MMPC 13 Free Solved Assignment
MMPC 13 Free Solved Assignment Jan & July 2022
Q1- What is the significance of ‘Business Law’? Discuss the objectives of Business Law?
Ans- significance of Business Law’Business law encompasses all of the laws that dictate how to form and run a business.
This includes all of the laws that govern how to start, buy, manage and close or sell any type of business. Business laws establish the rules that all businesses should follow.
A sawy business person will be generally familiar with business laws and know when to seek the advice of a licensed attorney.
Business law includes state and federal laws, as well as administrative regulations.
Let’s take a look at some of the areas included under the umbrella of business law.
All the laws which pertain to how, what and why of how businesses are legally allowed to and supposed to function are encompassed by what is business law.
Business law meaning includes contract laws, manufacturing and sales laws, and also hiring practices and ethics.
In simple words, it refers to and pertains to the legal laws of business and commerce in the public as well as the private sector.
Note that it is also known as commercial law and corporate law, due to its nature of regulating these worlds of business.MMPC 13 Free Solved Assignment
Business law is an important aspect of law in general because, without the same, the corporate sector, manufacturing sector, and retail sector would be in tyranny.
The aim of putting business and law together is to maintain safe and functional working spaces for all individuals involved in the business,
whether they’re running it or working for the people running Business law is that branch of the legal system which promotes an orderly treatment of business affairs,
facilitates the regulation of commercial activities in accordance with established practices of law, and provides for settlement of disputes in an amicable manner.
It constitutes that part of the legal system which is most fundamental to national wealth creation.
It also specifies the rules and the conduct that needs to be adhered to, for the creation of successful business relationships among the government, business entities and the public, and business enterprises.
Business law also aids in establishing the environment needed for responsible and peaceful business dealings not just amongst the different enterprises but also for safeguarding the rights of the employees.
Business law also requires understanding and firm grounding of multiple substantive areas of law. Business law has gained significance due to the changing business environment.
Business environment is dynamic in nature and there is a requirement of having adequate laws in place to govern the business organisations functioning in the society.
OBJECTIVES OF BUSINESS LAW
Business law is a section of code that is involved in protecting liberties and rights, maintaining orders, resolving disputes, and establishing standards for the business concerns and their dealings with government agencies and individuals.
Every state defines its own set of regulations and laws for business organizations.
Similarly, it is also the responsibility of the business concerns to know the existing rules and regulations applicable to them.MMPC 13 Free Solved Assignment
We enter into contracts every day. Some of these contracts are made consciously, for example, for the purchase or sale of any goods, purchase of a share of a company or a plot of land.
Entering into contracts determines the legal rights of each party giving rise to legal obligations as well.
People who are engaged in business activities such as business Owners enter into a contract on a daily basis to further the business transactions.
All business activities include a variety of transactions which give rise to contracts on a daily basis.
Some of these contracts are as simple as purchasing goods from a shop thus giving rise to a legal right and legal obligation. Business law serves a variety of purposes some of which are listed below:
(1– A comprehensive set of standards established universally: Business laws are comprehensive and uniform set of standards that are applicable to all business entities.
Uniformity in laws helps in maintaining smooth relations between the businesses and its various stakeholders including consumers, suppliers, etc.
It provides an environment where the businesses can function smoothly and efficiently as the same rule shall be applicable to all the business organisations falling in a particular category.MMPC 13 Free Solved Assignment
However, there can be different compliances for different kinds of business organisations depending upon the size, nature of business activity or certain threshold limits.
(2- Promoting industrial growth: Business laws not only provides different provisions for compliance for the business but also facilitate industrial growth by protecting and promoting the rights of businesses.
Adherence to the rules prescribed by the range of laws falling under the domain of business facilitates businesses to achieve growth and success.
Thus, business laws enable; capital formation, promote industrial relations, facilitation of licensing, ease of doing business, financial inclusion, etc. which promote economic growth.
(3-Laying down the procedure for the establishment of business: The laws dealing with business provide the necessary framework required for the commencement of a business corporation along with building of a strong foundation for the business entity to thrive in the market.
The formal process provided under the laws also facilitates successful conduct throughout the life-cycle of the business.
For instance, Companies Act, 2013 lays out the steps involved in the incorporation of a company, and provisions related to the Articles of Association and the Memorandum of Association in detail.MMPC 13 Free Solved Assignment
(4–Enforcement of Rights: Business laws provide provisions for judicially enforcing the rights of all the parties involved in a business transaction.
Thus, the businesses can approach the court to enforce the claims against the debtors or right to a patent or copyright or the right to hold property, etc.
Businesses also have a right to defend themselves in case actions are filed by the central, state and local bodies.
Thus, businesses have been given the power of initiating legal action in case any legal compliance are breached by any outside party and also allowed to defend themselves against the litigation filed by the government for the various stakeholders.
