Bba301 Slm Unit 01

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Legal and Regulatory Framework Unit 1

Sikkim Manipal University Page No.: 1

Unit 1 Introduction

Structure:

1.1 Introduction

Objectives

1.2 Meaning and Scope of Business Law

Difference between law and regulations

1.3 Sources of Law

Sources of Indian business laws

1.4 Laws applicable to Business in India

Commercial laws

Labour laws

Corporate laws

Taxation laws

Financial laws

Miscellaneous laws

1.5 Summary

1.6 Glossary

1.7 Terminal Questions

1.8 Answers

1.1 Introduction

Legal and regulatory framework of business refers to the norms and

stipulations laid down by laws, legislations and regulations that define the

behavioural boundaries for business activity and thereby govern business,

trade and commerce.

The major purposes of business legislation include laying down laws

governing all aspects of business, protection of companies from unfair

competition, protection of consumers from unfair business practices and

protection of the work force from exploitation. It also works on conservation

of the environment and protection of the interests of society from unbridled

business behaviour such as monopolising trade, manipulating prices,creating artificial shortage of goods by hording etc. It also aims at creating

an environment conducive for trade within the country as well as with other

countries as well as to make the business environment an attractive

economic hub for foreign investment.

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The legal environment becomes more complicated as organisations expand

globally and face governmental structures quite different from those withintheir own countries. Legal and regulatory framework has become even more

important and crucial in the post liberalisation business scenario of India.

In this unit, we will get an overview of the complexities of legal and

regulatory framework impacting business in India. We will also become

familiar with the definition of business laws and know the sources of laws in

general and business laws in particular. In subsequent units, we will study

these aspects in detail.

Objectives:

After studying this unit, you should be able to:

recognise the legal framework of business

define the laws applicable to business

discuss the laws governing business

1.2 Meaning and Scope of Business Law

The term Law denotes the rules and regulations that are enacted by the

legislature and enforced through designated authorities to govern various

aspects of public and personal life. It is a body of rules recognised and

enforced by courts of law.

In the Indian context law may be defined as an Act passed by theParliament or a state legislature and signed by the President of India or

Governor of a state.

According to Clause 3 of the Indian Constitution, the term Law includes

ordinances, orders, bye-laws, rules, regulations, notifications as well as

custom and usage having the force of law. An amendment to an existing law

is also termed as law.

Business laws lay down norms and stipulations for production, quality

control, fair trade practices, flow and accounting of finance, raising of

capital, foreign direct investments and so on. In subsequent units you will bereading these in detail.

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Scope of business law:

The ambit of business law spreads across the following areas related tobusiness:

Protection of companies from unfair competition.

Regulation of production.

Defining norms for quality control.

Raising of funds and capital.

Deployment, management and accounting of funds.

Protection of consumers from unfair business practices.

Protection of the work force from exploitation.

Conservation of environment.

Protection of civil rights and the interests of society from unbridled

business behaviour.

Ensuring an environment conducive for trade within the country as well

as with other countries.

Making the business environment an attractive economic hub for foreign

investment.

Laying down norms for Foreign Direct Investment (FDI).

Interpreting business related laws and clauses of the Constitution.

Arbitrating business and trade related disputes.

1.2.1 Difference between law and regulations

A Law or an Act is a bill passed by both houses of Parliament or the StateLegislature. It acquires the status of an Act after it is signed by the President

of India or the Governor of a state. It comes into force when it is notified in

the official Gazette.

Rules and regulations are subordinate legislations framed by the executive

branch or autonomous statutory organisations of the Government to

implement the provisions of the Act.

When there is a discrepancy between the law and the implementing

regulation, courts normally give the law supremacy over regulations unless it

can be proved that the regulation interprets the intent of the legislatorsbetter. This illustrates the spirit of checks and balances operating in a

democracy. The legislature creates the law, the executive branch issues a

regulation for implementing it and the judicial branch decides on the

constitutionality and jurisdictional issues.

