign the trade mark and to give effectual receipts for any
consideration for such assignment.
 Under the new Act, a registered trade mark is assignable and
transmissible whether with or without goodwill of the business
either in respect of all goods or services or part thereof.
 The assignment or transmission of trade mark has been prohibited
under Section 40, where multiple exclusive rights would be created
in more than one person in relation to same goods or services;
same description of goods or services; or goods or services or
description of goods or services associated with each other, the use
of such trade marks would be likely to deceive or cause confusion 24
5
Relief in Suits for Infringement/Passing Off Civil Litigation

 A suit can be initiated either under the law of passing off or for
infringement under the Trade Marks Act, 1999 depending on
whether the trade mark is unregistered, pending registration or
registered respectively

 Jurisdiction and Venue: The suit for passing off and/or

infringement can be initiated either in the District Court or in the
High Court depending on the valuation of the suit


 The suit can be at the place where the rights holder or one of the
rights holders actually and voluntarily reside or work for gain or
carries on business

24
6
Relief in Suits for Infringement/Passing Off Civil Litigation

 Elements of the Complaint: In the complaint, the rights holder is

required to demonstrate that
 (a) the alleged infringing act involves a mark that is identical or
similar to a trade mark of the rights holder;
 (b) the infringing representation of a trade mark is being used in
connection with goods or services and might lead to confusion in
public regarding the origin of the infringing goods/services;
 (c) the unlawful act interfered with the trade mark holder's rights of
exclusive use or caused the rights holder economic loss.
 Section 135 expressly stipulates that the relief which a Court may
grant in any suit for infringement or for passing off referred to in
Section 134 includes injunction (subject to such terms, if any, as
the court thinks fit) and at the option of the plaintiff, either
damages or an account of profits, together with or without any
order for the delivery up of the infringing labels and marks for
destruction or erasure.

24
7
Case Laws

https://spicyip.com/2016/08/a-case-study-which-deals-w
ith-trademark-infringement-aditya-birla-nuvo-limited-v-
ms-r-s-sales-corporation-anr.html
 The Coca Cola Co. v. Bisleri International Pvt.
Ltd. (Manu/DE/2698/2009)
 Bisleri, which originally owned the trademark of mango drink
MAAZA, sold it to Coca Cola in India.
 Bisleri later applied for registration of MAAZA trademark in Turkey
and started to export the mango drink with the trademark of
MAAZA.
 Coca Cola approached the Indian courts asking for an injunction
along with damages against Bisleri for infringement of its
trademark MAAZA as well as to restrain Bisleri from divulging the
formulation of the drink.
 Coca Cola succeeded in obtaining a temporary injunction against
Bisleri for infringement of the trademark.

24
8
Case Laws
 M/S Castrol Limited & Anr. v. Iqbal Singh Chawla & Anr. [CS (OS)
4/2011]
 The Plaintiff is the owner of the trademark ‘CASTROL’ and ‘ACTIV’.
 The Plaintiff found out in 2010 that the Defendant had been selling
4T oil under the ‘LUMAX ACTIVE’ trademark.
 The Plaintiff also alleged that the trade dress of its products,
including the layout and the font, was being imitated by the
Defendant.
 The Delhi High Court granted a permanent injunction against the
Defendant for preventing the use of trademark ‘ACTIVE’ in a
manner that resembled the packaging and font of the Plaintiff’s
products.
 However, the Court clarified that the injunction would not restrain
the Defendant from using their mark ‘ACTIVE’ in different
packaging, font, and trade dress than that of the Plaintiff.

24
9
Case Laws
 Cadbury India Limited and Ors. v. Neeraj Food Products [142 (2007)
DLT 724]
 The Plaintiff is a well-known producer and manufacturer of
chocolates and confections and has a trademark ‘GEMS’ registered
in its name.
 The Plaintiff approached the court for an injunction against the
Defendant who was allegedly selling a product under the mark
‘JAMES BOND’ which resembled the ‘GEMS’ product of the Plaintiff
in packaging and size.
 The Plaintiff claimed that the product sold with mark of ‘JAMES
BOND’ was deceptively similar to ‘GEMS’.
 The court held that the products of the Defendant were indeed
deceptively similar to that of the Plaintiff and granted an injunction
restraining the Defendant from selling the said product.

25
0
Ex-parte Interim Injunction
 Most Indian Courts will grant ex-parte interim injunctions.
 Ex-parte interim injunction is a temporary injunction granted
without any notice to the infringer restraining him from using the
infringing mark during the pendency of the trial.
 This injunction is normally granted at the early stages of the trial
and many a times on the first date of hearing itself, provided that
the rights holder is able to establish its rights before the Court and
prove the gravity of the offence, merits immediate consideration.
 An interlocutory order for any of the following mattes can also be
passed, namely:—
 (a) for discovery of documents;
 (b) preserving of infringing goods, documents or other evidence
which are related to the subject-matter of the suit;
 (c) restraining the defendant from disposing of or dealing with his
assets in a manner which may adversely affect plaintiff’s ability to
recover damages, costs or other pecuniary remedies which may be
finally awarded to the plaintiff.
25
1
 The distinction between a suit based on infringement and that
based on passing off was explained by the Supreme Court in
Kaviraj Pandit Durga Dutt Sharma v. Navaratna Pharmaceutical
Laboratories, AIR 1965 SC 980.
 It was explained that "while an action for passing off is a common
law remedy being in substance an action for deceit, that is, a
passing off by a person of his own goods as those of another, that
is not the gist of an action for infringement.
 The action for infringement is a statutory remedy conferred on the
registered proprietor of a registered trade mark for the vindication
of the 'exclusive right to the use of the trade mark in relation to
those goods'.
 The use by the defendant of the trade mark of the plaintiff is not
essential in an action for passing off, but is the sine qua non in the
case of an action for infringement."