(5–Contributes to the building of healthy business relationships: Laws dealing with business matters are extremely significant in the establishment of secure and effective business relationships amongst the concerned entities as the formation of strong business ties is an absolute must for building a strong economy of a country.
For instance, the Partnership Act lists out the rights, duties, and obligations of the partners in a firm for carrying out a successful venture.
(6– Reduced possibilities of fraud: A robust and effective business law framework helps in reducing the possibility of fraud as the parties entering into contracts or dealing with each other are well aware of their rights and liabilities which would prevent them in falling prey to the illegal or fraudulent activities by the other party.
The laws associated with Business Law also provides for a highly effective enforcement mechanism, which are further lined with stringent measures that could minimize the possibility of perpetuating fraud.
(7- Business laws help maintain equilibrium: Business laws help in bringing about uniformity and maintaining equilibrium as there are set rules which have to be followed by each entity.MMPC 13 Free Solved Assignment
Different forms of business organisations are regulated by different laws. This helps in the ease of dealing and conducting business as the same standards are followed throughout the country.
It helps in making the business transactions easier and smoother across the country
(8- Ethical conduct: Business laws also help in improving the conduct of the business as the laws have to be followed in letter and spirit.
Therefore, the business organisations have a responsibility of maintaining ethical conduct Introduction to Business Law while functioning in the society.
As businesses survive in the society and use its resources, there is a responsibility on the businesses to give back by dealing ethically with all its stakeholders.
(9–Social Responsibility: Business laws also lay down the criteria for business to function in a society as the business utilize the resources of the society there arises a responsibility of the business to give back to the various stakeholders.
This enables social justice and social responsibility in the form of good employment practices, non-discrimination, sustainable utilization of resources, prevention of environmental damage etc.
Thus, it prohibits businesses from entering into practices that are harmful to the society at large.
(10– Laying down law in accordance with the evolving standards: The business environment is everchanging and dynamic in nature.
The laws have to be enacted taking into account the economic and business environment of the country.MMPC 13 Free Solved Assignment
These laws not only provide uniformity in business operations but also provide clarity to unforeseen situations.
Legislative changes in the form of amendments are made to address the occurrence of unforeseen situations
(11– Providing penalties for violation of laws: Business law serves an extremely important purpose of enlisting the various penalties that may be employed by the regulatory bodies to ensure that the conduct of business activities conforms to the prescribed standards set by the concerned branch of law.
The legislations dealing with the various aspects of the business have provided the penalties that may be incurred by the wrongdoers on contravention of the law and the rules provided therein.
For instance, chapter Vi under the Competition Act, provides for various penalties for contravention of the orders of the Commission or for non-compliance of the directions of the Director-general or the Commission.
Similarly, Chapter VII of the Insolvency and Bankruptcy code (IBC) provides for punishment of offences, penalties for acts including falsification of books of corporate debtor, false representations to creditors and transactions for defrauding creditors, etc.
(12– Insurance against Risks: Every business involves inherent risks that may be related to operations of business, movement or transit of goods, and financial risks, etc.
Insurance laws provide mechanisms for insuring against such unforeseen circumstances for the business.
Directors and officers of the companies can also take D & O insurance policies for protection against future liabilities
The purposes and functions of business law include maintaining order, protecting rights and liberties, establishing standards, and resolving disputes when it comes to businesses and their interactions with individuals, government agencies, and other businesses.
Q2- Explain the process of formation and registration of a Partnership Firm.?
Ans-process of formation and registration of a Partnership Firm – Partnership, in a layman language, refers to the coming together of two or more people to carry out a certain task.MMPC 13 Free Solved Assignment
In the corporate structure of India, the Indian Partnership Act (1932) (referred to as Act hereafter), defines partnership as “the relation between two or more persons who have agreed to share the profits of a business carried on by all or any of them acting for all.”
In a proprietary business an individual has constraints on the ability, skill and capital to run the business, besides liability that can occur anytime.
A partnership is governed by a partnership deed, which must be a written document duly signed by all the partners.
The deed fulfills the requirement of dissipating information about the firm -name, partners’ details, nature of the business, the location of the business and others.
Without much hassle to accumulate a minimum capital, two or more people can start a partnership firm, as there is no minimum capital requirement under the Act.
Formation of Partnership
Partnership comes into existence by contract and this contract may be written or oral- or implied, which is inferred from the conduct of the parties in business circumstances.
According to the definition of partnership under the Indian Partnership Act, 1932, there must be an agreement between the partners of a partnership firm
To constitute a valid contract, the parties to the contract must be competent to contract, their consent must be free and objective should not be forbidden by law or immoral or opposed to public policy. However, two exceptions may be noted
(1– A minor may be admitted to the benefits of an existing partnership firm with the consent of all other partners.
(2— As relations of partners inter se are that of agency, no consideration is required to create the partnership.
Partnership Deed MMPC 13 Free Solved Assignment
As already stated the agreement of partnership may be oral. But it is advisable to have it in writing so as to avoid any future disputes.