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Self Assessment Questions

Fill in the blanks:1. A bill passed by both houses of Parliament or the State Legislature

becomes an Act when it is signed by _________________ or

________________.

2. An Act comes into force when it is notified in the __________.

3. An _______ to an existing law is also termed as law.

4. According to ________________, the term Law includes ordinances,

orders, bye-laws, rules, regulations, notifications as well as custom and

usage having the force of law.

5. The _______ creates the law, the _________ issues a regulation for

implementing it and the ___________ decides on the constitutionality

and jurisdictional issues.

1.3 Sources of Law

The word Source denotes the origin from which something is derived. It

may also refer to the circumstances or causes that become responsible for

something coming into existence.

Law has evolved over the ages all over the world. Indian law has also

passed through various stages of development. Prior to the British Raj,

Indian princely states were governed according to the laws laid down by the

kings and emperors. All successive dynasties that ruled India from time to

time laid down their own laws. When the British colonised India they

imposed their own legal framework adopted from the legal system prevailing

in Britain to govern this vast subcontinent. Most of the laws applicable in

India have their source in the British laws.

Before we study the sources of business laws of India, let us become

familiar with the sources of laws in general.

There are various sources which can be classified as under:

Formal sources: A formal source of law is usually a constitutional process

by which a legal rule comes into existence, for example the passage of a bill

through Parliament. The state is the sole formal source of law. Laws derived

from formal source have force and validity as instruments of state

governance.

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Material sources: Material sources are concerned with the substance and

content of legal obligation. These refer to various processes which result inthe evolution of the constituents of law. Material sources may be divided into

the following

a) Legal sources: These are the sources which are recognised by law

itself as authoritative, for example

i) Statutes and laws which derive their force from the legislature.

ii) Case laws which have their source in precedents.

iii) Customary laws which spring from customs.

b) Historical sources: The sources which have no binding force and

which are not recognised by law are called historical sources. Examples

include juristic writings, literary writings and decisions or judgements

passed by foreign courts.

1.3.1 Sources of Indian business laws

The oldest business law which was applicable in India was the barter

system. Business laws existed even under the monarchy systems prevailing

in most of the princely states. However, we can trace the background of

modern business laws in India to 1600 A.D. Most Indian laws in general and

business laws in particular have their source in the British legal system.

The foundation of the East India Company not only initiated a drastic shift in

the Indian political scenario but also marked a major milestone in the legal

history of India. The British Crowns charter of 1600, under which the

company was set up, gave it sweeping juristic powers. The Company was

legally empowered to make laws for its government and to impose such

fines and penalties as might be necessary to impose these laws.

It is interesting to note that till the early 1900s, most of the British law was

not a written law. Only certain portions like the Magna Carta existed in

writing. As Britain colonised most of the world, its trade and commerce

grew. At times, disputes regarding trading issues occurred and were taken

to the kings court. All such cases were decided according to the usage and

custom of the community and the prevailing concept of equality and justice.Judges relied heavily on precedence in deciding cases. When a number of

similar cases were decided alike, the reasoning and principle underlying the

judgment acquired the force of an unwritten law. As more and more such

laws emerged, they became part of what is called Common Law.

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As British trade and commerce flourished, its influence increased in the

world. The increase in trade across the world raised newer issues anddisputes for which the common law was not adequate. New laws were

required to resolve them. That is when the practice of enactment of statutory

laws to regulate trade and commerce started. The Contract Act, the Sale of

Goods Act and the Negotiable Instruments Act are example of such

enactments. As more and more enactments came into force, it was decided

that the law be systematised and written down as Acts. By the early 1900s

the British Government got the Common Law and the enactments written

down as Acts.

When the British colonised India, they needed a body of law to govern this

vast and diverse nation. They borrowed, adapted and imposed many Actsexisting and prevailing in Britain as Acts applicable in India. Some examples

are The Indian Contract Act, 1872, the Indian Sale of Goods Act, 1930 and

the Negotiable Instruments Act, 1881 and so on. Thus, most of the business

laws of India have their roots in the British laws such as:

1. English mercantile law:Lex mercatoria is a Latin expression meaning

law merchant. In business context it refers to a body of trading

principles used by the merchants throughout Europe in the medieval

ages. Evolving from a system of customs and best practice, it functioned

as the international law of commerce. It was enforced through a system

of merchant courts along the main trade routes. The English MercantileLaw constitutes the foundation on which the superstructure of the Indian

Mercantile Law has been built.