25
2
Copyright
Copyright
 Copyright is a right given by the law to creators of literary,
dramatic, musical and artistic works and producers of
cinematograph films and sound recordings

 Unlike the case with patents, copyright protects the expressions

and not the ideas

 There is no copyright in an idea

 https://indiankanoon.org/docfragment/1734007/?
formInput=copyright%20cases
 https://
www.legalserviceindia.com/legal/article-8110-main-findings-in-r-
g-anand-v-deluxe-films-1978-sc-and-its-relevance-today.html

 Just as you would want to protect anything that you own, creators
want to protect their works.
25
4
Copyright
 The protection provided by copyright to the efforts of writers,
artists, designers, dramatists, musicians, architects and producers
of sound recordings, cinematograph films and computer software,
creates an atmosphere conducive to creativity, which induces them
to create more and motivates others to create

 Creativity being the keystone of progress, no civilized society can

afford to ignore the basic requirement of encouraging the same


 Economic and social development of a society is dependent on

creativity.

25
5
MEANING AND RIGHTS CONFERRED
 Copyright is a right given by the law to creators of literary,
dramatic, musical and artistic works and producers of
cinematograph films and sound recordings
 In fact, it is a bundle of rights including, inter alia, rights of
reproduction, communication to the public, adaptation and
translation of the work.
 It means the sole right to produce or reproduce the work or any
substantial part thereof in any material form whatsoever (Kartar
Singh Giani v. Ladha Singh & Others AIR 1934 Lah 777).
 Section 14 of the Act defines the term Copyright as to mean the
exclusive right to do or authorise the doing of the following acts in
respect of a work or any substantial part thereof, namely

25
6
 In the case of literary, dramatic or musical work (except computer
programme):
 (i) reproducing the work in any material form which includes
storing of it in any medium by electronic means;
 (ii) issuing copies of the work to the public which are not already in
circulation;
 (iii) performing the work in public or communicating it to the
public;
 (iv) making any cinematograph film or sound recording in respect
of the work; making any translation or adaptation of the work.
 Further any of the above mentioned acts in relation to work can be
done in the case of translation or adaptation of the work. In the
case of a computer programme:
 (i) to do any of the acts specified in respect of a literary, dramatic
or musical work; and
 (ii) to sell or give on commercial rental or offer for sale or for
commercial rental any copy of the computer programme.
25
7
 However, such commercial rental does not apply in respect of
computer programmes where the programme itself is not the
essential object of the rental.

 In the case of an artistic work:

 (i) reproducing the work in any material form including depiction in
three dimensions of a two dimensional work or in two dimensions
of a three dimensional work;
 (ii) communicating the work to the public;
 (iii) issuing copies of work to the public which are not already in
existence;
 (iv) including work in any cinematograph film; making adaptation of
the work, and to do any of the above acts in relation to an
adaptation of the work.
 .

25
8
 In the case of cinematograph film and sound recording:
 (i) making a copy of the film including a photograph of any image
or making any other sound recording embodying it;
 (ii) selling or giving on hire or offer for sale or hire any copy of the
film/sound recording even if such copy has been sold or given on
hire on earlier occasions; and
 (iii) communicating the film/sound recording to the public.

 In the case of a sound recording: •

 To make any other sound recording embodying it •
 To sell or give on hire, or offer for sale or hire, any copy of the
sound recording •
 To communicate the sound recording to the public.

25
9
Objective
 The main objective of the Act is to give protection to the owner of
the copyright from the dishonest manufacturers, who try to confuse
public and make them believe that the infringed products are the
products of the owner.

 Further, it wants to discourage the dishonest manufacturers from

enchasing the goodwill of the owner of the copyright, who has
established itself in the market with its own efforts [Hawkins
Cookers Ltd. v. Magicook Appliances Co., 00(2002) DLT698].

26
0
Nature of Copyright Protection

 Automatic
 Copyright is an unregistered right which subsists automatically as
soon as the work that is eligible for protection is created and
recorded on some medium.
 Originality The work protected need not be new.
 However, it must be original in the sense that it is not copied from
some other source but is the result of an application of effort by
the creator of the work.

 Exclusions
 Copyright protects the expression of ideas but not the idea or
concept underlying a piece of work.
 For that reason, procedures, methods of operation and
mathematical concepts are excluded from copyright protection

26
1
Works in which Copyright Subsists
 Section 13 of the Copyright Act provides that copyright shall
subsist throughout India in certain classes of works which are
enumerated in the section.
 Copyright subsists throughout India in the following classes of
works:
 Original literary, dramatic, musical and artistic works;
 Cinematograph films; and
 Sound recordings.
 In Macmillan and Company Limited v. K. and J. Cooper, AIR 1924 PC
75, it was held that the word ‘original’ does not mean that the work
must be the expression of original or inventive thought. Copyright
Acts are not concerned with the origin of ideas, but with the
expression of thought; and in the case of ‘literary work, with the
expression of thought in print or writing. The originality which is
required relates to the expression of the thought; but the Act does
not require that the expression must be in an original or novel
form, but that the work must not be copied

26
2
COPYRIGHT PERTAINING TO SOFTWARE
 The definition of ”Literary wok” under section 2 (o) of the Copy
right Act, 1957 includes computer programmes, tables and
compilations including computer "literary data bases.

