NATIONAL LAW SCHOOL OF INDIA UNIVERSITY, BANGALORE

Master of Business Laws (MBL) I year

June 2011 Annual Examination - Key Answer : CONTRACT LAW

Part-A

1. Contract of Bailment

a. Essentials of bailment, Sec. 148

b. Bailor’s Duties

c. Gratuitous bailor Sec. 150

d. Maffat v Bateman

e. Bank of India, v M/s Grains and Gunny Agencies

f. Union of India v Udho Ram and Sons

g. Involuntary bailee

h. Liability to pay Rs 5000/. Sec. 154. Bailor may recover

compensation

i. L & N.W.Ry.Co. v Nielson

2. Law relating to Tenders

a. Essentials of tender contract

b. Essentials of Government Contract

c. Contract of Guarantee

d. Essentials of Bank Guarantee

i. Nature of Bank Guarantee

ii. Irrevocable, unconditional

iii. Payment of demand

iv. No injunction

e. Maharashtra Electricity Board v The Official Liquidator,

High Court

f. Banwari Lal v Punjab State Coop Ltd

g. Dai0ichi Karkaria Pvt Ltd v Oil and Natural Gas

Commission

h. Kudremukh Iron Ore v Kerala Rubber Ltd

3. Law relating to Misrepresentation/Fraud

a. Sec. 17 and 18

b. Remedies for misrepresentation: Law of Recession

c. Sec. 64

d. Sec. 75: Proof of damage

e. Sec. 75: entitlement of compensation on recession

f. Keats v Lord Cadogan

g. Suppression veri, suggestion falsi

h. Davis v London Prudence and Marine Insurance

Part B

1. Legal Capacity of bodies, organisations, associations of persons

under contract.

a. Companies, MOA and AOA

b. Ashbury Railway Carriage Co v Riche

c. Concept of Ultra vires

d. Void contract

2. Agreement against public policy: Sec. 23

a. Gherulal v Mahadeodas

b. Defeating the provisions of any law

c. Void

3. Proposal must not be confused with invitation to treat

a. Silence is no acceptance

b. Harvey v Facey

4. Balfour v Balfour: Essentials of a valid contract

a. Promise should be made to create a binding legal obligation

b. Effect of promise of contractual obligations

c. Jones v Padavatton

5. Quasi contract: Sec. 68 to 72

a. Supply of necessaries

b. Payment by an interested person

c. Liability to pay for non gratuitous acts

d. Finder of goods

e. Mistake or coercion

6. 1915 case: This case was followed by Shankiln Pier v Detel

Products

a. Doctrine of privity of contract

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NATIONAL LAW SCHOOL OF INDIA UNIVERSITY, BANGALORE

Master of Business Laws (MBL) I year

June 2011 Annual Examination - Key Answers : BANKING LAW

1. “The Central Bank is an institution charged with the responsibility of

managing the expansion and contraction of the volume of money in the interest of the general public welfare…” [R. P. Kent, Money and Banking, p. 351] – Examine the statement in the context of RBI by referring to the legal environment created for the same.

a. Brief explanation as to why ‘credit control’ is essential in any economy – vis-à-vis Central Banking institution and some reference to the RBI

b. Quantitative Credit Control Methods i. Bank Rate etc.,

c. Selective Credit Control Methods i. Sec. 21, Banking Regulation Act, 1949 ii. Fixation of margin requirements of secured loans iii. ‘credit rationing’ iv. Direct action v. Moral suasion

d. Other methods like rediscounting etc.,

2. “The business of banking is fraught with dangers, arising principally from the instability in the world economy and from human error or misjudgment. Like any other enterprise, a bank may be overtaken by events or may be governed unwisely. Bank failures are, therefore, no novelty” [Sir John Clapham, The Bank of England – A History, Cambridge, 1944] – Discuss.

a. Basic reference to the banking function of borrowing and

lending – b. How banker balances between ‘liquidity’ and ‘profitability’ c. If entire borrowed money is lent there will be greater

profitability; but no liquidity. On the other hand, if entire money is retained – there will be greater liquidity but no profitability – therefore a banker would balance these two aspects;

d. How one bank failing would spread to other banks as well as the entire banking business stands on depositors confidence – therefore the regulating law would have immense provisions in this regard;

e. In India both (i) Banking Regulation Act; and (ii) Reserve Bank of India would have immense provisions to ensure this factor;

f. Reference to such provisions of law and explanation.