2. Statutory Law: Statutory law is a written law enacted by the legislature

or other authorised governing body such as the executive branch of the

government. Statutory law contains all laws enacted to facilitate,

regulate or clarify the process of governance, to improve civil order,

codify or amend existing laws, or to grant special treatment to an

individual or company.

In the Indian context, all laws are statutory. When a Bill passed by the

Parliament is signed by the President of India, it becomes an Act or a

Statute. The bulk of Indian Mercantile Law is statutory law.

3. Judicial Decisions: The past judicial decisions or precedents of courts

are important sources of law. Sometimes existing statutory provisions

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are not adequate enough to resolve an issue. In such cases the court

adjudicates according to past precedents on similar matters.The precedents set by the higher courts have a binding force on lower

courts and the precedents set by the courts of the same status like High

Courts of different states, exercise a persuasive power over each other.

4. Customs and usages: Like all other aspects of human activities,

business and trade also rely heavily on customs and usages, practices

and business dealings related to a particular trade. In many cases such

practices acquire a binding and legal force on the parties. For example,

as per the mercantile usage prevailing in the Delhi Iron Market among

big merchants, no interest can be charged on the unpaid price for

transactions before 1917. However, the custom or usage must becertain, reasonable and well known to have a binding force.

Self Assessment Questions

Fill in the blanks:

6. _____________is a Latin expression meaning law merchant.

7. ________ is a written law enacted by the legislature or other authorised

governing body.

8. The past judicial decisions are known as ______________.

9. A formal source of law is usually a _________ process by which a legal

rule comes into existence.

10. Till the early 1900s most of the British law was not a ________ law.

1.4 Laws Applicable to Business In India

The legal and regulatory framework plays a crucial role in the economy of a

nation. The politico-legal ideology and the economic policies of the

government as well as the prevailing laws and regulations have a bearing

on all aspects of business, commerce and trade. The Government of India

has enacted several laws that lay down the boundaries within which

business and industries are required to function. These enactments play a

very significant role in the nations overall progress and economic

development. These legislations are amended from time to time according

to the needs of the changing circumstances. Following are the major

business laws applicable in India:

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1.4.1 Commercial laws

Commercial laws govern business and trade relationships and transactions.Following are the major commercial laws in India:

The Indian Contract Act, 1872: Most of the transactions in trade,

commerce and industry in India are based on contracts. The Indian Contract

Act, 1872 lays down the general principles relating to formation,

performance and enforceability of contracts and the rules relating to certain

special types of contracts like Indemnity and Guarantee; Bailment and

Pledge as well as Agency. The law related to Agency is a part of this Act. It

also contains provisions pertaining to breach of a contract.

Sales of Goods Act, 1930: This Act governs all aspects of sale and

purchase of goods. A sale is a specialised form of contract. Therefore, the

basic principles of the contract Act applies to the sale of goods also. It also

deals with issues of ownership and the quality of goods sold or to be sold.

Indian Partnership Act, 1932: Partnership is the relationship between two

or more persons who agree to enter into business together with mutual

assent. This law governs all the modalities and issues arising out of such

business relationships.

Indian Negotiable Instruments Act, 1881: A negotiable instrument is a

document that guarantees the payment of a specific amount of money as

per the stipulations contained in the document. This Act deals with thefollowing three instruments recognised in India:

i) Promissory note

ii) Bill of exchange

iii) Cheques and Demand Drafts

Industries (Development and Regulation) Act, 1951 (IDRA): This Act

empowers the government to take necessary steps and actions for the

development of industries, to regulate the pattern and direction of industrial

development; and to control the activities, performance and results of

industrial undertakings in the public interest.