 Computer programme as stated above was included within the

definition of "literary work" in 1984 and
 the new definition of "computer programme" under Section 2 (ffc)
introduced in 1994 means a set of instructions expressed in words,
codes or in any other form, including a machine-readable medium,
capable of causing a computer to perform a particular task or
achieve a particular result

26
3
AUTHORSHIP AND OWNERSHIP
 Copyright protects the rights of authors, i.e., creators of intellectual
property in the form of literary, musical, dramatic and artistic works
and cinematograph films and sound recordings.
 Generally the author is the first owner of copyright in a work.

 “Author” as per Section 2(d) of the Act means •

 In the case of a literary or dramatic work the author, i.e., the
person who creates the work.
 In the case of a musical work, the composer.
 In the case of a cinematograph film, the producer.
 In the case of a sound recording, the producer.
 In the case of a photograph, the photographer.
 In the case of any literary, dramatic, musical or artistic work which
is computer-generated, the person who causes the work to be
created.

26
4
 In a musical sound recording there are many right holders. For
example, the lyricist who wrote the lyrics, the composer who set
the music, the singer who sang the song, the musician (s) who
performed the background music, and the person or company who
produced the sound recording.
 A sound recording generally comprises various rights. It is
necessary to obtain the licences from each and every right owner in
the sound recording.
 This would, inter alia, include the producer of the sound recording,
the lyricist who wrote the lyrics, and the musician who composed
the music.
 In the case of a government work, government shall, in the absence
of any agreement to the contrary, be the first owner of the
copyright therein. in.

26
5
 In the case of a work made or first published by or under the
direction or control of any public undertaking, such public
undertaking shall, in the absence of any agreement to the contrary,
be the first owner of the copyright therein.
 In the case of a literary, dramatic or artistic work made by the
author in the course of his employment by the proprietor of a
newspaper, magazine or similar periodical under a contract of
service or apprenticeship, for the purpose of publication in a
newspaper, magazine or similar periodical, the said proprietor
shall, in the absence of any agreement to the contrary, be the first
owner of the copyright in the work
 In the case of a work made in the course of the author’s
employment under a contract of service or apprenticeship, the
employer shall, in the absence of any agreement to the contrary, be
the first owner of the copyright therein.
 In the case of a photograph taken, or a painting or portrait drawn,
or an engraving or a cinematograph film made, for valuable
consideration at the instance of any person, such person shall, in
the absence of any agreement to the contrary, be the first owner of26
6
Term of Copyright

 Sections 22 to 29 deal with term of copyright in respect of

published literary, dramatic, musical and artistic works; anonymous
and pseudonymous; posthumous, photographs, cinematograph
films, sound recording, Government works, works of PSUs and
works of international organizations.
 Literary, dramatic, musical or artistic works enjoy copyright
protection for the life time of the author plus 60 years beyond i.e.
60 years after his death.
 In the case of joint authorship which implies collaboration of two or
more authors in the production of the work, the term of copyright
is to be construed as a reference to the author who dies last.
 In the case of copyright in posthumous, anonymous and
pseudonymous works, photographs, cinematograph films, sound
recordings, works of Government, public undertaking and
international organizations, the term of protection is 60 years from
the beginning of the calendar year next following the year in which
the work has been first published
26
7
 The Copyright (Amendment) Act, 1994 has given special right to
every broadcasting organisation known as broadcast reproduction
right in respect of its broadcasts.
 This right is to be enjoyed by every broadcasting organisation for a
period of twenty-five years from the beginning of the calendar year
next following the year in which the broadcast is made.
 In terms of Copyright (Amendment) Act, 1999 if any performer
appears or engages in any performance, he has a special right in
relation to such performance called performers right to be enjoyed
for a period of fifty years.

 COPYRIGHT OFFICE Section 9 of the Copyright Act requires for

establishment of an office to be called the Copyright Office for the
purpose of the Act.
 The Copyright Office is to be under the immediate control of a
Registrar of Copyrights to be appointed by the Central Government,
who would act under the superintendence and directions of the
Central Government
26
8
Assignment of Copyright
 The owner of the copyright in an existing work or the prospective
owner of the copyright in a future work may assign to any person
the copyright
 Section 18 of the Copyright Act provides for the assignment of
copyright in an existing work as well as future work.
 In both the cases an assignment may be made of the copyright
either wholly or partially and generally or subject to limitations and
that too for the whole period of copyright or part thereof.
 However, in case of assignment of copyright in any future work, the
assignment has the real effect only when the work comes into
existence.
 Section 18(3) explains that a assignee in respect of assignment of
the copyright in future work include the legal representative of the
assignee, if the assignee dies before the work comes into
existence.

26
9
Mode of Assignment
 Section 19 of the Act provides that an assignment of copyright should be in
writing signed by the owner of the copyright.
 Mere acceptance of remuneration or delivery of manuscript does not
constitute an assignment of copyright.
 Oral assignment is invalid and it is impermissible in law. Setty v. Dr.
Suryakantha U. Kamath K.A. Venugopala Setty v. Dr. Suryakantha U. Kamath
AIR 1992 Kar 1.
 Section 19 requires that the assignment should be in writing signed by the
assignor or by his duly authorized agent—if the assignment appears from
any document and it is signed by the assignor or by his authorized agent
the statutory requirement is fulfilled.
 The assignment of copyright should specify the assigned work, rights
including duration, territorial extent of assignment and the amount of
royalty.
 However, in the absence of duration and territorial extent, the assignment
remains valid for a period of five years and within the territory of India.
 In case assignee does not exercise his rights within a period of one year
from the date of assignment, the assignment in respect of such rights shall
be deemed to have lapsed after the expiry of said period, unless otherwise
specified in the assignment.
27
0
Licences by Owners of Copyright
 Section 30 of the Act empowers the owner of the copyright in any
existing work or the prospective owner of the copyright in any
future work to grant any interest in the right by licence in writing
by him or by his duly authorised agent.
 However, in the case of a licence relating to copyright in any future
work, the licence shall take effect only when the work comes into
existence.
 Explanation to this section clarifies that where a person to whom a
licence relating to copyright in any future work is granted, dies
before the work comes into existence, his legal representatives
shall, in the absence of any provision to the contrary in the licence,
be entitled to the benefit of the licence.