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3. Write short notes on the following a. Collecting & Paying Banker;

i. Explaining the concept of ‘collecting’ and ‘paying’

banker ii. Paying Banker’s protection as envisaged by the NI Act

1. Sec. 10 – Payment made in due course (generic) 2. Sec. 85 – Protection to the paying banker

(specific section to banker); and 3. Sec. 98 – Altered instrument & making payment

(generic section) 4. Reference to supreme court judgment to Canara

Bank v Canara Sales Corporation; iii. Collecting banker

1. Collecting banker and his liability 2. KYC norms while opening the account 3. And other precautions

b. Finality of entries in the passbook.

i. Pass book is issued to bank’s customer, who generally

keeps savings account ii. In case of current accounts – it is issued only upon

demand by the customer iii. Pass book is replica of the ledger at the bank branch iv. In case of current accounts statement of their accounts

are given to them periodically (daily, weekly, fortnightly etc.)

v. Two prominent thoughts 1. Once the passbook entry is made and passed on

the customer – he shall verify and raise objection if any – afterwards the entries made in the passbook shall be treated as final

2. Passbook entries are for general convenience hence, the entries can be questioned any time by the parties

vi. If there is 100% correctness in the entries made – no legal hassles

vii. Although banker’s take adequate care mistakes do creep in

viii. There are two situations ix. Entries favouring the customer; and x. Entries favouring the banker xi. “the passbook … belongs the customer and the entries

made in it by the bank are statements on which the customer is entitled to act…” – In Atlantic Mines Ltd., v Economic Bank [(1904) 2 KB 471]

xii. If the position of the customer has not been adversely affected, by relying upon the passbook, the banker may rectify it (within reasonable time)

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xiii. What is ‘affecting adversely’? – is question of fact to be determined depending upon the circumstances of each case

xiv. “In determining this question of fact, a great deal depends upon whether the customer was led through the erroneous entry to act in a manner in which he would otherwise not have done and whether such action has been to his detriment”

xv. A fictitious entry made by a bank employee cannot be relied upon by a customer

xvi. Example – State Bank of India v Shyma Devi, AIR 1978 SC 1263

4. Write short notes on the following

a. General and special crossing;

i. ‘Crossing’ is a feature which is unique to cheques and distinguishes cheques from other negotiable instruments

ii. Crossing is a usage born of commercial practice iii. The objective – give direction to the banker that, he is

not to pay the cheque across the counter but to pay it only to another bank

iv. Crossing of a cheque accords a protection or safeguards the interest of the drawer

v. If wrongful person seeks payment – it can be traced back (as he has acted through another banker)

vi. The General Crossing and its features vii. Special Crossing - Sec. 124

1. Two transverse parallel lines may or may not be drawn

2. Name of the banker should be written across the cheque

3. The words ‘not negotiable’ may also be included viii. Account Payee crossing ix. Not negotiable crossing etc.,

b. Holder and Holder in due course.

i. ‘Holder’ is one who is 1. Entitled in his own name to the possession of the

instrument; and 2. Have the right to receive or recover the amount

due thereon from the parties thereto. ii. Otherwise a ‘holder’ means –

1. The payee; or 2. The bearer; or 3. The endorsee of an instrument

iii. Reference to Sec. 8 of the NI Act; 1. Holder must have taken the instrument for value

[consideration]

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2. Must have obtained the instrument before its maturity

3. Instrument must be complete and regular on its face; and

4. Must have taken the instrument in good faith and without notice of any defect either in the instrument of the title of the person negotiating it to him

iv. Holder in due course 1. Holder in due course is a person – who takes an

instrument in “good-faith and for value” 2. And he becomes the true owner of the instrument

and is known technically as ‘holder in due course

v. Reference to sec. 9 of NI Act.

5. Write short notes on the following a. Legal Significance of introductory letter (while opening of a

bank account);

i. There is no legal requirement to obtain any introductory reference

ii. But… the banking custom and practice insist that introductory reference is essential during opening of a new account

iii. Many internal rules of banking practice stipulate for it iv. The objective of taking introductory letter

1. “to identify the prospective customers of the bank”

2. Also to ensure that, the new customer will not use his account for fraudulent purposes

3. It is established law that the introducer will not run into any legal problems only for having introduced an account holder

v. Reference to Union of India v National Overseas and Grindlays Bank (1978)

vi. Other miscellaneous details

b. Banker’s books evidence law in India.

i. The basic objective of the law (but not in verbatim words) 1. “An Act to amend Law of Evidence with respect

to Bankers’ Books 2. Whereas, it is expedient to amend the Law of

Evidence with respect to Banker’s Books; It is hereby enacted as follows”

ii. Explaining the major principles and provisions behind the enactment

iii. Conclusions.