The Consumer Protection Act, 1986: It is the most important and

comprehensive Act for the protection of consumer rights. It was amended in

1989 and since then has been amended five times to keep pace with the

changing times and increased awareness about consumer rights. The Act

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identifies the following six rights of the consumers which are protected by

legislation and enforced through consumer courts:i) The right to be protected against goods and services that are

hazardous to life and property.

ii) The right to be informed about the quality, quantity, potency, purity,

standard and price of goods or services.

iii) The right to assured access (wherever possible) to a variety of goods

and services at competitive prices.

iv) The right to be heard and to be assured that proper forums will give

due consideration to consumers interests and grievances.

v) The right to seek redressal against unfair trade practices or

exploitation.

vi) The right to consumer education.

Competition Act, 2002: This Act provides for a modern framework of

protection against unfair competition. The Act replaced the Monopolies and

Restrictive Trade Practices (MRTP) Act of 1969. The main objectives of the

Act are:

i) Establishment of a Commission to prevent practices having adverse

effect on competition.

ii) Promotion and sustenance of healthy competition in Indian markets.

iii) Protection of the interests of consumers.

iv) Ensuring freedom of trade to the participants in Indian markets.

Vide this Act, the Government of India has set up the Competition

Commission of India (CCI) in order to ensure a healthy and fair competition

in the market economy. You will read about these and other related laws in

detail in subsequent units.

1.4.2 Labour laws

It is the responsibility of the Ministry of Labour and Employment to

safeguard the interests of workers in general and of the poor, deprived and

disadvantaged sections of the society, in particular. The Ministry is also

entrusted with the task of creating a healthy work environment for higherproduction and productivity and to develop and coordinate vocational skill

training and employment services.

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In order to do so, the Parliament enacts labour laws which deal with

employer-labour relationship, trade unions, wages payable to the workers,post retirement benefits, the health and safety of workers and so on.

The Indian government has enacted the following important laws for this

purpose:

The Indian Trade Unions Act, 1926: A Trade union is a voluntary

organisation of workers pertaining to a particular trade, industry or a

company. Its objective is to promote and protect the interests and welfare of

the workers by collective action. The Trade Unions Act, 1926 deals with the

registration of trade unions and their rights, liabilities and responsibilities. It

also lays down stipulations to ensure that their funds are utilised properly.

The Industrial Disputes Act, 1947: This legislation governs industrial

relations, which involve various aspects of interactions between the

employer and the employees, among the employees as well as between the

employers. The Industrial Disputes Act is invoked for the investigation and

settlement of all industrial disputes. It also addresses conflict of interests in

the industry. The Act also enumerates the contingencies when a strike or

lock-out can be lawfully resorted to and when they can be declared illegal or

unlawful. It lays down conditions for layoffs, retrenchment, discharge or

dismissal of a workman. It also defines the circumstances under which an

industrial unit can be closed down.The Industrial Employment (Standing Orders) Act, 1946: This Act

requires employers to clearly state the conditions of employment to their

workers.

The Factories Act,1948: This Act aims to regulate the working conditions in

factories; to ensure provision of the basic minimum requirements for safety,

health and welfare of the factories workers as well as to regulate the

working hours, leave, holidays, employment of children, women etc. It

includes provisions for the licensing of factories and their inspection. The

Constitution also prohibits the employment of a child below the age of

fourteen years in any factory or mine or to be engaged in any other

hazardous employment.

Other such important Acts are The Workmens Compensation Act, 1923,The

Payment of Wages Act, 1936, The Minimum Wages Act, 1948, The

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Employees Provident and Miscellaneous Provisions Act, 1952 and The

Payment of Gratuity Act, 1972, the Bonded Labour System (Abolition) Act,1976 etc.

1.4.3 Corporate laws

Corporate law pertains to all aspects of business enterprise in the modern

world. Issues such as the role of shareholders, directors, employees,

creditors and stakeholders; the interest of the consumers and the

community; and the impact of the company activities on the environment

etc. are part of this law. They also deal with mergers, takeovers and winding

up of sick units.