27
1
Registration of Copyright
 Chapter X of the Act containing Sections 44 to 50A deal with various
aspects of registration of copyright.
 The mechanism for registration of copyright has been contemplated under
Section 44 of the Act.
 It is evident from the provisions of the aforesaid section that registration of
the work under the Copyright Act is not compulsory and is not a condition
precedent for maintaining a suit for damages, if somebody infringes the
copyright.
 Registration is not a prerequisite for acquisition of a copyright (Nav Sahitya
Prakash & Others v. Anan Kumar & Others AIR 1981 All 200).
 Sections 44 and 45 of the Act is only an enabling provision and the
provisions contained therein do not affect common law right to sue for
infringement of the copyright, therefore, registration of the work under the
Act is not compulsory and that registration is not a condition precedent for
maintaining a suit for damages for infringement of copyright (R. Madhavan
v. S K Nayar AIR 1988 Ker 39).
 The only effect of registration is what is stated in Section 48, to wit, that it
shall be prima facie evidence of the particulars entered in the register.

27
2
INFRINGEMENT OF COPYRIGHT
 Copyright protection gives exclusive rights to the owners of the
work to reproduce the work enabling them to derive financial
benefits by exercising such rights.
 If any person without authorisation from the owner exercises these
rights in respect of the work which has copyright protection it
constitutes an infringement of the copyright.
 If the reproduction of the work is carried out after the expiry of the
copyright term it will not amount to an infringement
 In Penguin Books Ltd., England v. M/s India Book Distributors &
Others AIR 1985 Del. 29, it was observed that whenever there is
misappropriation of intellectual property of which the primary
beneficiary is the copyright owner there is infringement of
copyright.
 Copyright is a property right. Throughout the world it is regarded
as a form of property worthy of special protection in the ultimate
public interest.

27
3
 Section 51 of the Act contemplates situations where copyright in a
work shall be deemed to be infringed.
 As per this section copyright in a work is infringed when any
person without a licence granted by the owner of the copyright or
the Registrar of Copyright or in contravention of the conditions of a
licence so granted or of any condition imposed by a competent
authority does —
 (1) anything for which the exclusive right is conferred upon the
owner of the copyright, or
 (2) permits for profit any place to be used for the communication of
the work to public where such a communication constitutes an
infringement of the copyright in the work, unless he was not aware
and had no reasonable ground for believing that such
communication would be an infringement of copyright.

27
4
 (3) when any person
 (i) makes for sale or hire or lets for hire or by way of trade display
or offers for sale or hire, or
 (ii) distributes either for the purpose of trade or to such an extent
as to affect prejudicially the owner of the copyright, or
 (iii) by way of trade, exhibits in public, or
 (iv) imports into India any infringing copies of the work.
 However, import of one copy of any work is allowed for private and
domestic use of the importer.
 Explanation to Section 51 clarifies that the reproduction of literary,
dramatic, musical or artistic work in the form of cinematograph
film shall be deemed to be an infringing copy.
 The copyright in a work shall be deemed to be infringed by any
person who, without the consent of the owner of the copyright,
does anything, the sole right to do which is conferred on the owner
of the copyright. Kartar Singh Giani v. Ladha Singh & Others AIR
1934, Lah 777 (DB).
27
5
Remedies against Infringement of Copyright
 Protection of rights under the copyright law, which is basically a
negative right is as much a problem of complying with the
mandatory provisions of the procedural law as the effective
exercise of investigative and adjudicatory functions by the
enforcing authorities and the courts.
 Section 54 to Section 62 of the Copyright Act provide for civil
remedies under the Act.
 Section 55 provides that where copyright in any work has been
infringed, the owner of the copyright can, except as otherwise
provided in the Act, be entitled to all remedies like injunctions,
damages and accounts as are conferred by law for the infringement
of a right.
 However, if the defendant proves that at the date of the
infringement he was not aware and had no reasonable ground to
believe that copyright subsisted in the work, the plaintiff will not be
entitled to any remedy other than an injunction in respect of the
infringement and a decree for the whole or part of the profits made
by the defendant by the sale of the infringing copies as the court
may, in the circumstances, deem reasonable. 27
6
 On non-appearance of the plaintiff, an ex-parte order was passed
and it was ruled that, the unjust enrichment by the infringing party,
was a mischief and the plaintiff was to be protected from it as per
Section 55 of the Copyright Act, 1957.
 Hence permanent injunction was granted

27
7
IPR Laws in India
Intellectual Property Rights in India
 Legal rights governing the use of creations of the human mind

 The laws which recognize and protect the rights

◦ The Trade Marks Act, 1999,
◦ The Copyright Act, 1957
◦ The Patent Act, 1970 (amended by Amendment Acts of 1999 and 2002
and 2005)
◦ The Designs Act of 2000
◦ The following laws have been enacted to protect newly recognized
species of intellectual property in India:
◦ The Geographical Indications of Goods (Registration and protection)
Act, 1999
◦ The Semiconductor Integrated Circuits Layout Design Act, 2000
◦ The Protection of Plants & Varieties and Farmers Rights Act, 2001;
◦ The Biological Diversity Act, 2002


28
0
PATENTS
https://youtu.be/4bmOBxgYK0k
 Patent law is an https://youtu.be/xP3bZzS5QUg

 intellectual property law that deals with new inventions.