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6. Write short notes on the following

a. The concept of ‘securitization’ & the legal framework;

i. Securitization is defined as a process of pooling and repacking of homogeneous, liquid financial assets into marketable securities. It is a structured financial instrument and a means of raising funds by transfer of assets.

ii. The process of securitization leads to creation of financial instruments that represent ownership interest in, or are secured by, a segregated income-producing asset or pool of assets.

b. The transaction of securitization may be summarized as follows

i. An originator of (usually) high quality receivables, such as home mortgage loans or consumer credit receivables sells the receivables to a specially formed company (SPV) in return for a purchase price payable immediately on sale;

ii. The SPV finances the purchase price of the receivables by borrowing from the banks or by a conventional bond or note issue to sophisticated investors (‘funding loan’). The SPV grants security to the investors over the receivables to secure the borrowing;

iii. The SPV authorizes the originator as ‘servicer’ to collect the receivables on behalf of the SPV, which uses them to pay the principal and interest on the funding loan. The SPV pays a serving fee to the servicer;

iv. The SPV usually a thinly capitalized single purpose company whose shares are held by somebody other than the originator, e.g., charitable trustees, so that the SPV is not a subsidiary which must be consolidated on the originator’s balance sheet.

v. In order to ensure that the receivables are sufficient to repay the investors on time, there may be various forms of ‘credit enhancement’, e.g. a third party may give guarantee to SPV or the originator may agree to make a subordinated loan to the SPV.

vi. The SPV pays surplus income from the receivables, which is not needed to repay the funding loan, to the originator so that the originator takes the profit. The SPV may pay this profit to the originator as servicing fees or other mans.

c. THE LAW RELATING TO SECURITIZATION i. THE law governing securitization in India is the

Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI)

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ii. Although the legislature enacted the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and set up fast track courts in the form of Debt Recovery Tribunals, the same did not furnish expected results because of the time consuming legal process under the DRT Act. Furthermore inadequate infrastructure was made available to the DRT’s, which was the major reason for their failure in ensuring speedy recovery of bank dues.

d. Hypothecation.

i. Explaination as to what is hypothecation; and ii. The generic legal principles; iii. The banking practice iv. Conclusions.

7. Write short notes on the following

a. Principles of good lending;

i. “but merely because ‘lending’ forms a major chunk of banking functions it does not mean that the banker gives a loan to any or all person(s) asking for it. Before he sanctions a loan he had to ascertain whether or not it would be desirable to give a loan to the applicant..”

ii. Capacity of the applicant 1. The loan transaction is contractual 2. The applicant should be competent to enter into

contract 3. In case of artificial person – the applicant shall

have other qualifications iii. Purpose of the loan

1. The purpose shall be one identified by the banker (according to their preferences)

2. Must not be prohibited according to the government order

3. There shall be some assurance of returns 4. World war II (loans other than war purposes in

Germany) 5. Finance Minister can draw the attention of the

bank on desirable fronts (for advances by the banks)

iv. Amount of advance 1. Whether the amount sought is sufficient 2. Whether there is sufficient money invested by the

applicant into the project 3. While lending money to the firms/companies 4. Year’s turnover 5. The objective of the company

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6. Its market standing etc., v. Duration of the advance

1. Whether it is for long term 2. Then multifarious aspects are to be noted by the

banker 3. If it is for short term 4. Although not much but some aspects are to be

noted by the banker vi. Source of payment

1. This has to be valued in addition to the security which the banker is accepting

vii. Profitability of the advance 1. Money lent not as ‘charity’ but as business

transaction

b. Consortium lending.