The written document that contains the mutual rights and obligations of partners is known as partnership deed.
The deed must be stamped according to the provisions of the Indian Stamp Act and copy of the same must be given to each partner and at the time of registration, a copy of the deed should be filed with the Registrar of Firms.
The partnership deed is not a public document and therefore binds only third parties so far as they have notice of it.
Contents of Partnership Deed
The exact terms of the partnership deed (or agreement) will depend upon the circumstances but generally a partnership deed contains the following covenants:
(1–The firm name, date of establishment, duration of partnership.
(2– Full names and permanent addresses of all the partners and the date when each partner joined the firm.
(3- Nature and scope of business; the place or principal place of business of the firm,
(4- Total capital and the contribution by each partner.
(5- Provision for further capital and loans by partners to the firm.
6– Partner’s drawings,
(7 — Interest on capital, loans, drawings and current account.
(8–Salaries, commission and remuneration to partners,
(9–Profit sharing ratio of partners.
(10- Guideline for maintaining proper books of accounts, inspection and audit, Bank Accounts and their operation.MMPC 13 Free Solved Assignment
(11- Rights and duties of the partners.
(12- Whether and in what circumstances, notice of retirement or dissolution can be given by a partner.
(13- Provision that death or retirement of a partner will not bring about dissolution of partnership,
)14–Valuation of goodwill on retirement, death, dissolution, etc.
(15- The method of valuation of assets (and liabilities) on retirement or death of any partner.
(16- Provision for expulsion of a partner.
(17-Provision regarding the allocation of business activities to be performed by individual partners
(18- The arbitration clause for the settlement of disputes.
The terms contained in the partnership deed may be varied with the consent of all the parties, and such consent may be express or implied by a course of dealing. [Section 11(1)]
Registration of Partnership Firm
Registration of Partnership in not mandatory in India. But registering with a document deed puts into black and white all the intentions and the purposes of the partnership as well as its functioning.
However, it is to be noted that registration only creates an instance or evidence of the existence of partnership, and not a creation of a legal entity.
Registration means getting the firm registered with the Registrar of the firm in the area where the business is situated or proposed to be situated.
Application for Registration MMPC 13 Free Solved Assignment
The registration of a firm may be affected at any time by sending by post or delivering to the Registrar of the area in which any place of business of the firm is situated or proposed to be situated,
a statement in the prescribed form and accompanied by the prescribed fee, stating:
a) the name of the firm;
b) the place or principal place of business of the firm;
c) the names of any other places where the firm carries on business;
d) the date when each partner joined the firm;
e) the names in full and permanent addresses of the partners; and
f) the duration of the firm
The statement shall be signed and verified by all the partners or by their agents specially authorised in this behalf.
(Section 58) Registrar on being duly satisfied, record an entry of the statement in “Register of Firm” and then issue a certificate of registration.
The firm, which is registered, shall use the brackets and word (Registered) immediately after its name.
If, any change is made in points (a) to (f) above same should be duly notified to the registrar so that the same is incorporated in the register of the firm
Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any one of them acting for all.
Persons who have entered into partnership with one another are called individually ‘partners’ and collectively ‘a firm’, and the name under which the business is carried on is called the ‘firm’s name’.
The true test, in determining whether a partnership exists, is to see whether the relation of mutual agency i.e., principal and agent exists between the parties and not.
Registration of firm is not mandatory but desirable as an unregistered firm suffers from a number of disabilities.
Based on their conduct or profit sharing, partners can be of different types like; Actual, Active or Ostensible Partner, Sleeping or dormant partner, Nominal partner, Partner by estoppel or by holding out and so on.
The dissolution of partnership firm may be without the order of the court or voluntary dissolution or by the court.
After dissolution, the rights and obligations of partners continue in all things necessary for the winding up of the business. The partners may complete unfinished transactions.
But this authority is only for the winding up of the affairs of the firm and not for new transactions.
Q3- What is a ‘Contract’? Discuss the essentials of a Valid Contract.?
Ans- What is a ‘Contract In a business, a contract or agreement plays a significant role in smooth functioning between two parties.
In simple terms, the contract is a written agreement between two parties, which contains certain obligations and is enforced by the law.
Violation of the contract or law can attract legal action by any of the parties, including cancellation of the entire contract.
Any individual entering into a written agreement should be knowledgeable enough with the essentials of a contract.
A contract is a contract only when it satisfies all its validity. A contract will not be qualified to be a legal contract if it does not pass specific factors.
India is a country that is much observant of legal factors, it is a country of laws, thus holding a valid and legal contract can only further your chances of getting represented.MMPC 13 Free Solved Assignment
There are some essential points that are to be considered before holding a contract.
FORMATION OF CONTRACTS
A contract is an agreement enforceable in a court of law. An agreement is a set of reciprocal promises between the parties to the contract.
These set of promises arises from an offer and acceptance from the parties to the contract.
The contract may be express or implied i.e., it may be oral words or in writing and even inferred from the conduct of the parties.