 Patents are conferred in order to grant protection to certain new
products, processes, apparatus, etc.
 provided the invention involved in it is non-obvious in nature in
light of what already exists or has already been done before,
 it is not in public domain, and
 has not been disclosed anywhere in the world at the time of the
application for grant of patent.
 The invention involved must have a utility i.e. a practical purpose.
 Registration of patent provides its owner the right to prevent
anyone else(other than the licensed user) from making, using,
selling, or importing the invention for 20 years from the date of
grant of patent.
 Patents are enforced by court proceedings.
 https://youtu.be/T64XoIGHNmg
28
1
Object of Patent law

 A patent is an official document given to an inventor by the

government allowing him to exclude anyone else from
commercially exploiting his invention for a limited period which
is 20 years at present.
 As per the Supreme Court, the object of Patent Law is to
encourage scientific research, new technology and industrial
progress.
 Grant of exclusive privilege to own, use or sell the method or the
product patented for a limited period, stimulates new inventions
of commercial utility.
 The price of the grant of the monopoly is the disclosure of the
invention at the Patent Office, which, after the expiry of the fixed
period of the monopoly, passes into the public domain [M/s
Bishwanath Prasad v. Hindustan Metal Industries, AIR1982 SC
1444].

28
2
Are all inventions patentable
 Not all inventions are patentable.
 An invention must fulfill certain requirements known as
conditions of patentability.
 The word “invention” under the Patents Act 1970 means “a new
product or process involving an inventive step and capable of
industrial application.
 The fundamental principle - a patent is granted only for an
invention which must be new and useful.
 it must have novelty and utility.
 it must be the inventor’s own discovery
 an improvement on something must independently satisfy the
test of invention or an “inventive step”.
 the improvement or the combination must produce a new result,
or a new article or a better or cheaper article than before.

28
3
Conditions of Patentabilty
 In Raj Prakash v. Mangat Ram Choudhary AIR 1978 Del.1, it was held that
invention, as is well known, is to find out some thing or discover some
thing not found or discovered by anyone before. It is not necessary that
the invention should be any thing complicated. The essential thing is that
the inventor was first to adopt it. The principal therefore, is that every
simple invention that is claimed, so long as it is something which is novel
or new, it would be an invention and the claims and specifications have
to be read in that light.

 Therefore, the conditions of patentability are:

◦ Novelty
◦ Inventive step (non-obviousness) and
◦ Industrial applicability (utility)

 The usefulness of the invention is to be judged, by the reference to the

state of things at the date of filing of the patent application,
 if the invention was then useful, the fact that subsequent improvement
have replaced the patented invention render it obsolete and
commercially of no value, does not invalidate the patent
28
4
What is not Invention
 The following are not inventions
 an invention which is frivolous or which claims anything
obviously contrary to well established natural laws;
 an invention the primary or intended use or commercial
exploitation of which could be contrary to public order or
morality or which causes serious prejudice to human, animal or
plant life or health or to the environment;
 the mere discovery of a scientific principle or the formulation of
an abstract theory or discovery of any living thing or non-living
substances occurring in nature;
 the mere discovery of a new form of a known substance which
does not result in the enhancement of the known efficacy of that
substance or the mere discovery of any property or mere new use
for a known substance or of the mere use of a known process,
machine or apparatus unless such known process results in a
new product or employs at least one new reactant;

28
5
 a substance obtained by a mere admixture resulting only in the
aggregation of the properties of the components thereof or a process for
producing such substance
 the mere arrangement or re-arrangement or duplication of known
devices each functioning independently of one another in a known way;
 a method of agriculture or horticulture;
 plants and animals in whole or any part thereof other than micro-
organisms but including seeds, varieties and species and essentially
biological processes for production or propagation of plants and animals;
 a computer programme per se other than its technical application to
industry or a combination with hardware;
 a literary, dramatic, musical or artistic work or any other aesthetic
creation whatsoever including cinematographic works and television
productions;
 a mere scheme or rule or method of performing mental act or method of
playing game;
 a presentation of information;
 an invention which in effect, is traditional knowledge or which is an
aggregation or duplication of known properties of traditionally known
component or components

28
6
Application for Patent
 Application for a patent for an invention may be made by any of
the following persons either alone or jointly with another:
◦ by any person claiming to be the true and first inventor of the
invention;
◦ by any person being the assignee of the person claiming to be the true
and first inventor in respect of the right to make such an application;
◦ by the legal representative of any deceased person who immediately
before his death was entitled to make such an application.

 “true and first Inventor” does not include either the first importer
of an invention into India or a person to whom an invention is
first communicated from outside India.

28
7
Specification
 In order to obtain a patent, an applicant must fully and
particularly describe the invention therein claimed in a complete
specification.

 Provisional Specification
◦ invention has reached a stage wherein it can be disclosed on paper,
but has not attained the final stage, the applicant may prepare a
disclosure of the invention in the form of a written description and
submit it to Patent Office as a provisional specification which describes
the invention.
◦ A provisional specification secures a priority date for the application
over any other application which is likely to be filed in respect of the
same invention being developed concurrently.
◦ Provisional Specification gets a filing date and application
◦ a complete specification to be filed within twelve months from the date
of filing of the provisional application, and if the complete
specification is not so filed, the application shall be deemed to be
abandoned
28
8
 Complete Specification
◦ techno-legal document- fully and particularly describes the invention
and discloses the best method of performing the invention
◦ an extremely important document in the patent - should be drafted
with utmost care without any ambiguity
◦ Important Elements of the Complete Specification:
 fully and particularly describe the invention and its operation or use and the
method by which it is to be performed;
 disclose the best method of performing the invention which is known to the
applicant and for which he is entitled to claim protection; and
 end with a claim or claims defining the scope of the invention for which
protection is claimed; and
 be accompanied by an abstract to provide technical information on the
invention.