i. The challenge of consortium lending (why consortium lending?) 1. Meeting the credit needs of borrowers (which are

ever increasing); and 2. Safeguarding the lender from (various risks) 3. To meet the said challenge ‘consortium lending’

gained prominence over the last century 4. It is a mechanism by which single borrower is

financed by multiple lenders (generally who are related to each other in many ways)

ii. The consortium lending has grown immensely in all over the world (including India)

iii. But.. There are some challenges iv. Improper (or no) regulations v. Lace of guidelines by the regulatory agencies vi. Short-sightedness of the lenders vii. There are many nomenclatures viii. Participation loans; ix. Syndicate lending; x. Co-lending; and xi. Multiple lending etc., xii. One way of looking at them is they are interchangeably

used xiii. But from the way a businessmen will look – there is

some difference (especially from the view point of risk involved)

xiv. Indian system has no dedicated legal framework to regulate consortium lending

xv. Hence we have to have piecemeal approach xvi. The main law is ‘law of contracts’ xvii. There is very little ‘decisional law’ on the point xviii. As consortium lending in India has not faced much of

litigation as of now

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xix. But… there is some amount of ‘soft law’ on the point xx. In 1973 RBI set up a study group to develop a policy xxi. The study groups strongly supported the development

and accepted this as a foundational aspect of banking xxii. Based on the report of the study group the RBI

developed certain guidelines xxiii. Large credit amounts to any borrower in the public or

private sector, in excess of 1.5% of bank’s deposits, should be extended as consortium loan

xxiv. Where multiple lenders exist, with no consortium arrangement, a procedure for the coordination between different lenders and an exchange of information should be evolved

xxv. All consortium lending should try to fulfill all the credit needs of the borrower so as to prevent multiple consortium being formed

xxvi. The share of each bank in the consortium should not be less than 10%

xxvii. The lead bank must be given the responsibility for appraising the borrowers credit requirements

xxviii. The terms and conditions under the consortium should be the same for all members

xxix. The formation of the consortium was obligatory where the credit limit sanctioned by many banks to a single borrower exceeded Rs.5 crores

xxx. The total drawing from each of the banks in the consortium must be proportional to the ratio of sharing

xxxi. Finally in 2007 – the role of RRBs was also highlighted by RBI in consortium lending

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NATIONAL LAW SCHOOL OF INDIA UNIVERSITY, BANGALORE Master of Business Laws (MBL) I year 

June 2011 Annual Examination  ‐ Key Answer : CORPORATE LAW 

1. a) (i) Guarantee Company- Two fold liability (1) on the shares held by the member-Liability is the same as that of the member of a

company limited by shares (2) Liability under the guarantee clause- Arises only in the event of winding up if the

assets of the company not sufficient to discharge its debts and liabilities-ceiling on the liability – (the maximum specified in the guarantee clause).

1. a) (ii) Unlimited Company having a share capital - The nature and extent of liability or the shares as that of a guarantee company

having a share capital - Liability in winding up

The nature of liability as that of a guarantee company except that in an unlimited company there is no ceiling on the liability of the member. Such amount as may be necessary to discharge the debts and liabilities of the company incurred while the person concerned was a member of the company or within 1 year of his ceasing to be a member.

1. a) (iii) Company limited by shares The liability may arise while the company is a going concern or in the course of winding up. But the liability is based on the number of shares held by the member. Once the amount due on the shares is paid, (nominal value plus the premium agreed to be paid at the time of allotment) there Is no further liability on the shares held by the member. 1. b) (i) The Articles of Association of a private company shall incorporate all those

matters specified in section 3 (1) (iii) - see section 3(1) (iii). (ii) If default is committed by the company with regard to any of those

requirements, section 43 is attracted and the company is treated as if it is a public company.

1. c) The maximum number of members of a private Company at any point is 50 only. If default is committed section 43 id attracted and treated as a public Company.

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The issue here is whether Akshaya Pvt Ltd. Violated section 3(1) (iii) (b). In computing the number of members for the purpose of section 3(1) (iii), the employees of the company who are shareholders will not be counted provided they acquired the respective shares while they were in employment. 2. a) In order that a policy holder or an assignee of a fire insurance policy to make a successful claim on the policy, the following conditions must be satisfied (1) The person who took the policy had an insurable interest in the property insured. (2) The insured or the assignee had an insurable interest in the property .Here the firm Which took the insurance policy had no insurable in the property at the time when the policy was taken.(A shareholder had no legal or equitable right in the properties of the company.(Macaura’s case).Hence the insurance contract is null and void. The parties cannot succeed. 2. b) L & M Ltd. is a wholly owned subsidiary of AB Ltd. (40% in its own name and 60% held by XY Ltd. which is a wholly owned subsidiary of AB Ltd). From the facts, Bansal is not a director of L & M. Nor is he a member of L & M Ltd.To fasten liability on Mr. Bansal, the questions to be considered are:- (1) Whether L & M Ltd can be treated as the agent of Mr Bansal, who really carried