It may be bilateral or unilateral contract. The former one refers to the involvement of two parties and the latter refers one party alone can perform without the other.
Agreements: Two or more persons agree mutually to undertake to do or not do certain things through an agreement, for example, to deliver goods and to pay for them. This is not through a process of offer and acceptance.
Offer: The offer is a proposal by the offeror to undertake to do or abstains from doing something provided the offeree will also undertake to do or abstains from doing something.MMPC 13 Free Solved Assignment
The offer contains two things namely ‘an expression of a willingness to be bound’ and ‘a statement of what each party to the proposed agreement must do or not to do.’
The person making the proposal is said to be called as ‘Promisor’, ‘Offeror,’ or’Proposer.’
The offer is of two types namely specific offer and General offer.
An offer to a specific person is specific offer and the offer to public at large is general offer.
‘A’s offer to sell his watch to ‘B’ is specific and ‘X’ offer to pay Rs.1,000/- to one who finds his lost dog is the example of general offer.
Acceptance: The person to whom the proposal is made signifies his assent thereto, the offer/proposal has been accepted and which raises a promise.
The person to whom the proposal is made or the person from whom the promisor seeks the assent is said to be called as ‘Promisee’or ‘Acceptor.’
ESSENTIALS OF VALID CONTRACT
Consideration, capacity to contract, free consent, and legality of consideration and object are some of the essentials of a valid contract. These are explained in detail below:
1-Consideration Consideration is one of the essential conditions for the validity of contract.18 The essential condition for the enforceability of simple contacts is consideration, MMPC 13 Free Solved Assignment
and the rule is expressed by the Latin maxim: ex-nudopacto non orituractio which means out of nude pact no cause of action arises.
It can be understood in the sense quid pro quo.
“A valuable consideration in the sense of the law may consist either some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility, given suffered undertaken by the other.”
“An act or forbearance of one party or the promise thereof, is the price for which the promise of the other is brought and the promise thus given for value is enforceable.”
The analysis of the above definitions says that the consideration may be executed or executory.
In a contract to deliver a watch by A to B for Rs. 100, A and B gained money and watch and in another stand point A and B lost watch and Rs.100, respectively.
The law insists more upon the presence of the element of detriment to the promisee B and then the presence of benefit to the promisor A.
A promise from one party to the other and a promise from the other to the former support the consideration.
In other words, the reciprocity of promises between the parties establishes the consideration.
The absence of consideration makes the contract void.22 This principle has certain exceptions recognized under the provisions of law. They are
(1– Where the contract reduced in to writing and registered and made out of natural love and affection between the parties standing in near relationship to each other
(2– Where the contract is to compensate the person who voluntarily rendered services in past.MMPC 13 Free Solved Assignment
In other words, past services rendered at the desire of the promisor constitute a valid consideration in India.23 But under English law past consideration is not valid.
(3- Where a promise is made to pay a time-barred debt does not require a fresh consideration.
(4– Where a gift between the donor and donee is not affected for want of consideration if it is registered and attested by two witnesses.
Consideration and Discharge of Contract: The doctrine of consideration is not extended to the discharge of contract.
The reciprocal promises between the parties constitute consideration. Subsequently if both the parties agree not to enforce the contract also constitute consideration in India.
But it is not so in English law. Till 1947 the law of England applied the doctrine of consideration not only to the formation of a contract, but also to its discharge.
It was pointed out that a creditor ‘might accept anything in satisfaction of his debt except a less amount of money’26 A canary or pepper corn may be accepted in full discharge of a debt, but a part payment of the debt cannot be accepted so as to operate as full discharge of the debt.
The following are the exceptions to the rule in Pinnel’s case
(1– Under the scheme of composition if the debtor agrees to pay a portion of the debt discharges liability without application of the doctrine of consideration under English law.
(2– In case a third party pays a part of the amount less than the amount due from the debtor discharges the debtor without application of the doctrine of consideration under English law.MMPC 13 Free Solved Assignment
(3- The doctrine of estoppel or quasi-estoppel neutralized the rule in Pinnel’s case.Under Indian law, a contract may be discharged by what is called “an accord and satisfaction” i.e., mutually agreed settlement.29
The English law allows the delivery of horse against the payment of debt but not accept the delivery in future to discharge the debt.
The part payment of debt is also not accepted as accord and satisfaction.
(2- Capacity to Contract: There are certain persons in law who are incapable wholly or in part, of binding themselves by a promise or of enforcing a promise made to them.
In mercantile contracts lexloci contractus i.e., the law of the place will prevail whereas in case of land lexsitus i.e., the law of the place where the land situate will be applicable.
The incapacity of a party to enter into a contract will arise in two ways namely, on account of status, or on account of mental deficiency.
The former would occur on the grounds of political consideration and expediency, the latter is imposed to protect the interest of the disabled person.