◦ A complete specification customarily begins after the title, with a general

preamble stating the subject to which the invention relates, followed by a
detailed description of one or more embodiments of the inventions. In an
infringement action, the function of the Court is to construe the claims which
are alleged to have been infringed, without reference to the body of the
specification, and to refer to the body of the specification only if there is any
ambiguity or difficulty in the construction of the claims in question [Farbwerke
Hoechst v. Unichem Laboratories, AIR1969 Bom 255
28
9
E-filing
 The Patent Office provides the facility to file a Patent Application
online from the native place of the agent of the applicant or
applicant through e-filing.
 For e-filing, applicant/agent must have a digital signature.
 For the first time, applicant/agent has to register as a new user
and has to create login ID and password on the Patent office
portal.
 Details regarding procedure for e-filing are provided at
http://www.ipindia.nic.in.]

29
0
OPPOSITION TO THE PATENT
 where an application for a patent has been published but a patent
has not been granted, any person may, in writing, represent by
way of opposition against the grant of patent.

 Grounds for opposition:

◦ wrongfully obtained the invention or any part thereof
◦ Claimed on or after priority date of a claim with an earlier priority date
◦ was publicly known or publicly used in India before priority date of that claim
◦ the invention is obvious and clearly does not involve any inventive step
◦ not an invention within the meaning of Act, or is not patentable under Act;
◦ does not sufficiently and clearly describe the invention or the method by which
it is to be performed;
◦ failed to disclose to the Controller the information required or has furnished the
information which in any material particular was false to his knowledge;
◦ the application was not made within twelve months
◦ does not disclose or wrongly mentions the source of geographical origin
◦ the invention is anticipated having regard to the knowledge, oral or otherwise,
available within any local or indigenous community in India or elsewhere.
29
1
GRANT OF PATENTS
 where an application for a patent has been found to be in order
for grant of the patent and
 either the application has not been refused by the Controller by
virtue of any power vested in him by the Act;
 or the application has not been found to be in contravention of
any of the provisions of the Act,
 the patent shall be granted as expeditiously as possible to the
applicant or, in the case of a joint application, to the applicants
jointly, with the seal of the patent office and the date on which
the patent is granted shall be entered in the register.
 The Controller has been put under obligation to publish the fact
that the patent has been granted and thereupon the application,
specification and other documents related thereto shall be open
for public inspection.

29
2
RESTORATION OF LAPSED PATENTS
 where a patent has ceased to have effect by reason of failure to
pay any renewal fee within the period prescribed
 the patentee or his legal representative and where the patent was
held by two or more persons jointly, then with the leave of the
Controller
 one or more of them without joining the others,
 May within eighteen months from the date on which the patent
ceased to have effect, make an application for the restoration of
the patent.

29
3
ASSIGNMENT AND LICENSING OF PATENTS
 Act of the patentee by which the patent rights are wholly or
partially transferred to the assignee who acquires the right to
prevent others from making, using or exercising or vending the
invention.
 Section 70 of the Patents Act, 1970 gives the person/persons,
persons registered as grantee or proprietor of a patent, power to
assign, grant licences under, or otherwise deal with, the patent
and to give effectual receipts for any consideration for any such
assignment, licence or dealing.
 The assignment can either be exclusive or non exclusive. The
exclusivity can be further limited, for example exclusivity to a
territory or market or line of products.

29
4
types of assignments
 Following are three main types of assignments in patents:
 Legal Assignments.- An assignment of an existing deed is a legal
assignment. A patent which is created by deed can only be
assigned by a deed. A legal assignee is entitled to be registered
as the proprietor of the patent and acquires all the rights thereof.
 Equitable Assignments.- A document agreeing to transfer a
patent or a share of a patent with immediate effect is an
equitable assignment. This affects proprietorship, but does not
directly change it. The man to whom it is equitably assigned gets
the right in equity to have the ownership of the patent altered in
law
 Mortgages.- A mortgage is a document through which patent
rights are transferred to the assignee in return for a sum of
money. Once the assignor repays the sum, the patent rights are
restored to him

29
5
Patent Infringement
 patent rights are the exclusive rights granted by the Government
to an inventor over his invention for a limited period of time.
 if any person exercises the exclusive rights of the patent holder
without the patent owner's authorization then that person is
liable for patent infringement.
 Patent infringement occurs when another party makes, uses, or
sells a patented item without the permission of the patent holder.
 The patent holder may choose to sue the infringing party to stop
his or her activities, as well as to receive compensation for the
unauthorized use.
 Since intellectual property is governed by statutory law, the
patent holder must sue the unauthorized party in court of law.

29
6
Reliefs in Suits for Infringement
 As stated earlier, the exclusive rights of a patent holder have
been provided protection under the Patents Act, 1970 and in the
event of any violation of these rights the patentee can file a suit
in the appropriate court.
 No infringement action may be started until a patent has been
granted.
 the reliefs which may be awarded in such a suit include – (1) An
injunction. (2) Damages or account of profits.
 the reliefs granted under the Act are inclusive and not exhaustive.