on the business through the instrumentality of L & M Ltd. (2) Whether Section 542 (Fraudulent trading provision) can be invoked. From the facts it seems that these grounds will not be available to the liquidator. 3. a) Remedies available to the parties of an ultravires contract. (1) Executory contract- Both the parties can plead ultravires (2) Executed contract (a) Money paid or property transferred: The affected party can recover the property

based on title. If the money is still remaining identifiable, it can be recovered. (b) Tracing and following and subrogation also available (c) In certain cases the other contracting party may claim damages against the

directors and other agents who entered in to the ultravires contract for breach of implied warranty of authority.

3. b) Here the issue has to be examined with reference to two classes of companies. (i) Private companies which are not subsidiaries of public companies- The rule in

Birch v. Copper that prima facie, there is a presumption of equality among the various classes of shareholders is true of such companies. The prima facie presumption of equality among the various classes of shareholders is true of

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such companies. The prima facie presumption of equality may be rebutted when the articles of the company or the terms of issue provide otherwise.

(ii) Public companies and private companies which are subsidiaries of public companies Section 85 to 90 provide for the rebuttal of the prima facie presumption. Voting rights Preferential shareholders would have no voting rights in company meetings except when their rights are directly affected. But when their dividend is in arrears they will have voting right. As to when they will have voting rights on the ground of non payment of dividend. When their rights are directly affected see explanation to section 87 (2) (a). Their rights on the ground of non payment of dividend- see section 87(2) (b) and explain. As regards other rights

- Preference shareholders have a preferential right in respect of return of capital whether it be under section 100 etc or in the winding up. Right to dividend They have a preferential right in respect of their contractual dividend.

3. c) Variation of class rights See the terms of issue and section 106 & 107.variation possible only if the AOA provide for such variation if the articles are silent variation may be carried out, if the terms of issue does not prohibit variation. Variation procedure See sections 106 & 107 Two modes:- (1) special resolution of that affected class (2) Consent in writing of the holders of ¾ of the issued shares of that class.

3. d) (1) The maximum period of any preference shares issued by a company is 20 years,

but perpetual debentures may be issued by a company. (Section 120). (2) Debenture holder can have no voting right at general meeting. But in

circumstances specified in section 87 preference shareholders may enjoy voting rights in general meetings.

(3) Preference shareholders will be entitled to dividend only out of the profits of the current year or free reserves. But there is n such restriction with regard to the interest payable to the debenture holder.

(4) Redemption of preference shares can be made only through a fresh issue of shares made for the purpose or free reserves. Such restrictions do not operate with respect to the redemption of debentures.

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4. a) i)

See section 56(3). When there is a public issue prospectus has to be issued. See also section 64.Also section 67(2) (3) and proviso (1) to section 67 (3) as to the meaning of issue to the public.

Other requirements -Registration of copy with ROC- Section 60 - Contents of prospectus. Section 56 (1) If expert’s opinion is included in the prospectus, his written consent for the inclusion of his opinion to be obtained. (Section 58).

4. a ) ii) Remedies Remedies may be available against the following

(a) Company Remedies- (1) rescission, (2) Damages (b) Directors and others who authorised the issue of prospectus –civil and criminal

liability. (1) Civil liability and defences See section 62 (2) criminal liability Section 63: prima facie liable defences- those provided in section 63. (c) Experts Who is an expert, see section 59 (2) on what matters expert will be liable. - Matters pertaining to expert opinion- liability only in respect of expert opinion - Liability only in respect of matters pertaining to expert opinion.

Civil and criminal liability of experts the same as that of directors, etc under section 62 and 63. 4. b) i) Blank transfer An instrument of transfer, signed by the transferor, but not by the transferee accompanied by the share certificate/certificates pertaining to the debenture, transfer may be affected by the transferee by delivering these documents to another. The currency of blank transfer See section 108 A 4. b) ii) Transfer of shares by unlisted company See section 108

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- Not done through stock exchange. Now shares are freely transferable – no restriction on transfer. See section 111A (2) read with 111(14).

Procedure

Instrument of transfer signed by the prescribed authority before any entry made therein.