The incapacity of a party is broadly divided into two one which arises out of status of an individual for the following reasons:
a) Political or Civil status e.g., where the contracting party is a ruler of a foreign state, Ambassador or envoy or alien enemy, or a convict or a bankrupt.
b) Profession of the contracting person e.g., barrister
The other which arises from mental deficiency (soundness of mind) of the person contracting in case of:
b) Insane persons
d) Drunken persons
Mutuality of mind: The parties to the contract must have consensus-ad-idem35 which means mutuality of mind as to the subject matter of the contract. The lack of mutuality of mind makes the contract void.
‘A’ had two houses namely ‘X’ and ‘Y’. ‘A’ enters into contract with ‘B’ to sell keeping ‘X’ house in his mind and ‘B’ entered into contract with ‘A’ by keeping ‘Y’ house in his mind.MMPC 13 Free Solved Assignment
This results the contract void due to lack of consensus-ad-idem on the subject matter of the contract.
3- Free Consent: “The consent of the party to the contract is said to be free36 if it is not caused by; coercion, undue influence, fraud, misrepresentation and mistake. These are explained hereunder:
1–Coercion: “The committing, or threatening to commit, any act forbidden by the Indian Penal code, 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 in to an agreement.”
The term duress in English law defined as causing, threatening to cause, bodily violence or imprisonment, with a view to obtain the consent of the other party to the contract.
Coercion in Indian law has a much wider connotation than duress in English law.
The main distinction between coercion and duress as the first denotes the offense forbidden by Indian Penal Code whereas the latter confined only to bodily violence and imprisonment.
The presence of coercion or duressin both Indian and English law was an invalidating element for the enforceability of contract.
(2–Undue Influence: This was also called as constructive fraud. It covers all the contracts where one party will be in a position to dominate the will of the other because of relationship while entering the contract.
This influence can be presumed in existence among the following relationships:
A-Parent and child
b. Guardian and ward
c. Trustee and beneficiary MMPC 13 Free Solved Assignment
d. Spiritual master and Disciple
e. Lawyer and client
f. Doctor and patient
The contract between the parties with above relationship turns it voidable by presuming the existence of undue influence of the former against the other.
It is the burden on the former party to prove that he was not in dominating position and that his position was not used to obtain the consent of the other
(3–Fraud: The following acts of a party to a contract establish fraud while entering into a contract with the other:
a) the suggestion of a fact, of that which is not true by one who does not believe it to be true
b) the active concealment of a fact by one having knowledge or belief of the fact
(4- Misrepresentation: A party may give his consent to enter into a contract because of misrepresentation of the other. These false statements or misrepresentations may be either inducing cause of contract.
These statements may be called as innocent misrepresentation and willful or actionable misrepresentation which amounts to fraud. A misrepresentation consists of the following ingredients:
a) Failure to disclosure of a fact
b) Such non-disclosure must relate to a fact not to an opinion
c) Such representation must be untrue
5–Mistake:While entering into a contract the parties to the contract may be under a mistake. This mistake may be as to a fact or law.
Mistake of fact may be as to subject matter of the contract e.g., regarding the existence, quality or quantity etc.; nature of contract; person entering into contract.
Mistake of law may be regarding foreign law, or ordinary law, law of our country, or private rights of the contracting parties. Another classification of these mistakes is bilateral and unilateral.
4-Legality of Consideration and Object: Apart from the above essentials for the formation of a valid contract the legality of consideration and objectis must.
The unlawful agreements may be classified as follows:
1) illegal-where the agreement is contrary to the statute law
2) Immoral- where it is opposed to public morals e.g., agreement for illicit cohabitation, or separation between husband and wife MMPC 13 Free Solved Assignment
3) Opposed to public policy- where the agreement is forbidden as conflicting with the well-being of the state e.g., agreements tending to the abuse of legal process, agreements in restraint of trade, agreements in restraint of marriage, agreements in restraint of parental rights, etc
Where a part of consideration or object of an agreement is unlawful the agreement is void. In case of non-separation of the unlawful part from the agreement the total transaction will be void.
The rule applicable to separate the unlawful and lawful part is known as blue pencil rule.
In such cases the lawful part which separated by drawing blue pencil lining from the unlawful part can be enforceable.
To conclude it can be said that contract is an agreement as per Section 2(h) of the Indian Contract Act, 1872 which is enforceable by law.
For a valid contract there must be plurality of persons that is one party who is making the offer and the other party accepting it and whenever the parties are entering into the Contract then they must disclose all the relevant to the facts and they should not deceive intentionally the terms and conditions of the contract.
Therefore, for a valid contract there must be an agreement and that agreement should be based upon the free consent of the parties to the contract and there must be lawful consideration as well as the object should be lawful and parties who are entering into the contract they must be competent to enter into the contract and when the consent is not free then the contract is said to be voidable at the option of the party whose consent was not freely taken.
Thus, for creating a valid contract certain essentials have to mandatorily followed otherwise if not followed then the contract is not a valid contract.