The Companies Act, 1956: This is the most important corporate law in

India. It lays down the provisions relating to the formation of a company,

powers, roles and responsibilities of the directors and managers, raising of

capital, holding company meetings, maintenance and audit of company

accounts, powers of inspection and investigation of company affairs,

reconstruction and amalgamation of a company and, if necessary, its

winding up also.

The Act applies to the whole of India and to all types of companies, whether

registered under this Act or an earlier Act. However, it does not apply to

universities, co-operative societies, unincorporated trading, scientific and

other societies.The Act empowers the Central Government to inspect the books of

accounts of a company, to direct special audit, to order investigation into the

affairs of a company and to launch prosecution for violation of the Act. In

response to the changing business environment, the Companies Act, 1956

has been amended from time to time to make it commensurate with

changing business requirements and to provide more transparency in

corporate governance.

Foreign Exchange and Management Act, 1999 (FEMA) is a successor to

the Foreign Exchange Regulation Act, 1973 (FERA). FEMA was enacted to

consolidate and amend the already existing law relating to foreign exchangewith the objective of facilitating external trade and payments and for

promoting the orderly development and maintenance of foreign exchange

market in India. However, the provisions of FEMA are very different from

those of FERA.

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The Foreign Trade (Development and Regulation) Act, 1992 and the

EXIM Policy: Foreign trade is the exchange of goods and services betweentwo countries, across their international borders. Imports and exports are the

two important components of a foreign trade. 'Imports' imply the physical

legal movement of goods into one country from another while 'exports' imply

the physical movement of goods out of a country in a legal manner. Thus,

imports and exports have made the world a global market. In India, exports

and imports are regulated by Foreign Trade (Development and Regulation)

Act. It authorizes the Central Government to formulate and announce

an Export and Import Policy (EXIM).

Other major corporate laws are The Securities Contracts (Regulation) Act,

1956 and The Depositories Act, 1996. These deal with and govern the saleof securities. Issues like acquisitions of companies where the shares are

held by the general public, is governed by the Substantial Acquisition of

Shares and Takeovers (SEBI) Regulations, 1997. Mergers of companies

require the approval of the High Court.

1.4.4 Taxation laws

The Constitution of India bestows the authority to levy taxes on the Central

and the State Governments. However, no government can impose any tax

unless an appropriate Act, duly enacted by the Parliament or the State

Legislature permits it. Article 265 of the Constitution clearly states that "No

tax shall be levied or collected except by the authority of law." The

Constitution vide Article 246, has listed the areas on which the Parliament or

the State Legislatures or both can enact laws to levy taxes. Schedule VII

demarks these areas into three lists as follows:

List I: Areas on which only the Parliament is competent to make laws.

List II: Areas on which only the State Legislature can make laws.

List III:Areas on which both the Parliament and the State Legislature can

make laws.

All taxation laws fall within the purview of the Ministry of Finance. The main

body responsible for administration of taxes in India is the Central Board of

Direct Taxes (CBDT).

The Central Board of Direct Taxes (CBDT) is a statutory authority

functioning under the Central Board of Revenue Act, 1963. The officials of

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the Board in their ex-officio capacity also function as a Division of the

Ministry dealing with matters relating to levy and collection of direct taxes.The CBDT is a part of the Department of Revenue in the Ministry of

Finance. It has the following responsibilities:

providing essential inputs for policy and planning of direct taxes in India

administration of direct tax laws through the Income Tax Department

The Central Board of Revenue is the main body responsible for the

administration of taxes. It exists and functions as per the stipulations of the

Central Board of Revenue Act, 1924. Initially the Board was in charge of

both direct and indirect taxes. However, as the task of administrating all the

taxes in a vast nation could not be handled by one Board, it was decided to

set up another Board, namely the Central Board of Excise and Customs witheffect from 1.1.1964 to levy and administer excise taxes and custom duties.

This bifurcation was brought about by constitution of the two Boards under

section 3 of the Central Board of Revenue Act, 1963.