Instrument of transfer filled up and signed by the transferor and transferee The instrument duly stamped Instrument of transfer along with the share certificate presented by the transferor

or transferee (within the period specified in section 108 (1A)( ii) to the company for registration of transfer.

5. a) i)

AGM & EGM

Distinction between AGM & EGM

AGM- the Company is to hold an AGM in every year, failing which the directors and the company incurs penal liability. At the AGM, the annual Accounts are placed, and considered by the members.

Other businesses carried out by AGM

1. Appointment of rotational detector’s & other directors 2. Appointment of Auditors 3. Declaration of dividend

The business carried out by AGM falls into two categories (1) ordinary business and (2) special business

At EGM any business transacted is special business

AGM may also be called by central government (CLB) where the board fails to call the AGM.

EGM-Any general meeting other than the AGM is an extraordinary general meeting. it may be called.

1. By BOD Suo moto 2. By the Board on a requisition made by the requisite number of members specified

in section 169. 3. On failure of BOD to hold the EGM requisition within the time specified in

section 169(6), the requisitionists themselves may call the EGM.

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5. a) ii)

See section 169 (6)

5. b)

No conflict rule

It is an aspect of the fiduciary duties of directors and other fiduciaries. No rule that a fiduciary shall not enter into any transaction with the beneficiary. The fiduciary duties of the directors demand that they shall not enter into transactions without the informed consent of the company where there is a potential conflict between their personal interest and the interest of the company. The potential conflict may according to gower arise in the following cases:

1. Transactions between the company and the directors 2. Use of corporate opportunity 3. Competition with the company

Examine the case law under these heads.

6. a)

Proper plaintiff rule

Since the company is a separate legal person, the rights belonging to it can be pursued by the company only. This is based on the doctrine of privity of contract. If the persons against whom the company has to institute legal proceedings are in control of the company they may not proceed to take legal proceedings against themselves or their companies. In such cases an exception has to be made to pursue the claims of the company. This is provided by the common law exception to the proper plaintiff rule namely derivative action. Any member of a company may initiate a suit against the wrongdoers for the relief which really belongs to the company. Examine the conditions to be satisfied to invoke this relief.

6.b)

Refer sections 529,529A, 530

The assets of a company in its winding up have to be distributed in the manner provided in the above sections.

The priority is in the following order

1. Expenses of winding up 2. Overall preferential claims.

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See section 529 A

3. Preferential claims section 530 4. Claims of other creditors.

If after satisfying the above claims any amount is left, it is to be utilized to pay back the share capital. Here the preference share holder get priority where the company is a public company or subsidiary private co. see section 85 (1) (b).

- Even after discharging the above liability, there is surplus, the shareholders would get it as residuary legatees.

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NATIONAL LAW SCHOOL OF INDIA UNIVERSITY, BANGALORE Master of Business Laws (MBL) I year  

June 2011 Annual Examination  ‐ Key Answer : INDUSTRIAL RELATIONS LAW   Q.  No.1.  Explain  an  Industrial  dispute  and  also  when  an  individual  dispute  becomes 

industrial dispute.  Key Answer  Industrial dispute definition has to be explained. An  Industrial dispute can be 

raised by plurality of workers. What is the number of workers required to raise an  industrial dispute,  it should be substantial numbers of workers or a Trade Union  in the organization. The explanation given to substantial number given by  the  Supreme Court must be explained. The  term  any person used  in  the definition has to be explained, using the case law, Workmen of the Dimakuchi Estate Vs. Dimakuchi. Also they have to refer to the Standard Vaccum Refining Co. of India Vs. Workmen.  

 Individual  dispute  deemed  as  Industrial  dispute,  1965  amendment  is  to  be explained.  In  case  of  individual  dispute  not  covered  by  deemed  industrial dispute,  the  individual  dispute  has  to  be  exposed  by  substantial  number  of fellow workers.  

Q. No.2.  Critically examine the limitations on Managerial Prerogatives under the Industrial Disputes Act, 1947. 

 Key Answer Audit of provisions relating to regulation of managerial prerogatives like  

a. Notice of change under Section 9A. b. Provisions regulating employer's right to layoff, retrenchment and closer of Industry. 

c. Section 11‐A. d. Ss. 33, 33A & 33C  and other provisions.  

 Q. No.3.  Critically examine the appropriate Government's power of reference through case 

law. Is there any need to continue with such power in the era of liberalization and globalization? 