Q4- Describe the process of Corporate Insolvency Resolution with the help of an example?
Ans- Insolvency is a state of being unable to pay the debts owed by a person or a company.
It is the situation in which the assets of the company are not sufficient enough to discharge the debts and liabilities incurred by the person or company. The person or the company is termed as an insolvent.
The Insolvency and Bankruptcy Code, 2016 (Code) is the Act which lays down the statutory provisions for the Corporate Insolvency Resolution Process as well as other guidelines necessary for the Corporate Insolvent.
Trigger point for initiation MMPC 13 Free Solved Assignment
A corporate insolvency resolution process may be initiated under Chapter II of the Code in respect of a corporate debtor that has committed a default.
The trigger point for initiating the corporate insolvency resolution process is the occurrence of default.
A default16 would have occurred when the debtor fails to pay whole or any part or installment of the amount of debt that has become due and payable.
The “debt”17 has been defined under Code as a liability or obligation in respect of a claim, which is due from any person and includes a financial debt and operational debt.
While a financial creditor is required to present record of default before NCLT for initiation of corporate insolvency resolution process, an operational credit or must issue a statutory notice to corporate debtor in the manner provided in Code
Who can initiate the process? The process for initiating corporate insolvency resolution may be initiated by any of the following:
(1-A financial creditor
(2-An operational creditor
(3-The corporate debtor
Commencement by financial creditor
Application by financial creditor
A financial creditor may initiate the process either by itself or jointly with other financial creditors by filing an application before the NCLT,
if a default has occurred in respect of a financial debt owed not only to the applicant financial creditor but to any other financial creditor of the corporate debtor.
A financial creditor is a person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred to.
Ascertaining existence of debt default by NCLT Within 14 days of receipt of application by NCLT, MMPC 13 Free Solved Assignment
it must ascertain the existence of a default from the records of an information utility or on the basis of other evidence furnished by the financial creditor. If NCLT is satisfied that
(i) a default has occurred; or
(ii) the application made by financial creditor is complete; or
(iii) there is no disciplinary proceedings pending against the proposed resolution professional, it may, by order, admit such application.
Under SICA, admission of reference made to BIFR was by way of an administrative act of registration of reference by the registry of BIFR. Now, an order must be passed by NCLT.
It appears that the corporate debtor need not be heard by NCLT while ascertaining the existence of default.
The NCLT can reject the application if it finds that default has not occurred or the application made by financial creditor is incomplete or any disciplinary proceeding is pending against the proposed resolution professional.
The NCLT is required to provide an opportunity to the applicant to rectify the defect in the application if the NCLT finds the application to be defective.
The applicant must rectify the defect in his application within 7 days of receipt of such notice from the Adjudicating Authority
Date of commencement
The corporate insolvency resolution process shall commence from the date of admission of the application of financial creditor by the NCLT.
Order of admission of such application shall be communicated by the NCLT to the applicant and corporate debtor, and of rejection to the financial creditor, within seven days. MMPC 13 Free Solved Assignment
Declaration of moratorium and public announcement
With regard to creditors, one of the fundamental principles of insolvency law is that insolvency proceedings are collective proceedings, which require the interests of all creditors to be protected against individual action by one of them.
Many insolvency laws include a mechanism to protect the value of the insolvency estate that not only prevents creditors from commencing actions to enforce their rights through legal remedies during some or all of the period of the liquidation or reorganization proceedings, but also suspends actions already under way against the debtor.
Such a mechanism is variously termed a “moratorium”, “suspension” or “stay”, depending on the effect of the mechanism.
The Code provides for a moratorium from creditors action against the corporate debtor.
Where the NCLT passes an order of admission of an application for commencement of corporate resolution process, the NCLT shall, by an order:
(1–Grant a moratorium mentioned in section
(2–Appoint an interim resolution professional in the manner as laid down section 16 of the Code.
(3–Cause a public announcement of the initiation of corporate insolvency resolution process and call for the submission of claims immediately after the appointment of the interim resolution professional
The order to declare moratorium prohibits: MMPC 13 Free Solved Assignment
1–the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgement, decree or order in any court of law, tribunal, arbitration panel or other authority
2–Transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein
3–Any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002
4–The recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor
Exclusion from moratorium
The order of moratorium should not affect supply of essential goods or services to the corporate debtor, which shall not be terminated or suspended or interrupted during moratorium period.
This is important to explore resolution of the corporate debtor as a going concern.
Conduct of corporate resolution process by resolution professional
The resolution professional is responsible for the conduct of the entire corporate insolvency resolution process and manage the operations of the corporate debtor during the corporate insolvency resolution process period.
For this purpose, the resolution professional has the same powers and must perform same duties as vested or conferred on the interim resolution professional.
Resolution Plan A resolution applicant may submit a resolution plan to the resolution professional prepared on the basis of the information memorandum 25.
A resolution plan means a plan proposed by any person for insolvency resolution of the corporate debtor as a going concern in accordance with Part II of the Code.