Let us now discuss the major taxation laws in India:

Income Tax Act of 1961: This Act is the most important tax law in India. All

taxes on the income of individuals and corporations are levied and realised

vide this Act. The tax on income is imposed under the following five heads:

income from house and property

income from business and profession income from salaries

income in the form of capital gains and

income from other sources

Wealth Tax Act deals with the assets one possesses. The Act has been

passed and repealed many times.

Service Tax, imposed under Finance Act, 1994 taxes the provision of

services provided by service providers within India or services imported by

an Indian from outside India.

Central Excise Act, 1944 imposes a duty of excise on goods manufactured

or produced in India.

Customs Act, 1962 imposes duties of customs, countervailing duties and

anti-dumping duties on goods imported into India.

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Central Sales Tax, 1956 deals with sales tax on goods sold in inter-state

trade or commerce within India.Transaction Tax pertains to taxes imposed on transactions of sale of

securities and other specified transactions.

1.4.5 Financial laws

Financial laws deal with savings and investments products as well as the

services related to these products. Savings and investments play a vital role

in the economy of a nation. Financial laws subject financial institutions to

certain stipulations, restrictions and guidelines in order to maintain the

integrity of the financial system.

The specific aims of such laws and regulations are: To enforce applicable laws.

To prosecute cases of market misconduct, such as insider trading.

To ensure fair play by licensed providers of financial services.

To protect clients of such service providers and investigate complaints.

To maintain confidence in the financial system.

Financial laws lay down stipulations and regulations for financial services

such as banking services, brokerage services, commodities, consumer

lenders (including credit card issuers), insurance, investment advisors,

mortgages, mutual funds and stocks and bonds

1.4.6 Miscellaneous laws

Apart from the major categories of law listed here, there are some assorted

but very important laws that you will be reading in the subsequent units.

These are:

The Environmental Regulations: Over the years, there has been an

increasing consciousness and realisation that environmental quality and

economic development are complementary and not mutually exclusive. With

tremendous technological advancements, environmental challenges are

also on the rise. Therefore, the government has framed many laws to

protect every aspect of environment. Broadly, the environmental concernsinclude the emission standards for gasses in the air, noise, water etc.

Separate set of laws for emission of hazardous wastes have also been

enacted. Every industry has to abide by these guidelines and parameters for

environmental protection. The main priorities of these regulations is

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controlling water and air pollution, forest conservation, wildlife protection and

safeguarding biological diversity.Intellectual Property Legislations pertain to all the creations of the human

mind such as ideas, knowledge, inventions, innovations, creativity or

research etc. The rights relating to intellectual property are known as

'Intellectual Property Rights' (IPRs). In today's globalised scenario of

expanding multilateral trade and commerce, it has become imperative for

any country to protect its intellectual property by providing statutory rights to

the creators and inventors. Thus, the statutory rights help them fetch

adequate commercial value for their efforts in the world market.

Intellectual property rights cover two main areas:-

i) Indian Copyright Act: The rights of authors or creators of literary and

artistic works such as books and other writings, musical compositions,

paintings, sculpture, computer programs and films etc. are protected

under this Act. The Copyright Act also covers the rights of performers

(e.g. actors, singers and musicians), producers of phonograms (sound

recordings) and broadcasting organisations etc.

ii) Industrial Property Rights: Industrial property rights such as patents,

distinctive signs, in particular, trademarks which distinguish the goods

or services of one undertaking from those of another are protected

under these rights. Innovations, original designs and the creation oftechnology, industrial designs and trade secrets also come within the

purview of this Act.

Information Technology Act, 2000 deals with the issues of electronic

communication. In the modern business scenario, a great deal of business

is done online. Hence, there is a need to regulate, govern and protect such

dealings. The Act grants legal recognition to transmission of data through

the electronic communication. It holds such transactions as valid and also

stipulates that all such communications can be treated as evidence. It also

deals with the issues of hacking, deliberate spread of virus, transmission of

obscene material and treats these as criminal offences.

As all business, trade and commerce related activities have to operate

within the statutory framework of the country, every enterprise must take

business laws into account while framing its basic aims and objectives.