29
7
 The Supreme Court of India has laid down the following guidelines
to determine infringement of a patent based on Biswanath Prasad
Radhey Shyam v. Hindustan Metal Industries. AIR SC 1978.
 (i) Read the description and then the claims;
 (ii) Find out what is the prior art;
 (iii) What is the improvement over the prior art;
 (iv) List the broad features of the improvement;
 (v) Compare the said broad features with the defendant’s process
or apparatus; and
 (vi) If the defendant’s process or apparatus is either identical or
comes within the scope of the plaintiff’s process or apparatus,
there is an infringement.

29
8
Defenses available
 The defendant in a suit for infringement of a patent may lead one
or more of the following defenses:
 1. Plaintiff not entitled to sue for infringement,
 2. Denial of infringement or of any threat or intention to infringe,,
3. Leave or license express or implied to use the invention,
 4. Estoppels or res judicata,
 5. Claims alleged to be infringed are invalid on certain grounds
( Revocation of Patents)
 6. For Patent in respect of Medicine or drug, for its own use of
Govt. of India, for distribution in Govt. Dispensary and hospitals or
by gazette notifications to other dispensaries, hospitals and
medical institutions.
 8. Alleged infringement not novel or is obvious

29
9
WTO – TRIPS
 20 Years
 From process to product
 Evergreening of patents
 Sect 3(d) – prevents evergreening
 Enhanced efficiency required
 Novartis Case – Glevac
 Supreme Court – defines Enhanced efficiency :
 Therapeutic efficiency (TE)
 Minor improvement can't be considered as TE
 SC rejected
 USA is against …….India - Priority watch list
 Advantages – Affordable, Other countries ,
 https://youtu.be/0_7oV_TX6tY
 https://youtu.be/uJC_S3orqGU
 https://youtu.be/UI0w80TQ3Mk

30
0
Defenses available
 The defendant in a suit for infringement of a patent may lead one
or more of the following defenses:
 1. Plaintiff not entitled to sue for infringement,
 2. Denial of infringement or of any threat or intention to infringe,,
3. Leave or license express or implied to use the invention,
 4. Estoppels or res judicata,
 5. Claims alleged to be infringed are invalid on certain grounds
( Revocation of Patents)
 6. For Patent in respect of Medicine or drug, for its own use of
Govt. of India, for distribution in Govt. Dispensary and hospitals or
by gazette notifications to other dispensaries, hospitals and
medical institutions.
 8. Alleged infringement not novel or is obvious

30
1
Defenses available
 The defendant in a suit for infringement of a patent may lead one
or more of the following defenses:
 1. Plaintiff not entitled to sue for infringement,
 2. Denial of infringement or of any threat or intention to infringe,,
3. Leave or license express or implied to use the invention,
 4. Estoppels or res judicata,
 5. Claims alleged to be infringed are invalid on certain grounds
( Revocation of Patents)
 6. For Patent in respect of Medicine or drug, for its own use of
Govt. of India, for distribution in Govt. Dispensary and hospitals or
by gazette notifications to other dispensaries, hospitals and
medical institutions.
 8. Alleged infringement not novel or is obvious

30
2
INDUSTRIAL DESIGNS
 Industrial design play an important role in the trading of consumer
goods or products. Industrial designs are what makes a product
attractive and appealing;
 hence, they add to the commercial value of a product and increase
its marketability.
 Today, industrial design has become an integral part of consumer
culture where rival articles compete for consumer's attention.
 It has become important therefore, to grant to an original industrial
design adequate protection.
 When an industrial design is protected, this helps to ensure a fair
return on investment.
 An effective system of protection also benefits consumers and the
public at large, by promoting fair competition and honest trade
practices.


30
3
What is a Design
 The registration of a trade mark confers on the registered
 Design as per Section 2(d) of the Designs Act, 2000 means
 only the features of shape, configuration, pattern or ornament or
composition of lines or colour or combination thereof applied to
any article whether two dimensional or three dimensional or in both
forms,
 by any industrial process or means, whether manual, mechanical or
chemical, separate or combined,
 which in the finished article appeal to and are judged solely by the
eye, but does not include any mode or principle or construction or
anything which is in substance a mere mechanical device,
 and does not include any trade mark, as define in clause (v) of sub-
section of Section 2 of the Trade and Merchandise Marks Act, 1958,
property mark or artistic works as defined under Section 2(c) of the
Copyright Act, 1957.

30
4
What is Not a Design
◦ As stated in the definition of the design above, design does not include:
◦ (i) any trademark, as defined in Section 2(zb) of the Trademarks Act,
1999, or
◦ (ii) any property mark, as defined in Section 479 of the Indian Penal
Code, 1860, or
◦ (iii) any artistic work, as defined in Section 2(c) of the Copyright Act,
1957.
◦ Artistic Work means (i) A painting, sculpture, drawing (including a
diagram, map, chart or plan), an engraving or a photograph, whether or
not any such work possesses artistic quality. (ii) Any work of architecture
i.e. any building or structure having an artistic character or design or any
mode for such building or structure. (iii) Any work of artistic
craftsmanship (Section 2(c)).
◦ An illustrative list of non-registrable designs is as under: • book jackets,
calendars, certificates, forms and other documents. • dress making
patterns, greeting cards, leaflets, maps and plan cards. • post cards,
stamps and medals. • labels, tokens, cards and cartoons. • any principle
or mode of construction of an article. • mere workshop alterations of
components of an assembly. • mere change in size of article. • flags,
emblems or signs of any country. • layout designs of integrated circuits
30
5
Registrable Design
 A design is capable of being registered only if it is new or original.
 Novelty: A design shall be considered to be new when it has not been
disclosed to the public, anywhere in India or in any other Country, by
publication or by use or in any other way, prior to the filing date or priority
date.
 A design shall be considered new if it is significantly distinguishable from
known designs or combination of known designs. [Section 4]
 Originality: Original in relation to a design, means (a) originating from the
author of design, and (b) includes the cases, which though old in
themselves yet are new in their application. For instance, the figure of Taj
Mahal is centuries old. But if a person conceives for the first time, the idea
of making a flower vase or an ash tray in the form of figure of Taj Mahal,
that may be an original design and shall be registrable.
 Application and Registration of Design - the Controller may, on the
application of any person claiming to be the proprietor of any new or
original design not previously published in any country and which is not
contrary to public order or morality register the design under the Act.
 Every application for registration is required to be in the prescribed manner
and accompanied by the prescribed fee. A design when registered shall be
registered as of the date of the application for registration.
30
6
Publication
 the Controller shall, as soon as may be after the registration of a
design, cause publication of the prescribed particulars of the
design to be published in the prescribed manner and the design be
open to public inspection.
 the Controller grants a certificate of registration to the proprietor of
the design when it is registered.
 The important purpose of design Registration is to see that the
artisan, creator, originator of a design having aesthetic look is not
deprived of his bona fide reward by others applying it to their
goods.