As already mentioned, a resolution applicant means any person who submits a resolution plan to the resolution professional.
The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan is compliant of the specifications provided in the Code. MMPC 13 Free Solved Assignment
Approval of resolution plan by creditors A resolution plan, which confirms the conditions referred above, must be placed before the committee of creditors by the resolution professional for its approval.
The committee of creditors may approve a resolution plan by a vote of not less than seventy five per cent of voting share of the financial creditors.
The resolution applicant may attend the meeting of the committee of creditors in which the resolution plan of the applicant is considered.
However, the resolution applicant shall not have a right to vote at the meeting of the committee of creditors unless such resolution applicant is also a financial creditor.
Approval of plan by NCLT
The resolution plan as approved by the committee of creditors must be presented by resolution professional to the NCLT for approval.
If the NCLT is satisfied that the resolution plan as approved by the committee of creditors meets the requirements of resolution plan referred above (sub-section (2) of section 30), it shall, by order, approve the resolution plan.
The resolution plan approved by the NCLT shall be binding on the corporate debtor and its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan.
As a consequence of the order of approval, the moratorium order passed by NCLT shall cease to have effect. Following the order of approval of resolution plan by the NCLT,
the resolution professional shall forward all records relating to the conduct of the corporate insolvency resolution process and the resolution plan to the Board to be recorded on its database.
Rejection of resolution plan If the NCLT is satisfied that the resolution plan does not confirm to the requirements (of sub-section (2) of section 30), it may, by an order, reject the resolution plan.
Punishment for contravention of resolution plan If a corporate debtor, any of its officers or creditors or any person on whom the approved resolution plan is binding under section 31, knowingly and will fully contravenes any of the terms of such resolution plan or abets such contravention, such corporate debtor, officer, creditor or person shall be punishable with imprisonment of not less than one year, but may extend to five years, or with fine which shall not be less than one lakh rupees, but may extend to one crore rupees, or with both.
Time limit for completion of insolvency resolution process The corporate insolvency resolution process provided in Chapter II must be completed within a period of 180 days from the date of admission of the application to initiate such process (effective date).
The period of 180 days can be extended by NCLT upto a maximum period of 90 days.
Therefore, the total period for resolution of corporate insolvency, including extended period, can be upto a maximum of 270 days.
An extension can be granted by the NCLT on an application filed by the resolution professional only if instructed to do so by a resolution passed at a meeting of the committee of creditors by a vote of seventyfive percent of the voting shares, and if it is satisfied that the subject matter of the case is such that corporate insolvency resolution process cannot be completed within 180 days.
Any extension of the period of corporate insolvency resolution process cannot be granted more than once.
Appeal before National Company Law Appellate Tribunal An appeal by a person aggrieved by an order approving the resolution plan by the NCLT may be filed before National Company Law Appellate Tribunal (hereinafter referred to as NCLAT) on the following grounds:
1–The approved resolution plan is in contravention of the provisions of any law for the time being in force;
2–There has been material irregularity in exercise of the powers by the resolution professional during the corporate insolvency resolution period;
3–The debts owed to operational creditors of the corporate debtor have not been provided for in the resolution plan in the manner specified by the Board;
4–The insolvency resolution process costs have not been provided for repayment in priority to all other debts; or
5–The resolution plan does not comply with any other criteria specified by the Board.
Every such appeal shall be filed within 30 days.
The NCLAT may allow an appeal to be filed after the expiry of the said period of 30 days if it is satisfied that there was sufficient cause for not filing the appeal but such period shall not exceed 15 days.
Appeal before Supreme Court of India Any person aggrieved by an order of the NCLAT may file an appeal to the Supreme Court on a question of law arising out of such order under Code within 45 days from the date of receipt of such order.
The Supreme Court may, if it is satisfied that a person was prevented by sufficient cause from filing an appeal within 45 days, allow the appeal to be filed within a further period not exceeding 15 days.
Fast track corporate insolvency resolution process The Code provides for a fast-track corporate insolvency resolution process to be completed within a period of ninety days from the insolvency commencement date.
The period of 90 days may be extended by a maximum period of 45 days by the NCLT on an application filed by resolution professional.
The resolution professional can make such application for extension if instructed to do so by a resolution passed at a meeting of the committee of creditors and supported by a vote of seventy five percent of the voting share.
Any extension of the fast-track corporate insolvency resolution process can be granted by the NCLT only once.
The Insolvency and Bankruptcy Code, 2016 provides a provision for an application for insolvency or bankruptcy of start-ups, individuals, partnership firms, limited liability partnerships, and companies.
The Code has provided a slab of default amount in each category however the final amount is to be notified by the Government as the trigger point to initiate the proceeding while keeping in view the fluctuation of the economy.
It is important to understand that the said amount is not the minimum or maximum fixed amount of debt default but it is a ‘range’. CIRP is initiated after making an application.
CIRP is the process through which it is determined whether the person who has defaulted is capable of repayment or not.