 Key  Answer  Definition  of  'Appropriate  Government'  uls  2(a)‐Analyze  with  the  help  of 

decided  cases  ‐  Critically  evaluate  the  role  of  'Appropriate Government'  in maintaining  Industrial  peace  with  reference  to  power  of  reference  of  ID, publication of award, regulation of strikes and lock outs and so on. In the era of  globalization  and  liberalization,  judicious  exercise  of  these may  still  be required. 

 Q. No.4.  Define 'Industry'. Explain in brief with the help of decided cases.  Key Answer  Section 2 (j) of ID Act, 1947 ‐ Analysis‐Supreme Court cases explaining the 

definition. 

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Important cases ‐ D.R.Baneerjea vis P.R.Mukherjea. Corporation of City of Nagpur Case. Hospital Mazdoor Sabha Case. Safdarjung Hospital Case. Solicitors Case. University of Delhi v/s Ramnath. Harinagar Cane Sugar Farm v/s State of Bihar. Madras Gymkhana Club Case. Bangalore Water Supply and Sewage Board v/s A.Rajappa. Coirboard v/s Indiradevi. Jalbir Singh Case. 

Reference to Amended definition of 1982.   Q. No.5.   Examine the scope and the extent of  immunities of registered trade unions with 

the help of decided cases.  Key Answer     The  immunities are available only  to registered Trade Unions. Section 17 of 

the  Trade  Union  confers  immunity  from  criminal  conspiracy  to  registered Trade Union. Section 18 confers immunity from civil liability in respect of acts done  in  furtherance of a  trade dispute. The  immunities are confined  to  the objects of the Trade Union mentioned  in Section 15 of the Trade Union Act. Under Section 17  the very act of  the workers going on strike  is a breach of contract  of  employment.  According  to  the  Section  43  of  the  Indian  Penal Code anything which furnishes a ground for a civil action is illegal. So workers going on strike i.e. breach of contract of employment gives rise to civil action for damages is illegal as per Section 43. 

 Two or more workers  committing  such an  illegal act  is  criminal  conspiracy. The  Trade Union Act  provides  immunity  for  such  conspiracy  as  long  as  no offence is committed. Section 18 is to be explained: by the candidate. 

 Case Law: 1) Federation of Western  Indian Cine Employees Vs. Filmaya Pvt. Ltd  2. Chrandrana Bros vs. K. Venkata Rao  

Q. No.6. Explain  the pre‐requisites  for effective  collective bargaining. Also examine  as  to  what extent they are present in the Indian scenario 

 Key Answer   Elaboration on the following points: 

- Strong Trade Unions including finances - Compulsory recognition of Trade Unions - No multiplicity - Good faith negotiations - Good Trade Union leadership - No unfair labour practices 

3

- Willingness to give and take - No politicization of Trade Union 

Most of the above are absent in the Indian scenario.  Q.  No.7.  Explain  the  procedure  for  forming  Trade  Unions  and  also  the  procedure  for 

registration of Trade unions.  Key Answer   Explanation of these sections in detail:   Sections 4, 5 & 6 of the Trade Union Act, also the power of the registrar to call 

for additional information etc.,  Q.  No.8.  "Dispute  resolution machinery  in  the  Industrial  Disputes  Act  is  suppose  to  be 

speedy and effective, but there are many hurdles  imposed by the Statute  itself". Critically examine this statement. 

 Key  Answer  The  Compulsory  Adjudication  authority  gets  jurisdiction  only  by  way  of 

reference  by  the  appropriate  government.  There  are  problems  at  the reference stage. The problems are highlighted  in number of Supreme Court cases,  for  example:  Nirmal  Singh  vs.  State  of  Punjab;  Rajasthan  Road Transport vs. Krishnakant etc., 

 Writ  Petitions  follow  reference  or  no  reference.  Once  the  problem  of reference  is  over  and  the  dispute  is  before  the  Compulsory  Adjudication Authority,  Compulsory.  Adjudication  Authority  functions  at  a  snail  face  by granting any number of adjournments. They follow the procedures like a Civil Court which  is not  expected of  them.  The qualifications prescribed  for  the Presiding Officer are  in conflict with the expectation of the Presiding Officer where  in they are required to create rights and duties for the parties before them bared on equity reasonableness and the standards prevailing in similar industry. 