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Knowledge of these laws helps the business houses to know about the

rights, responsibilities as well as the challenges that they may have to face.Self Assessment Questions

State whether the following statements are True or False:

11. Corporate laws govern business and trade relationships and

transactions.

12. It is the responsibility of the Ministry of Home Affairs to enact laws to

protect and safeguard the interests of workers.

13. Commercial laws lay down how corporate companies are to be run and

also discuss issues such as the role of shareholders, directors,

employees.

14. The Constitution of India bestows the authority to levy taxes on theCentral and the State Governments.

15. Financial laws deal with savings and investments products as well as

the services related to these products.

1.5 Summary

Let us review the important concepts that have been discussed in this unit.

Legal and regulatory framework of businesses lay down the parameters

within which business, trade and commerce can function. These

regulations and legislations govern the governments relationships with

organisations, subsidies, tariffs, import quotas and deregulation ofindustries, labour laws etc. In India, various laws have been enacted to

govern how business is conducted. In the post liberalisation era these

Acts have become even more important.

In the Indian context, law may be defined as an Act passed by the

Parliament or a state legislature and signed by the President of India or

Governor of a state.

Business laws have a wide scope. They govern almost every aspect of

business dealings.

The sources of law can be categorised into formal and material sources.

The latter comprises of legal and historical sources. The primary sourcesof Indian law are custom, judicial precedents; statute, law or legislation

and personal laws. The secondary sources are the doctrine of Justice,

Equity and Good Conscience; and the English law.

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Sources of business laws in India are the English mercantile law,

statutory law, judicial decisions and customs and usage. There are various categories of laws and regulations applicable to

business in India such as commercial, labour, corporate, taxation,

financial and miscellaneous laws. These laws play a major role in the

country's overall progress and economic development. These

legislations are amended from time to time in accordance with the

changing circumstances and environment. These laws and regulations

are aimed at providing an equitable and fair business environment to all

the people concerned, be it the investor, consumer or labour or anyone.

1.6 GlossaryArbitration: Resolution of dispute between two parties at the mediation of a

third impartial party.

Entrepreneur:A person who undertakes a commercial venture.

Equitable: Something that deal fairly and equally with all concerned.

Equity:A system supplemental to law.

Liberalisation: Opening up of the economic system.

Promissory Note: A written document by which one person agrees to pay

money to another.

1.7 Terminal Questions

1. What are business laws? What are the sources of law?

2. Discuss the sources Indian business laws?

3. Which are the main labour laws applicable in India?

4. Discuss the major commercial and corporate laws prevailing in India.

5. Give the main taxation and financial laws of India.

1.8 Answers

Self Assessment Questions:

1. The President of India, the Governor of a state2. Official Gazette

3. Amendment

4. Clause 3 of the Indian Constitution

5. Legislature, Executive, Judiciary

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6. Lex mercatoria

7. Statutory law8. Precedents

9. Constitutional

10. Written

11. Incorrect

12. Incorrect

13. Incorrect

14. Correct

15. Correct

Terminal Questions:

1. Business laws define the boundaries within which all businesses haveto operate. These laws have sprung from various sources. For more

details refer to section 1.3.

2. The main source of Indian business laws is the British mercantile law.

For more details refer to section 1.3.

3. Labour laws safeguard the interest of the workers. For further detail

refer to section1.4.2.

4. Corporate and commercial laws govern how companies operate. Refer

to sections 1.4.1 and 1.4.3.

5. Taxation and financial laws deal with the levying of various taxes and

various financial services respectively. Refer to sections 1.4.4 and1.4.5.

References:

Bedi, Suresh. (2004). Business Environment. Excel Books, New Delhi.

Tulsian, P. C. (2000). Business Law. Tata Mcgraw-Hill Publishing

Company Ltd. New Delhi.

Pathak, Akhileshwar (2007). Legal Aspects of Business. Tata Mcgraw-

Hill Publishing Company Ltd. New Delhi.

Bba301 Slm Unit 01

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