If a person is not capable of repaying the debt the company is restructured or liquidated. Following are the steps to be followed for resolution or liquidation of a corporate:
Q5- Discuss the evolution of Environmental Protection Legislation and its framework in India?
Ans- Protection of the environment and keeping ecological balance unaffected is a task which not only the government but also every individual, association and corporation must undertake.
It is a social obligation and fundamental duty enshrined in Article 51 A (g) of the Constitution of India.
The concept of environmental protection is an age old idea imbibed in the Indian cultural ethos since time immemorial.
To understand the present-day legal system for environment protection and conservation of natural resources, it is important to look into the past Indian traditions and practices of protecting the environment.
In the early years of Independence there was no precise environmental policy and not much attempts were made to frame any specific policy or law for the protection of environment.
However, the concern for environmental protection was reflected in the national planning process and forest policy.
Evolution of Environmental Protection Legislation and its framework in India
India’s approach towards environmental protection was piecemeal and reactive in nature.
In response to Stockholm declaration 1972, Air (Prevention and Control of Pollution) Act, 1981, and Water (Prevention and Control of Pollution) Act, 1974, were introduced.
Further, Art 48 A and 51(g) were incorporated in Indian Constitution by way of 42nd amendment in 1976.
It is unfortunate to note that beyond causing continual environmental harms industries can also be responsible for severe and large-scale disasters resulting in the deaths of millions of people.
India was ill fated to witness one of the world’s worst industrial disasters tragedy in 1984 killing thousands of people.
This incident was a turning point for environmental jurisprudence in India.
Several prominent legislations, rules, notifications were adopted after this incidenttaking into account issues and challenges that increasingly emerged as part of modernday developments.
India experienced a virtual explosion of public interest litigations specifically on environmental issues and courts also assumed a more pro-active role in the form of public educator 10, policy maker 11 and administrator12.
India even started contemplating on having a specialized tribunal dealing specifically with environmental matters13 as the Supreme Court stressed on its importance in numerous instances. 14 Finally after much deliberation and failed attempts, National Green Tribunal was established in 2010.
Since its inception, it has played an important role in shaping the environmental litigation in India.
Thus, India started adopting a more holistic and comprehensive approach towards environmental protection and regulating the pollution emanating from industries.
Constitutional provisions for Environmental Protection: The Indian Constitution is a living document which has evolved and grown with time.
Substantive provisions for environmental rights and duties were lacking in our original Constitution.
However, its landscape was changed by way of 42nd amendment which introduced specific provisions for environmental protection in the form of Directive Principles of State Policy16 and Fundamental Duties17.
With the introduction of these two Articles, both the State and the Citizens are now under the constitutional obligation to protect, preserve and safeguard the environment.
Article 21 of the Indian Constitution states that, “no person shall be deprived of his life or personal liberty except according to procedure established by law”.
Supreme Court in the case of Virender Gaur Ors. vs. State of Haryana18 interpreted the word ‘life’ in a liberal manner and stated that, ‘Article 21 protects right to life as a fundamental right.
Enjoyment of life and its attainment including their right to life with human dignity encompasses within its ambit, the protection and preservation of environment, ecological balance free from pollution of air and water, sanitation without which life cannot be enjoyed.
Any contra acts or actions that would cause environmental, ecological, air, water, pollution, etc. should be regarded as amounting to violation of Article 21.” Further, in the case of M.C Mehta v.
Union of India19the Supreme Court treated the right to live in healthy and pollution-free environment as a part of fundamental right to “life” under Article 21 of the Constitution.
Public Interest Litigations under art. 32 and art 226 also resulted in a wave of environmental litigations, producing a rich environmental jurisprudence in India.
Thus, India’s Constitution now guarantees a right to healthy environment20, right to clean air21, right to clean water.
Article 19 (1) (g) of the Indian constitution confers fundamental right on every citizen to practice any profession or to carry on any occupation, trade or business. However, it is subject to reasonable restrictions.
In the case of Burra bazar Fireworks Dealers Association v. Commissioner of police, Calcutta23it was held that, “Art.
19(1)(g) of the Constitution of India does not guarantee the fundamental right to carry on trade or business which creates pollution or which takes away that community’s safety, health and peace.”
Environmentalism is not a fixed concept, but is always evolving influenced by its context.
This also applies to Indian environmentalism, which has developed and changed throughout the years.
There is a rapid evolution in the Indian legislations after independence as the need and concern regarding environment arose.
From ancient environmental rules including Buddhism and Jainism to medieval and then from British era to afterwards including the post 1972 (Stockholm’s) and the coming of modern legislations on environmental laws in India,
a great sense of concern has been shown by the legislature and even the Indian judiciary shown a great concern regarding the environment with its landmark judgements.
MMPC 12 Free Solved Assignment Jan & July 2022
MMPC 11 Free Solved Assignment Jan & July 2022
MMPC 10 Free Solved Assignment Jan & July 2022