 

The awards passed by the Compulsory Adjudication authorities are required to be published. There is delay at the stage of publication. For Example, cases like Remington Rand of India. Ltd., vs. Workmen, Grindlay Bank vs. CGIT etc. The awards are subject to judicial review.  

 

Voluntary Arbitrator has the following hurdles:  

There must be an Arbitrator Agreement. Arbitrator Agreement must be sent to the appropriate government and the Conciliation Officer. The appropriate government  is  required  to  publish  the  Arbitration  agreement  which  is compulsory, after Karnal Leather Karma Chari Sanghatan Vs. Liberty Footware case, if the agreement is signed by majority of workmen there will be second notification, hence delay at the stage of publication of agreement. Arbitration award  is  also  required  to  be  published.  The  award  is  subjected  to  judicial Review‐Rothas India case.  

 

Availability of competent arbitrator in the area of industrial relations. 

NATIONAL LAW SCHOOL OF INDIA UNIVERSITY, BANGALORE Master of Business Laws (MBL) I year  

June 2011 Annual Examination  ‐ Key Answer : ENVIRONMENTAL LAW   

Part- A

1. Constitutional concerns:- Article 39 (b) and (c) Article 48 A- Public Trust Doctrine ( Kamalnath case) Article 51 A (g). Scheduled Tribes & the Environment: V & VI Schedules and

Article 19(1) (e). 42nd Amendment: ‘Forests’ to the Concurrent List. 73rd & 74th Amendments: - Community Assets to be managed by

Local Self Govt Institutions. Article 21 & Courts: Right to clean Environment.

2. Precaution:- Description of the principle-German origin. Rio Summit, 1992- Agenda 21. Application in Biodiversity Convention- Bio safety Issue M.V Naidu; Vellore Citizens Welfare Forum cases Limitations of the Principle. Public Trust Doctrine MonoLake case Application in Kamalnath case-Description of the Principle-

Relation of Natural Resources, State and the People- Articles 48 A and 51 A(g) of the Constitution.

Eminent Domain, Public Purpose & Public Trust.

3. Biodiversity Act, 2002 Conservation, Protection and Bio safety aspects Prevention of Biopiracy Access and benefit sharing arrangement Administrative structure and functions Conflict Resolution mechanism Relation with other statutes Long gestation period and procedural problems Subordination of conservation concerns to commerce of bio

resources.

4. Pollution control regime Common law and criminal law :- Nuisance, negligence, strict and

absolute liability Specialized pollution control laws to control Water and Air

pollution :- Setting standards; consent provision; corporate

environmental responsibility; administrative architecture and functions of authorities

Problems of enforcement: - command and control; competence to discharge functions beyond pollution control and waste management; centre –state relations; disharmony and lack of coordination; infra-structural problems; weakness in conflict resolution mechanism etc.

5. Wild life protection law, 1972 and 2002 Classification and changes to classification and its impact:-

National parks; sanctuaries; closed areas; gaming reserves; protected areas; conservation reserves; community reserves.

Role, responsibilities and jurisdiction of wild life authorities- Powers beyond what is prescribed in Wildlife Act- critical wildlife habitats under Forest Rights Act, 2006.

Penal sanctions- Stringency of the law and less than effective enforcement- dependence on cooperation from penal law enforcement authorities

6. Environment Protection Act, 1986 Enabling law for enforcement of pollution control, forest, wildlife

and biodiversity law Overarching law over all laws concerning waste management;

coastal areas (CRZ Law ); infrastructure and developmental activities (EIA Law)

Problems and limitations: - coordination; effective implementation; gaps in the law and in administrative functioning etc.

Part- B 7. (a) . Individual’s Right of prosecution Section 49 of Water Act- Explain and analyse the scope, possibility & Limitations. (b) Stockholm Conference: Human Environment; Commitments & Agenda for Action for States; Follow up; National Legislations ;International Arrangements; Birth of United Nations Environment Programme etc. 8. (a) CITES: Conservation of Species & Eco-systems; Role &Responsibilities

of States; Role of Non-state Actors- Limitations & Short-Comings (b) Trailsmeltor Arbitration:Trans-boundary Pollution Case- Discuss Facts & Arbitral Award and the emerging principle. (c) Forest Rights Act: Give salient features of law that confers rights to Forest Dwellers (d) Coastal Regulation Zone: Salient Features of the law to be elucidated.