30
7
Processing & Examination of the Application

 On receipt of an application, the Office accords a date and serial

number to the application.
 This serial number, upon registration, becomes the registration
number of the design.
 The application for registration of a design is refereed by the
Controller of Designs to an Examiner of Designs for conducting
examination as to:
 (a) whether the application and the documents satisfy the formal
requirements, and)
 whether such design as applied to an article is registrable, under
the provisions of the Designs Act, 2000 and Designs Rules, 2001.

30
8
Formality Check
 The Examiner determines whether:
 (a) the application is in prescribed format?
 (b) the prescribed fee has been paid?
 (c) the name, address, and nationality of the applicant is
mentioned?
 (d) address for service is given in the application form?
 (e) declaration of proprietorship is given in the application form?

30
9
Substantive Examination
 Substantive examination is carried out to determine whether the
design under consideration is: (a) ‘a design’ under the Act? (b) new
or original? (c) prejudicial to public order or morality? (d) prejudicial
to the security of India?
 The Controller shall consider the report of Examiner on
registrability of a design as applied to an article and if it is
registrable, the same shall be registered forthwith.
 The registration certificate shall be issued and sent to the applicant
at the earliest.
 If upon consideration of the report, the Controller is of the opinion
that there are objection(s) adverse to the applicant or the
application requires some amendment(s), a statement of objections
shall be communicated to the applicant or to his agent at the
address for service by the Controller.
 The defects shall be corrected and the application resubmitted for
acceptance within six months or within the extended period from
the official date of the application

31
0
 Certificate of Registration Upon registration,
 the Controller issues a certificate of registration to the proprietor of
the design.
 The certificate is sent by registered post to the address for service.
 No hand delivery of certificate of registration is allowed. [Section 9]

31
1
Cancellation of Registration
 The registration of a design may be cancelled at any time after the
registration of the design on a petition for cancellation in Form 8,
along with the prescribed fee.

 The petition for cancellation of registration of a design may be filed

on any of the following grounds:
 (i) that the design has been previously registered in India;
 (ii) that it has been published in India or in any other country prior
to the date of registration;
 (iii) that the design is not a new or original;
 (iv) that the design is not registrable under this Designs Act;
 (v) that it is not a design as defined under Section 2(d).

31
2
Provisions of Copyright Act as Applied to a Design
 A creator of a design shall keep in mind the following provisions of
the Copyright Act, 1957:
 (a) Copyright shall not subsist under the Copyright Act in any
design which is registered under the Designs Act.
 (b) Copyright in any design, which is capable is being registered but
which has not been so registered shall cease as soon as any article
to which the design has been applied has been reproduced more
than fifty times by an industrial process, by the owner of the
copyright, or with his license, by any other person.

31
3
Period of Protection

 The duration of a design registration is initially ten years from the

date of registration but in cases where claim to priority has been
allowed, the duration is ten years from the priority date.

 This initial period of ten years may be extended by a further period

of 5 years, if the registered proprietor applies for extension in
prescribed manner.

31
4
Piracy of Registered Design
 Piracy of a design means the application of a design or its imitation
to any article belonging to the class of articles in which the design
has been registered for the purpose of sale or importation of such
articles without the written consent of the registered proprietor.
 Publishing such articles or exposing them for sale with knowledge
of the unauthorized application of the design to them also involves
piracy of the Design.
 The proprietor of the design gets exclusive right to apply the
design to the article in a class in which the design is registered.
 The following activities are considered to be infringement:
 (i) to apply for the purpose of sale the design or any fraudulent
imitation of it to any article in any class of articles in which the
design is registered;
 (ii) to import for sale any article to which the design or fraudulent
or obvious imitation of it, has been applied;
 (iii) to publish or to expose for sale knowing that the design or any
fraudulent or obvious imitation of it has been applied to it.
31
5
Assignment of Designs
 where a person becomes entitled by assignments, transmission or
other operation of law to copyright a registered design, he may
make application in the prescribed form to the Controller to
register his title.
 For an assignment to be valid, it must be in writing
 and the application for registration of title under such instrument is
filed in the prescribed manner within six months from the
execution of the instrument.
 the absolute right to assign the design rights lie with the person
registered as proprietor of the design.
 Any rights acquired by third parties by way of assignments or
licenses are only made effective if the same is duly registered in
accordance with the provisions of the Act and the Rules framed
there-under.
 There is no concept of common law license under design law.

31
6